By Julien Etchanchu, Senior Director, Sustainable Collaboration
Like most businesses these days, corporate travel programs are under pressure to adopt more sustainable business practices. Respected scientists are forecasting dire consequences of climate change and sustainability is now a concern across most age groups, so it is nearly impossible not to take action. That’s why, for example, many airlines have successfully implemented eco-friendly initiatives, including renewing their fleet by buying more efficient aircraft, investing in alternative fuel, improving on-board sustainability, and so on. When sourcing a managed air program or booking business travel, it helps to be aware of these initiatives.
One common method airlines and other corporates use to improve their green credibility and make a real impact in their sustainability efforts is carbon compensation, also known as carbon offsetting. Carbon offsetting is the process of compensating for CO2 emissions stemming from business activities by participating in initiatives designed to make equivalent reductions of CO2.
We need to recognize the fact that offsetting is not THE solution for climate change, but rather it can be an effective part of a holistic approach to sustainability.
In this article we’ll look at the good, the bad and the ugly truth about CO2 compensation.
The bad: what are the problems with offsetting?
There are four main challenges with carbon offsetting: the temporality and uncertainty of certain initiatives, underestimation of the real carbon impact, inaccurate carbon pricing, and the lack of additionality. Let’s look at these in more detail.
1. Temporality and uncertainty
The main issue with carbon offsetting is the uncertainty factor. One common carbon offsetting method is planting trees, but this is far from ideal, due to the time it takes to capture the carbon. Carbon Neutral estimates that it takes about 30 years (or even longer) to capture carbon, and it takes about 15 trees for a single ton of carbon. To illustrate this further, a one-way flight from London to New York in business class averages 2 tons of CO2: to compensate for the associated emissions, you would have to plant 30 trees and wait 30 years.
Additionally, you can’t guarantee that a tree planted in an offsetting scheme today will still be around in 30 years. In the last year alone, there have been serious fires in Amazonia, California, Oregon and Portugal that have destroyed huge numbers of trees including some that were part of carbon offset programs. When this happens, then the value of that offset is effectively wiped out, as the CO2 ends up back in the atmosphere. Hence, there is a lot of uncertainty involved if a carbon offset strategy of planting trees will successfully compensate emissions.
2. The real carbon impact
Many airlines tend to underestimate the environmental impact of their flights. For example, they only focus on carbon emissions in their reporting, while aircrafts emit other gases during flight – like nitrogen oxide (NOx) – that have an even greater impact on global warming than CO2.
The European Environment Agency (EEA) estimated that the real impact of a flight is 2 to 5 times higher than just CO2, therefore 2 to 5 times higher than what airlines are calculating, and then compensating. This means when airlines offset, they’re probably not doing enough to mitigate the impact. Assessing the CO2 ‘savings’ or avoidance of an offset project is also extremely complex. Recent reports have repeatedly shown that the way CO2 credits may not always be transparent and accurate.
3. Inaccurate carbon pricing
To effectively compensate for CO2 emissions, it’s crucial to set the right price. Airlines claim to follow the market price when making their estimates, with many estimating the price at under $10. However, low carbon prices can be misleading, as they often fail to support high-quality climate projects as the price cannot cover the expertise on the field and the investigation of the benefits of the project in depth. Additionally, when prices are set too low, it makes people think they can simply “offset” a bad action by paying a small fee. This often creates a false sense of accountability and doesn’t encourage real, lasting change.
MiT research suggests that at the low end of the spectrum, the price of carbon cannot be below $100 per ton, while other studies even set a price between $200 and $400 per ton. While there is no standard for calculating this price, somewhere between $70 and $80 per ton would probably be a good first step.
4. The lack of additionality
Finally, some offset providers display ‘creative’ accounting practices when it comes to CO2 compensation. It is quite common for a company to claim that it is offsetting while benefiting from a planned project (reforestation or similar) that was already in the works. That means there’s no actual compensation, and no net gain, as no additionality – no additional trees, solar panels, or cookstoves e.g. It can be difficult to tell whether the project is truly new and intended to offset recent emissions, or if it would have been implemented soon anyway.
A common example of this would be forest projects that grant carbon credits when the focus is on forest preservation/conservation initiatives. While some of these projects are needed to protect land, no new trees are being planted (no additionality factor with this project). The effort goes rather into leaving the land untouched. In cases like this, the carbon credit scheme can be rightfully questioned.
The ugly: the perverse effects of compensation
If those are the bad aspects of CO2 compensation, what’s the ugly side of carbon offsetting?
As we said at the start, CO2 compensation works well as part of a holistic approach to sustainability. But the problem is that some corporations, not just airlines, sometimes present CO2 compensation as THE solution. They are under pressure to set ambitious goals for achieving carbon neutrality, but a huge part of these strategies lies with offsetting. Many businesses may even have strong initiatives in place, but if offsetting didn’t exist, they would need to come up with another way to solve these challenges. And as we’ve seen, offsetting often doesn’t go far enough.
Some climate scientists argue that offsetting might actually be “worse than doing nothing” and hinder the “energy transition.” While it gives the illusion that something is happening, a single-solution approach can sometimes prevent companies or airlines from undertaking major structural initiatives that would bring about lasting change. Indeed, from this perspective offsetting buys a “license to operate” to continue with business as usual on the company and traveler side.
The good: how can you make offsetting virtuous?
It’s not all bad news, though. Offsetting can still be a great tool for business travel programs. The focus should not simply be on emissions though and projects should be assessed more holistically. It’s imporant to look at the benefits of these offsetting projects beyond carbon. What effects could it have on water conservation, biodiversity, soil fertilization, local communities, etc.? Carbon offsetting should be used while simultaneously taking other steps to make lasting environmental change. Here is what Advito recommends to travel managers to create more sustainable business travel programs:
1. Adopt advito’s four-step approach to building a sustainable travel program
The first step is realizing that CO2 compensation cannot be the first priority in a sustainable strategy. It’s essential to make other changes first to create a holistic approach:
- Travel less
- Travel better
- Use sustainable suppliers
- Then, and only then, offset residual CO2
2. Use a reliable partner
Some airlines do their own CO2 compensation. Though this is a good starting point that must be welcomed and recognized, remember that they may be inadvertently not doing enough because CO2 emissions estimations and the carbon price are often underestimated.
For example, Air France and British Airways compensate their domestic flights, while EasyJet compensated across its whole network from 2019-2022. Note that some key airlines have stopped compensating for now to focus on fleet renewal and alternative aviation fuel investments. Instead of relying on airline compensation, our recommended approach is to use a reliable third-party suppliers for these initiatives.
3. Focus on meaningful projects
We’ve already covered the uncertainty surrounding compensating with reforestation projects, but this issue is less pressing for energy projects such as building wind turbines or solar panels, methane capture, and biomass electricity. These methods can provide quicker efficiency and hence have a more direct impact on avoiding future emissions. They also ensure we can transition away from fossil fuels globally.
Outside of those, look for projects that are more holistic and do not solely focus on CO2. Ocean projects may be hard to quantify for credits but have a drastic impact on the marine life, and the global ecosystem. Our oceans, alone, capture 25% of all CO2 emissions. Guaranteeing their protection ensures they can continue acting as carbon sinks for our planet.
The pressure to take sustainable action is only continuing to grow. It’s time to take proactive steps to choose the right suppliers, understand what data is necessary to assess your own carbon footprint, and make sure your program and your travelers are ready for a greener future.