Here's What a Carbon Offset Actually Looks Like

At their simplest, offsets are a way to commodify taking carbon and other greenhouse gases out of the atmosphere.

Here’s What a Carbon Offset Actually Looks Like

Published: Oct 27, 2020

Carbon offsets are confusing, and many people wonder how—or if—they even work. Hoping to find a more guilt-free way to travel, frequent flier Tim Neville heads to the ranchlands of Montana to see what an offset looks like on the ground. Hint: it involves cows.

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I’m looking at a trench on part of a 7,500-acre ranch outside Big Timber, Montana. It is February. Swollen, purple clouds roll over the pastures.

Ranch owner Kevin Halverson, 70, spent the morning shoveling snow out of the trench. It is roughly as wide as a man��and shoulder deep��and was cut for a new two-inch pipeline that now snakes for more than five miles across his fields. The water will allow his cattle to graze the land in a more intensive way.

Halverson is wearing a jacket shredded at the elbows, and his cheeks burn like alpenglow on the 11,000-foot Crazy Mountains in the background. This is backbreaking work.

“I may have abused this land more than I should have, trying to make my payments,” Halverson says. Faced with so much overhead—land and equipment leases, in addition to��the cost of power, weed removal, and disease treatment for livestock—today many ranching families need an extra source of income to stay afloat.

Halverson climbs out of the trench and looks around. Pickups. Cows. A scar of freshly turned earth. The pipeline will bring��water to tanks stashed among the thirstier corners of his ranch, which will allow him to run more cattle and earn more than he could before. But the trench does even more than that. Thanks to the pipeline,��Halverson can now harvest carbon out of the sky and be paid for it.

“For ranchers of my age, this is, like, something from Mars,” he says.

The Halversons are one of four families in Montana behind a new effort called the , which seeks to pay ranchers to fight climate change by letting the grasses grow tall across their rangelands. If you change the way cows graze, the thinking goes, you can give huge swaths of chewed-up grasslands time to regrow properly. More grass means more photosynthesis, the process plants use to convert light energy into food. More photosynthesis means more carbon dioxide is siphoned out of the atmosphere and excreted back into the earth as organic compounds. That makes the soil richer with nutrients, oxygen, and water, which in turn leads to healthier grasses.

Scientists can measure how much carbon the grasses are converting, too, and every metric ton (about 2,200 pounds)��of that sequestered gas has a value derived from a demand to not have it floating around the planet. The strange, complicated world of carbon offsets turns that greenhouse gas into a commodity worth real money.

Standing next to Halverson and his very long trench, I was more or less witnessing the birth of an offset. Until then, offsets had seemed abstract and intangible to me. As an avid traveler, how many times have I been asked to offset my flights, offset my Lyft, offset my attendance at a conference? Does spending $7.22 to offset a round-trip flight from San Francisco to Kauai really do anything for the environment?

Here, I can see the dirt on Halverson’s gloves and the snot cooling in his nose. I can fathom how the promise of a carbon payment and healthier soil could reduce his overhead costs and shorten the road to profitability. Also, getting a check to fight climate change? “That’s gravy,” he says.

To limit global warming to about 3.6 degrees Fahrenheit over preindustrial levels, scientists at the International Energy Agency say the world��needs to slash global emissions to less than 20 billion metric tons a year by 2050—down from 33 billion in 2019—and down to zero by the end of the century. (Even then, we’ll still likely have more droughts, severe floods, and destructive storms.) Offsets will play a role in flattening that curve. Some state governments may follow California’s example and create policies that by law require certain high-polluting industries, like power plants, to offset their emissions. Other companies, like REI, buy offsets voluntarily, because their customers want to support an environmentally minded brand. In between lies a complex scheme where a traveler looking to take a guilt-free trip can get pretty lost.

“People assume all carbon offsets are the same, and that’s absolutely not true,” says Paul Gambill, founder of a Seattle-based carbon-trading company called . “There’s not always a good link between the offset and, OK, what does this even mean?”

To figure that out, Montana’s a great place to start.

Rancher Kevin Halverson and his new pipeline trench (Courtesy Tim Neville)

At their simplest, offsets are a way to commodify taking carbon and other greenhouse gases out of the atmosphere. Some types of offsets fund projects that remove gases already released into the air, like planting trees or restoring grasslands. Others support projects that stop greenhouse gases from being released in the first place: cap a landfill with layers of clay, plastic, gravel, and soil, and the methane emissions you prevent from entering the atmosphere can be sold as an offset that’s assigned a dollar figure.

