How much should I spend for my Indulgences: Voluntary Carbon Offset Pricing

So you’ve heard about all the pitfalls in the voluntary carbon offset market, and you still want to buy. How much is the right amount to spend? You might think that bargain shopping is a good idea–that it’s no different than shopping around for the best deal on paper towels. In the carbon offsets industry, cheap offsets are the equivalent of off-brand condoms: they might be fine, but the stakes are so high they are not really worth messing around with.
First things first. There is an enormous variation in the price per ton for carbon offsets. The Katoomba Group’s Ecosystem Marketplace, Voluntary Carbon Markets 2007: Picking Up Steam found an enormous variation in the prices of offsets available for purchase on the voluntary carbon offset market, from 45 cents to 45 dollars per ton! (See the PDF Here)
They included a lovely chart, showcasing the variation in prices by offset project type:
ver-chart.gif


As you can see, pricing is clear as mud. Forestation projects (Aff-mixed) were some of the cheapest and most expensive, as were methane and industrial gas capture projects. Renewable energy projects (RECs) also came in as some of the lowest. If you read my blog on project types, you’ll remember that these three project types are some of the most popular, and they each have varying degrees of precision in the amount of carbon they actually save. The fact that the Katoomba group (I just love writing that!) found some connection between price and quality is actually good news! It represents an improvement in this wild market. An analysis by Kollmuss & Bowell (PDF) two years ago found large differences in price to the consumer per ton of carbon offset, but not a clear connection between price and other variables like quality or type of project.
The pitfalls of the deal that’s too good to be true.
Some of these companies will try to tell you that you can offset a year’s worth of driving for $12 or some cheap lunch low number. Unfortunately, like that free lunch saying goes, there really is no such thing as a quick and easy solution to climate change. An offset that is too cheap probably does not meet the standards of rigor (verifiable, leakage-free, permanent and additional) that we want to see. This means that your money is probably not going towards actually removing the amount of carbon that you’ve been promised.
Does high price mean high quality?
Maybe. The Katoomba study found that the highest prices were paid for projects with strong quality and verifiability attributes, such as landfill methane and coal mine methane, as well the more ‘feel good’ offsets such as forestry projects and long term sustainable development projects, like energy efficiency and off-grid renewable energy. This means that the higher priced offsets might be of higher quality, in terms of either increased accuracy or increased co-benefits, or they might just be more popular like forestry projects. Those forest projects are something to be wary of because the high prices seem to correspond more to their popularity (they are easy to understand and therefore popular to purchase) than their quality.
The final word: price can be a stand in for quality, except when it comes to forestry projects. If you are going to buy offsets, you should go for higher priced offsets that are verified through one of the verification schemes I mentioned last time (the Voluntary Carbon Standard, the Gold Standard, the Climate Action Reserve and/or Green-e), and don’t bargain shop!

Jen Boynton

Jen is editor in chief of TriplePundit. She has an MBA in Sustainable Management from the Presidio Graduate School and lives in Oakland with her husband and normally happy baby. 
Hit her up at on twitter @jenboynton to discuss diapering strategies or sustainability reporting methodology.