Corporate Climate Solutions

Giving Green's Approach to Recommending Offsets

Summary

In this document, we explain our approach to assessing carbon offsets and determining which ones to recommend. We are searching for offsets where there is a direct, causal, and verifiable link between someone purchasing an offset and a decreased amount of greenhouse gases (GHGs) in the atmosphere.

First, we look at the offset market sector by sector, to determine which sectors are most likely to provide reliable offsets. For sectors that we determine to be likely to produce high-quality offsets, we then search through available projects and recommend those that meet our criteria. We rate offsets using five categories: causality, project-level additionality, marginal additionality, permanence, and co-benefits.

Note that our offset recommendations are not comprehensive - we have not assessed all offsets in the market. (In fact, many offsets do not have any publicly-available information!) We have developed a systematic approach to assessing offsets, and recommend the best ones we find. As our research continues, we expect to find more offsets to recommend.

If any offset providers believe that their project would meet our quality bar using the methods described below, please reach out to us!

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Disclaimer

This report was last updated in November 2021.

A project satisfies marginal additionality if each additional offset purchased leads to more GHGs being reduced. This is an important requirement for offsets to work as advertised: the purchase of every single offset must cause extra GHG reduction.

To explain the difference between project-level additionality and marginal additionality, we will use a few examples. Consider a landfill gas capture project. In areas where they are not required by law, landfill gas projects generally satisfy project-level additionality since there are no economic incentives besides offset revenues to build them. In general, the project developer foots the bill for the up-front costs of building the system, and then recoups these costs by selling offsets for the emissions avoided each year. Taking the concept very literally, no offsets generated from this project actually have marginal additionality, since the project has already been built. But given that the project was likely built only due to the expectation of being able to sell offsets, one could argue that offsets sold shortly after the project are really contributing to reduced GHGs.

The issue is that the project developer can sell offsets as long as the gas collection system is still operational, and this may continue long after the project costs are paid off. After project costs (including opportunity costs) are covered, additional offset revenue just goes to pad the profits of the project developer. Additional offsets absolutely do not contribute to additional reduced GHGs.

The opposite can also be true: projects can have marginal additionality without having project-level additionality. For instance, consider a for-profit provider of clean cookstoves. The company may have a viable business model, and would exist and sell cookstoves even if offsets were not available. Therefore, they do not exhibit project-level additionality. However, if they do sell offsets, this allows them to lower their prices, therefore selling more stoves. In this case, each additional offset can contribute to additional lowering of stove costs, resulting in more stoves being sold. Therefore, the offsets satisfy marginal additionality.

A significant factor determining whether projects have marginal additionality, is whether they have ongoing activities that can continually be ramped up to remove more emissions, versus being composed of a single large project. For example, a cookstove manufacturer can always use offset revenue to distribute more cookstoves, but a large landfill gas capture project generally can not just expand its operations. Also, a project developer that makes profits is less likely to satisfy marginal additionality, since any offset revenue going to profits cannot be additional.

Another factor that can play into marginal additionality is profits. If the project developer is a for-profit company and is actually booking profits above the opportunity costs of its founders and investors, this is a reason to question marginal additionality. This is because in this case, additional offset purchases simply increase profits and are unrelated to decreasing GHG emissions.

At Giving Green, we view marginal additionality to be critical to the validity of an offset, though we admit it can sometimes be difficult to ascertain. We need to have high confidence in the marginal additionality of an offset to be able to recommend it. Note that this is a higher bar than required by the offset certifiers, whose definition of additionality only includes project-level additionality.

Giving Green's Approach to Recommending Offsets

Summary

Disclaimer

Sector-level analysis

Offset ratings

Causality

Project-level additionality

Marginal additionality

Permanence

Co-benefits

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