Offsets have existed since the 1980s, and while there has been volatility in the markets��since 2008, they are growing into a significant business. In 2018, the World Bank and carbon finance groups found that offsets generated revenues of nearly $45 billion worldwide, up more than 33 percent over 2017. Utility companies and fossil-fuel industries have been the biggest players in buying offsets. But the travel and outdoor industries are jumping in, and none too soon.

If U.S. airlines alone were a country, they’d rank sixth in the world as the biggest greenhouse-gas emitters. Starting in July 2020, JetBlue became the first airline to cover all of its fuel emissions for every domestic flight—some seven million metric tons’ worth each year. Airlines like Alaska, Delta, and United offer customers an option to pay extra to offset their own trips. In September, that it will offset its entire footprint every year starting this year, and the North Face and Patagonia both invest heavily in offsets. Recently, the , which provides leadership and conferences for the adventure travel industry, launched , a collective bulk-buying offset program for outfitters.

“We have this massive moment right now,” says Austin Whitman, CEO of , a company that helps outdoor businesses like Klean Kanteen, Ombraz, and REI��reduce their emissions and offset the rest. “People know climate change is a huge problem that needs to be solved, but they don’t know what to do about it. This space is very technical and generally not consumer friendly at all.”

He’s right. The business of offsets isn’t easy to understand. It basically comes down to two options: mandatory government-run compliance markets or voluntary schemes. The compliance market is when a state or national government sets a limit on the emissions a company can produce by awarding credits for those emissions. Companies can then buy and trade those credits to account for the greenhouse gases they’re releasing. This is called a cap-and-trade model, like the one California has been applying since 2013 on large electric power plants, industrial plants, and fuel distributors, who produce the lion’s share of the state’s greenhouse gases. For companies, this approach can get expensive fast, so the hope is that they will begin to seek ways to produce less carbon.

The voluntary scheme is more market driven, with prices set by supply and demand. With this approach, a company voluntarily chooses a way to counter the amount of greenhouse gases it produces, most often by investing in projects that remove carbon from the air, like massive tree plantings or a methane cap on a landfill.

Many ardent climate-change fighters say that of the two systems—compliance versus voluntary—they would pick compliance, because it’s legally binding, more accountable, and can fund larger emission-removal projects that expedite the cultural and lifestyle changes needed to reverse warming trends. Others say that voluntary markets, which raised $295 million in global revenue in 2018 (less than 0.7 percent of compliance-market revenues) work great because they’re a stepping stone between where we are now and where we need to go. Halverson and his cows are part of a voluntary scheme.

The voluntary approach has��other benefits, too. “Everyone cares about climate change right now, but in buying an offset, you might also be protecting wetlands, saving biodiversity, or helping farmers earn a livable wage,” says Anastasia O’Rourke, managing director of . “They have all these other environmental or social benefits.”

As an avid traveler, how many times have I been asked to offset my flights, offset my Lyft, offset my attendance at a conference? Does spending $7.22 to offset a round-trip flight from San Francisco to Kauai really do anything for the environment?

Under either scheme, offsets generally come in two major flavors. Sequestration offsets, a.k.a. removal offsets, typically fund projects that use nature as the cleaner. It’s relatively cheap and efficient to plant trees that soak up carbon dioxide. Industrial methods that scrub carbon dioxide out of the sky are ramping up, too. But the technology behind the so-called direct air capture isn’t quite there yet, and it’s still very expensive. It costs the nonprofit about $1,250 to plant a hectare (about 2.5 acres)��of mangroves that suck up some��840 tons of carbon dioxide over a 25-year life span. Meanwhile, a Swiss company called can remove that amount with green-energy-powered machines, but it would cost nearly a million dollars at the rates advertised on Climeworks’ website. (Those rates are almost certain to come down as the technology improves.)

“Global-warming solutions don’t map well to what’s the best bang for your buck—tech or trees,” says ��ԹϺ�� Travel Trade Association vice president of global strategy Christina Beckmann, who created an offsetting program for travelers��called that works with Climeworks. “No single solution is the silver bullet at this point. The reality is, we will need it all.”

The other flavor of offsets, reduction offsets, funds activities that prevent greenhouse gases from being released into the atmosphere in the first place, for instance by building a solar farm instead of a new coal-fired power plant. Companies that go this route generally must also reduce their own greenhouse gases—a requirement in many compliance markets—or risk losing their climate-conscious customers over time.

