Overview of Tradewater
Tradewater is an organization that produces and sells Ozone-Depleting-Substances (ODS) destruction offsets. In fact, it is the only such organization that we found selling these offsets to the public. Tradewater’s primary mission is to find and destroy refrigerants and other gases with especially high warming potential. They work worldwide to find these gases, purchase them, and subsequently destroy them. Tradewater’s revenue comes completely from the carbon offset market. It sells offsets directly to consumers on its website .
Tradewater has offset projects certified through both the American Carbon Registry (ACR) and Verra. Although the protocols for the two certification agencies are similar, Verra has more transparent and publicly accessible documentation on its certification process. Therefore, our analysis of Tradewater focuses on the Verra-certified project.
In this project, Tradewater works with a waste management company to gather ODS and then transport it to the USA for incineration. The project’s offset registry documentation is available here. This National Geographic piece gives more information about Tradewater’s history and projects.
As mentioned in our research note on ODS offsets, there are a few elements to establishing offsets from ODS. They are: conversion of ODS to less harmful substances, establishing the counterfactual of ODS release into the atmosphere, and ensuring that destruction of ODS does not lead to greater production of harmful gases.
Tradewater removes GHG by incinerating the ODS, converting them into substances with lower warming potential. While measuring the exact amount of gases destroyed is straightforward, converting this into the amount of CO2-equivalent gas removed requires understanding the “global warming potential” (GWP) of various gases. These have been established by the UN’s International Panel on Climate Change (IPCC), who are consistently updating their lists of conversion factors . When calculating the amount of CO2-equivalents removed by their projects, Tradewater (and Verra) use these conversation tables. Giving Green is not in a position to verify the science behind these conversation factors, but we believe we can trust the IPCC estimates.
As part of its offset certification process, Tradewater needs to account for its carbon footprint for obtaining and transporting the gases that have actually been destroyed, and these are taken into account in the issuance of the offsets.
ODS will likely be released into the atmosphere if not destroyed
As mentioned in our ODS destruction note, another important factor in determining whether the condition of additionality is met is to understand whether ODS gases would have escaped in the absence of Tradewater’s project or would instead have sequestered indefinitely in canisters and appliances. The Verra protocol allows projects to claim 100% of destruction when ODS are recovered from appliances at their end-of-life and 25% when they are recovered from canisters that could be sold into the market and/or sit unused in a warehouse. We believe these are reasonably conservative assumptions. In Ghana, the majority of ODS that Tradewater destroys are from stockpiles, meaning they claim 25% of their destruction.
Also, there are no regulations in Ghana mandating that ODS is destroyed. Therefore, it is very unlikely that the gases would be destroyed without Tradewater’s involvement.
Other emitting substances are unlikely to replace the destroyed ODS
Finally, in determining additionality we may worry that destroying these gases might cause similar chemicals to be produced in order to meet the demand for this type of gas, a phenomenon termed “leakage.” Since the production of these gases is banned in all countries under the Montreal Protocol, they cannot be reproduced, but they might be replaced with non-banned gases that also have warming effects when released into the atmosphere. This is not a problem with refrigerants captured from end-of-life appliances but could be an issue for stockpiled gases. According to Tradewater, this is not an issue with its program in Ghana because the captured cases have no further economic use. The appliances that use this type of gas are no longer in service, which is why the ODS that Tradewater targeted in Ghana is in stockpiles as opposed to being sold in the market.
Overall, we feel confident that Tradewater’s activities are reducing GHGs in the atmosphere.
Tradewater relies on the offset market for 100% of its revenue. Tradewater would not exist without the offset market, so this element of additionality is clearly achieved.
Tradewater is undertaking multiple ODS-destruction projects, and could invest all offset revenue into new projects. Therefore, it is certainly plausible that each offset purchased can directly lead to additional GHGs eliminated.
However, there is some uncertainty about this assumption given that Tradewater is a privately held for-profit company, which means that some amount of the offsets that they sell is likely to be used for profit (or will be in the future). If Tradewater is making profits above a reasonable reimbursement for the risk taken by their founders and investors, then it is possible that offset dollars are going towards profit-taking as opposed to carbon removal. In this case, not every offset purchased is truly additional, as Tradewater would likely destroy the same amount of ODS even if fewer offsets were sold.
As Tradewater’s financials are not public, it is impossible to know how much of their offset income goes into project operations versus profits. Additionally, they do not disclose the amount that they purchase the ODS for, making it difficult to conduct an independent assessment of the financial flows of offsets. In conversations with Tradewater management about this issue, they claimed that their mission is to remove as many refrigerants as possible and, therefore, that they reinvest any profit from a given project into the next project. They also claimed that their owners do not take profit disbursements above their salaries, at least for the time being. This is a difficult statement to verify, and we encourage Tradewater to make their financials public. Unlike some carbon offsets that require a significant investment of capital upfront (such as grid power generation), Tradewater could likely be run as a non-profit. It is therefore unclear why they are organized as a for-profit company while claiming to not take profits.
When ODS is destroyed by Tradewater, emissions are permanently reduced.
Co-benefits generally tend to refer to projects that have non-environmental upsides, like helping the poor or increasing biodiversity. Tradewater’s work does not have any traditional co-benefits.
However, besides reducing warming, preventing ODS from being released into the atmosphere also prevents ozone destruction, which can have detrimental consequences for humans and other species.
Overall, we believe that the offsets offered by Tradewater are highly credible and that purchasing Tradewater offsets has a direct link to decreasing the amount of GHGs in the atmosphere.
Our main concern relies on the fact that Tradewater is a for-profit company, and therefore could claim offset revenue as profit instead of reinvesting it in further ODS-removal projects. We urge Tradewater to make their financials public in order to reassure offset buyers.
We thank Tim Brown, CEO of Tradewater, for a series of conversations that informed this document.
 Tradewater also sells larger batches of offsets directly, and works with offset brokers as needed.  For instance, see appendix 8.A on page 731 of the Refer to the IPCC 2014 AR5 report here.