Public concern over the climate crisis is at record highs and more startups are springing up to give individuals and businesses the opportunity to offset carbon emissions. It is not a substitute for actually reducing carbon pollution by ending the use of fossil fuels. But it is a palliative that is becoming widespread on e-commerce sites. One of the startups offering the service is Cloverly, an Atlanta-based company with an API that allows companies to measure and offset their carbon emissions.
Cloverly’s API takes into account customers’ e-commerce data, including distance, package weight and mode of transport, which it uses to calculate the amount of carbon emitted. These estimates are made in real time when the customer adds an item to their cart. The system then calculates the cost of any renewable energy offsets or credits it would take to cover the emissions from a customer’s order.
“The idea was to make sustainability accessible to the end consumer,” said Archana Veerabahu, its marketing manager.
According to Veerabahu, Cloverly customers have seen increased sales, greater “stickiness,” and greater customer loyalty after implementing the Cloverly widget on their site.
Who should be responsible for emissions?
Cloverly customers can either offset their emissions themselves or let their customers choose to foot the bill. Tea brand Harney & Sons, one of the company’s customers, lets its customers decide. Marketing director Emeric Harney said about 25% of customers choose to offset their purchase.
Veerabahu sees merit on both sides when it comes to whether a company should bear the cost of compensation itself or pass it on to its customers. She sees the latter as a way to educate customers about their own carbon footprint and find ways to reduce their personal emissions elsewhere. (Evergreen reminder that 100 companies have been responsible for over 70% of carbon emissions since 1988.) Some customers, however, might just not want to sign up.
“If it slows down the shopping streak, it starts to be more problematic and the results aren’t as good,” said Michel Gelobter, the founder of Cooler, a startup aimed at helping businesses become carbon neutral.
This choice can be particularly difficult for buyers when it comes to more expensive purchases, such as air travel. Last November, Ryanair Group CEO Michael O’Leary said on a radio show that only 1% of his airline’s passengers had voluntarily paid to offset the carbon emitted from their journeys: “People want cheap air travel, and people want someone else to pay the environmental tax.
Ryanair’s competitor, easyJet, offsets 100% of carbon emissions. The company’s chief commercial officer, Sophie Dekkers, told Simple Flying last year that she believed the responsibility for compensation lay with the airlines, not the passengers.
But giving consumers the choice to buy carbon offsets “misses the point,” said Amir Jina, an assistant professor at the University of Chicago’s Harris School of Public Policy, because the small set of choices that individuals can do is negligible compared to emissions. major polluters.
Small margins, big decisions
The cost of purchasing offsets can be prohibitive for low-margin industries like food and beverage, according to Gelobter. Offsets for a hamburger patty – an admittedly carbon-intensive food item – could easily cost the same as its entire profit margin.
Covering the full cost of offsets wouldn’t be Harney & Sons’ full margin, “but it would certainly eat away at what little margin there is,” Harney said. But that’s a relatively small cost to customers, which Gelobter says typically amounts to around 2-3% of a product’s purchase price. For example, offsetting the carbon impact of a $21 bag of loose leaf tea from Harney & Sons would cost just $0.50.
Gelobter said having consumers pay a fee to offset the carbon emissions of their purchases would be a cultural shift and a potentially tough sell, but it’s not impossible. He likened it to tipping in cafes: Three or four years ago, it wasn’t common for baristas to flip the terminal around for customers to tip, but “people are embracing it.” And for some industries, this might be the only financially feasible option.
Some lags raise red flags
The quality or effectiveness of carbon offset projects can vary widely, and there is a growing awareness in the climate technology space that the actual climate impact of projects needs to be assessed with a fine-toothed comb. Some offset projects may displace Indigenous people, while others, such as logging projects in California, may go up in smoke in the face of escalating wildfires (ironically being driven by worsening the climate crisis).
Gelobter and Veerabahu have some recommendations for individuals on how to assess the quality of carbon offset projects. If the solution is nature-based, it is worth considering the project’s longevity and certification process. Gelobter recommends jurisdictional-based solutions, which are managed or monitored by a government entity and more likely to be held accountable.
For its part, Cloverly only supports carbon offset projects that are registered and tracked by certification programs like Gold Standard and the American Carbon Registry. These organizations generally assess offsets based on three main principles: additionality, leakage and permanence. These three factors relate to whether a project is actually sequestering carbon that would otherwise have remained in the atmosphere, and whether it is doing so on a long enough time scale to provide significant climate benefits. Additionally, they consider other things such as governance and the reliability of the project developer to monitor the site.
Despite the independent verification that these registries provide, however, it’s always fair to be skeptical about whether offsets actually do what they claim.
“The whole system is morally and ethically in conflict,” said Danny Cullenward, policy director of CarbonPlan, a nonprofit that evaluates climate action plans. He added that these certification programs have an inordinate incentive to accredit even below-average offset projects, as they are paid for each certification.
He pointed to a Texas wind farm project that Cloverly is buying into, which claims it needed the offset income to be built in 2008 “despite the wind economy being strong at that time” and Texas being the top producer. In his opinion, the element of additionality is not there, even if the project is credited by one of the largest carbon offset registers in the market.
How carbon is neutralized matters
Like Cloverly, Cooler helps e-commerce businesses neutralize carbon emissions from their transactions and products. However, it does this not with offsets, but by buying permits from the carbon market and withdrawing them permanently.
There are four major carbon markets in the world: the European Union, California, Quebec and a group of 11 eastern US states called the Regional Greenhouse Gas Initiative. In all of these markets, large emitters are required to purchase permits to account for their carbon emissions. In the Northeast and Mid-Atlantic regions, RGGI has helped reduce emissions by more than 40% over the past decade.
“It’s very effective,” Gelobter said. In addition, the money raised is used to invest in clean energy initiatives in the region, such as community solar energy and public transit projects. The average price for an RGGI permit is currently around $13 per tonne of carbon.
In Gelobter’s view, buying and then withdrawing these permits is a more effective way to tackle the climate crisis from a business perspective than buying other types of carbon offsets. Retiring then stops the emissions rather than, well, offsetting them. “We actually go into a chimney and turn the valve down a bit with each purchase,” he said.
“Offsets are controversial for a reason,” Jina said. They’re useful as a stopgap measure for companies to buy themselves time as they find more permanent ways to reduce the climate impact of their business operations, but if everyone were to rely solely on offsets as a solution, that’s no just isn’t sustainable. Jina added, “There’s not enough space on the planet to make up for everything.”
Although withdrawing carbon permits is preferable to offsets, he said it was “not effective on a large scale”. The problem with carbon markets is that they are technically not capped, and some markets have been known to issue more permits when prices get too high.
“Literally, every compliance market ends up over-allocating,” Cullenward said, meaning one permit doesn’t actually equal one tonne of carbon reduction.
Why climate action should not be limited to consumer choices
Cullenward has a suggestion for people who really want to make a climate-positive impact with their shopping dollars (besides, of course, buying less).
“Probably the most effective thing you can do as an online shopper is to choose really slow shipping options,” he said. This means relying less on air freight, the most carbon-emitting means of transporting goods. Waiting and planning ahead to consolidate multiple items into one purchase can further reduce unnecessary delivery trips.
Ultimately, the focus on individual consumer choice is fundamentally a distraction from the most important issue: large-scale political and corporate action. The concept of a personal carbon footprint was, after all, popularized by BP itself. “It’s not really up to you to be the solution here,” Jina said. Rather, it is up to businesses and policymakers to make the larger systemic changes needed to solve the climate crisis.