At the heart of all this is fixing a fundamental failure of capitalism and its very narrow view of cost. “Capitalism makes carbon free, and it isn’t,” says Erik Wurster, director of carbon finance at , a company that leverages reduction offsets to produce efficient wood-burning stoves for rural families in Africa. “There has to be an economic system that repairs that, and offsets put us on that path.”

Chris Mehus, left, program director for the Western Sustainability Exchange, and Roger Indreland looking at grass regrowth on Indreland’s ranch (Courtesy Tim Neville)

In Montana, the day before I head out to the Halverson ranch, I check out downtown Big Timber, which is pretty much one street and the commercial heart of Sweet Grass County. There’s the Big Timber Bakery and the Timber Bar. On a corner stands the Grand Hotel, built by Halverson’s great-grandfather, Jacob, in 1890.

Inside, Chris Mehus is waiting for me in the restaurant. He’s a range scientist in his early fifties,��with closely clipped hair and that easy Montana manner that says there’s nothing so bad a float on the Yellowstone River can’t fix. (“The fishing is terrible,” he assures me��when he finds out��I’m an angler.)

Mehus is now the program director for��a nonprofit based in nearby��Livingston called the that tries to find apolitical ways to help ranchers cut costs, increase profits, and restore their grasslands. The WSE is also a key player in the Montana Grasslands Carbon Initiative.

Mehus has invited the families involved with the initiative out to a steak dinner at the Grand. A big storm’s coming, so only three of the four families make it. Together they’ve put a total of 35,000 acres under a 30-year contract to capture carbon. I meet Halverson and his wife, Shirley; Alex Blake, a former Marine captain turned rancher with a Harvard economics degree; and husband and wife Roger and Betsy Indreland. The Indrelands raise bulls that breed small but stout calves. “Like eight pounds of sugar in a five-pound sack,” Mehus says.

We make a plan for me to visit them all over the next few days, but before I do, they tell me I need to understand two things: how a cow eats and what exactly counts as an offset.

When it comes to food, I’m told, cows are a bit like children. If given a choice, they’ll eat only the grasses they want to, repeatedly returning to the tender new shoots of an already-chomped plant over and over again, never allowing the plant to bounce back. That’s bad. Roots begin to shrink. The soil holds less water. Eventually, the earth can no longer produce enough grassy calories to feed the cattle. In a cruel twist, some of the biggest expenses a rancher faces come from the cost of buying (or producing) hay needed to make up for what the grassland can no longer provide.

Typically, a rancher puts cattle on a large allotment and lets the cows pick and choose their grasses for several months before moving them to a new pasture, if at all. But the grasslands of antiquity evolved with herds of constantly migrating bison that would eat, move on quickly, and allow the grass to rebound.

To imitate this, a rancher can divide big pastures into many smaller paddocks and more frequently move the cows so the chomped grasses can regenerate and mature. Shallow roots grow long. Photosynthesis roars to full throttle. Carbon that wasn’t in the soil gets replenished, the soil holds more water, and the grassland grows richer grass. But a rancher can’t just switch grazing gears overnight. There’s fencing to figure out and extra field hands to hire. Most critically, a rancher may need to invest heavily in infrastructure to get water to cattle grazing in the more remote paddocks. For Halverson, that meant digging the long trench and buying extra water tanks and solar pumps, which pushed costs into the $100,000 range.

But he only had to pay a portion of these expenses��out of his own pocket. Why? The WSE’s work caught the attention of , a Vermont-based company that specializes in developing projects that generate carbon offsets. NativeEnergy partnered with the WSE to create the Montana Grasslands Carbon Initiative, offering��to pay people like Halverson a certain amount up front for carbon yet to be sequestered. That futures bet created a help-to-build pot that the ranch families can dip into to fix diversions and ditches, lay water pipe, and construct other improvements to get the project going—something they wouldn’t do if it weren’t for carbon payments. Once the project is up and running, the ranchers will also receive��a share of the offset proceeds.

“What if there was a strategy that sequestered carbon, protected wildlife habitat, protected water quality, increased soil health, increased soil resiliency, and increased the economic viability of a ranch family to stay on their land?” WSE executive director Lill Erickson asks. “This is that strategy.”

For the offsets to qualify for a voluntary market, NativeEngery first had to follow a strict set of protocols laid out by a group called , which sets the standards for carbon projects. In this case, the WSE sent teams of college students studying natural-resource issues to about 500 sites around Montana to establish the area’s baseline carbon levels and historic grazing patterns. The idea is to take soil samples regularly over the next few decades and calculate how much atmospheric carbon dioxide has been sequestered into the soil. Each metric ton will be verified by a third party, after which it will become a carbon offset, with a vintage date and serial number logged in a registry.

When a company buys that offset to reduce its��own carbon footprint, that serial number gets retired, never to be sold or traded again. NativeEnergy sets the price. While the terms of the Montana Grasslands Carbon Initiative contract are sealed, a decent guess would put the total value of the group’s offsets at at least $2 million. Lill Erickson, the WSE’s executive director, calls this a win-win-win situation.

“What if there was a strategy that sequestered carbon, protected wildlife habitat, protected water quality, increased soil health, increased soil resiliency, and increased the economic viability of a ranch family to stay on their land?” she asks. “This is that strategy.”

When viewed that way, offsets like these push ranchers toward the front lines of the climate fight, since they hold domain over vast��carbon sinks waiting to be unclogged. Roughly just 1��percent of North America’s tallgrass prairie lands remains intact, and the majority of American farmers do no regenerative agriculture. Decades of industrial farming have depleted carbon stores held in soil to a fraction of what they used to be. Some estimates say American croplands could sequester as much as a billion tons of greenhouse gas a year—enough to offset the entire country’s emissions.

“When most people think about using the natural world to take carbon out of the air, they normally think about trees,” says Mark Ritchie, an environmental scientist at Syracuse University who developed a scientific model to calculate how much additional carbon could be absorbed in soil with intensive grazing methods. “What they don’t realize is that there’s almost more carbon in the top few inches of soil than in all of the wood of all the trees in the world. Agricultural lands are like a dry sponge in a pool of water.”

According to Ritchie’s model estimates, the four Montana families might sequester about 1.1 tons of carbon dioxide per hectare per year—close to 16,000 annual tons in all—which is roughly like . In truth, the amounts will likely be higher than that; these are conservative calculations.

From left: rancher Alex Blake, a member of the Montana Grasslands Carbon Initiative; a piece of basalt rock shows the residue of stored, mineralized carbon dioxide that was scrubbed out of the atmosphere using an industrial process developed by the Swiss company Climeworks. (photos: Courtesy Tim Neville)

The clouds are heavy and restless when I take a tour with Mehus of the ranches, first to the Halversons’��and then to the Blakes’, where Alex is busy reconfiguring his pastures so he can intensively graze his animals on the various paddocks.

After lunch, Mehus and I roll out to the Indrelands, where Roger invites me into his office. He is 58, with a frame that’s packed with muscle. Books like and sit on a shelf near a color-coded grazing chart hanging on the wall. He’s budgeting his grass. “And we all know budgets are only helpful if you do them ahead of time,” he says.

Of the ranchers I meet, Indreland, who now serves as chairman of the WSE board, seems to be the most passionate about the opportunities the offset program creates. He’s been intensively grazing for 20 years now, and the results are already clear, he says. He used to struggle to run 300 head of cattle 20 years ago, but now he’s up to 500 head. He grabs a tool called a brix refractometer, which measures sugar content in the grass, and leads me out to a pasture, where he promptly gets distracted by a tender sprout of new alfalfa knuckling up through the soil.

“You’d never see this before,” he says, getting down on all fours. When a ranching friend calls to ask him how much moisture he got out of the storm last night, Indreland replies: “All of it.”

The fact that the ranchers need the carbon revenues to make the grasslands project financially possible is called additionality, and it’s really the crux of what makes an offset an offset.

“Would the effort to reduce or remove a greenhouse gas happen without the revenue from the offset?” posits��Erik Wurster of BioLite. If the answer’s no, then you’re on the offset path. If the answer is yes, it’s a reduction you can feel good about, but it’s not an offset.

According to Ritchie’s model estimates, the four Montana families might sequester about 1.1 tons of carbon dioxide per hectare per year—close to 16,000 annual tons in all—which is roughly like taking 3,500 cars off the road.

That distinction carries real weight, and entire businesses have sprung up around it,��like BioLite, whose wood-burning consumes half as much wood and produces 90 percent less smoke than an open fire. In the past it has retailed for $150 in the U.S. That’s more than half the average monthly salary for many families in Africa, where deforestation is prevalent��and breathing smoke accounts for more deaths than HIV, tuberculosis, and malaria combined. The stove for African families is priced much lower to ensure��it reaches the neediest households still using traditional wood fires to cook. BioLite then bundles the emissions saved between the HomeStove and wood fires and sells those savings as offsets to businesses looking to balance out their own carbon footprints. The��payments help make it possible to get the stove into the hands of people who could otherwise never afford one. That’s different than you going out and trading your Ford F-250 for a Tesla Model S.

“Buying a Tesla because you fancy a new car does not balance out the emissions that were already released into the atmosphere when you flew to Timbuktu,” says Jennifer Cooper, vice president of client strategy at NativeEnergy. However, she says, that equation would change if an airline ever helped passengers buy electric vehicles that they would not otherwise buy in order to balance out the emissions generated when passengers fly. If the emissions saved can be measured and verified, they become offsets that the airline could use to lessen its own footprint.

The key thing here: offsets must accelerate change.

Roger Indreland says the carbon initiative program “lends a level of excitement we’ve never had before.” (Courtesy Tim Neville)

So, now that you hopefully better understand how offsets work, as a traveler, what should you do? First, you need to know what your impact actually is by learning how to use an . Then��you need to purchase enough offsets to counter your impact. Much of the offset market is closed to you when it comes to supporting specific projects, like the one on the Montana grasslands. If you’re not an institutional buyer, like a university or Nike, often you can’t simply find a project you like, call��up the managers, and plop down $20 for a bag of offsets. Few entities are set up to handle small, individual offset purchases, but companies like , , and are good places to start. (See how ��ԹϺ�� environmental columnist Heather Hansman calculated and offset a trip to London.)

You can also support companies that buy offsets. One of the easiest ways to do this��is to look for outdoor goods sporting a Climate Neutral label, which certifies that those companies are reducing their footprints and offsetting the rest. If you buy some ��with that label before you go hiking in Peru, and take an adventure��with a Neutral Together outfitter, you’re putting some of your money into a pool that makes big, impactful offset purchases.

Companies like the carbon trader Nori and Tomorrow’s Air are worth a look, too. Tomorrow’s Air offers a monthly to individual travelers that pays those Climeworks scientists in Switzerland to remove the equivalent of a traveler’s emissions using high-tech filters and fans to pull carbon out of the air. The emissions are then permanently stored as minerals in rock. Tomorrow’s Air wants you to think about atoning for your entire footprint with an ongoing subscription model. (After all, doing a single Google search for “best trails in Portugal” generates about 0.2 grams of carbon dioxide.) For now, there’s only one project that Nori allows an individual to purchase offsets for:��on the Eastern Shore of Maryland that is practicing similar regenerative strategies as the Montana ranchers. With either service—Nori or Tomorrow’s Air—there are almost no middlemen, and the bulk of the money goes directly to dealing with your sins.

Rest assured, few people think that you need to swear off travel entirely. “Not traveling at all would be a tragedy,” says the ��ԹϺ�� Travel Trade Association’s Beckmann. “Travel is an industry that generates money. If we wanted to scale up direct air capture, we could do it��and clean up travel’s mess.”

For big and small buyers alike, what makes one offset better than another is often the story behind it. , which handles food, lodging, and activities in the park, committed upward��of $750,000 over the next five years to buy about one-third of the offsets the ranchers in the Montana Grasslands Carbon Initiative are expected to produce. That’s good, local business.

Something to consider as you think about what offset to purchase is the idea of permanence—that a greenhouse gas accounted for by an offset should never enter the atmosphere again. The 200,000-acre Lionshead Fire that ravaged Oregon in September consumed nearly 24,000 acres of a forest that the state of California had tied to the sale of 2.6 million carbon offsets on its compliance market, which means much of the carbon those offsets sequestered literally went up in smoke. But offset monitoring has grown significantly tighter with controls set by groups like Gold Standard or Verra,��guaranteeing the integrity of an offset project.

Back at the Indreland ranch, there’s no doubt the project is making a difference. Roger takes a few readings with his refractometer, makes some notes, and then shows me the nine million worms he’s raising for their poo, or vermicast. He figures he’s saving 145 million gallons of water a year across his 6,000 acres, because the soil can hold that much more moisture thanks to the regenerative grazing he’s already been doing. The clover, orchard grass, brome, and timothy are all coming in nicely, even in late winter.

“It all lends a level of excitement we’ve never had before,” he says, walking back to his house. “I used to wake up thinking, What am I going to kill today? Weeds? Predators? Disease? Now I wake up thinking, What am I going to grow? It changes how you look at everything.”

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Here’s What a Carbon Offset Actually Looks Like

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