Carbon offsets for flights: dinkum deal, or pie in the sky?

Dream scenario: to celebrate Melbourne coming out of lockdown you manage to nab yourself an economy flight to the Sunshine Coast – one way.

With visions of sunny beaches before your eyes, the final add-on before payment appears on screen: would you like to offset your carbon emissions for this trip? 

If you choose yes, you might be supporting clean cookers in Cambodia or protecting a tract of rainforest in Tasmania; what’s certain is that there isn’t a tree someplace with your name on it. 

But figuring out what your surprisingly small contribution actually buys is a journey in itself, into carbon accounting and public relations. 

Your carbon neutral, pre-lockdown dash to the Sunshine Coast begins not with that little tick box, but much earlier with the Australian Government’s voluntary emissions accreditation scheme, Climate Active. 

Your carbon neutral, pre-lockdown dash to the Sunshine Coast begins not with that little tick box, but much earlier with the Australian Government’s voluntary emissions accreditation scheme, Climate Active. 

Please fasten your seat belts

The airlines’ need to convince passengers to start offsetting their flights is real. Carriers around the world, including Qantas, have pledged to be net zero emissions by 2050. But pre-pandemic research out of Griffith University, in 2019, found that while airlines might be becoming more efficient, overall emissions were still rising. 

“For 2018, compared with 2017, the collective impact of all the climate measures being undertaken by the 58 biggest airlines amounted to an improvement of 1%,” wrote study co-author Dr Susanne Becken, in a story in the Conversation in February 2020. “This falls short of the industry’s goal of achieving a 1.5% increase in efficiency. And the improvements were more than wiped out by the industry’s overall 5.2% annual increase in emissions.”

The government’s Climate Active Carbon Neutral Standard (formerly the National Carbon Offset Standard, or NCOS) certifies organisations and requires them to publicly publish their carbon accounts. 

This means their total emissions of carbon dioxide (CO₂), methane (CH₄), nitrous oxide (N₂O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulphur hexafluoride (SF6) and nitrogen trifluoride (NF₃) have been calculated according to the Climate Active standards, independently verified, and they’ve made efforts to reduce or offset those emissions. 

Airlines offset the emissions generated by parts of their businesses such as head-office costs and staff flights, and ask passengers to offset the emissions they create in the course of travelling – that tick box at checkout.

According to Qantas’ most recent public disclosure, for the financial year 2018-19, its international and domestic passengers were responsible for total annual emissions of 11.9 million tonnes of carbon dioxide equivalent (t/CO₂-e). Qantas passengers bought offsets for just 1% of that total. 

According to Qantas’ most recent public disclosure, for the financial year 2018-19, its international and domestic passengers were responsible for total annual emissions of 11.9 million tonnes of carbon dioxide equivalent. 

Virgin Australia’s last disclosure was in 2017-18 and includes several now-defunct layers of the business, which is emerging from its 2020 bankruptcy, such as the shuttered Virgin Samoa. 

Four years ago, Virgin Australia passengers were responsible for total annual emissions of 3.7 million t/CO₂-e, and bought offsets for 0.75% of that volume. 

Qantas told Cosmos it’s due to release its next public Climate Active disclosure “soon”; it will cover FY 2019-20. 

Virgin Australia declined to comment.

From total to the offset tick box

Those figures are raw compared to the more nuanced data airlines must provide to jurisdictions with mandatory carbon emissions schemes, such as New Zealand and Europe, says Adrian Enright, partnerships director at carbon-offset provider Tasman Environmental Markets. 

“Some jurisdictions will specify that [an airline’s carbon accounting] needs to happen by particular plane type,” Enright says. “Different airlines are bound by a set of emissions standards according to their jurisdictions, they are updated annually, they are all verified independently, and they are fast being standardised [internationally].”

Qantas and Virgin Australia run their carbon offset funds as not-for-profits, he says. 

Neither Qantas nor Virgin Australia answered questions on the detail of how they turn that total emissions figure into a per passenger dollar figure. They did say they calculate emissions based on Climate Active standards. 

Cabin class is important on long haul flights, where the seats are bigger and passengers are allowed to take more luggage, but in short-haul flights (such as our imagined Melbourne–Sunshine Coast jaunt) distance is the bigger factor, says Pauna Truong, customer engagement and relations manager for carbon-offset provider Carbon Neutral.

For that 1456km escape from Melbourne, the Carbon Neutral calculator suggests per passenger emissions of 250kg, based on emission factors calculated by the UK’s Department of Business, Energy and Industrial Strategy and Department of Environment, Food & Rural Affairs.

Australian airlines estimate it to be much less. 

The Carbon Neutral calculator suggests per passenger emissions of 250kg – Australian airlines estimate it to be much less.

Using data from the airline’s offset fees, their own estimates of how much CO₂-e is offset – either per flight or in the Climate Active disclosures – and airline data on the types of aircraft that fly the Melbourne–Sunshine Coast route, it’s possible to calculate total carbon emissions and cost for each airline. 

If everyone ticked the “offset your carbon” box for the Jetstar flight, the full environmental and financial cost attributed to passengers would be 16.4 t/CO₂-e, which could be offset for $176.84.

The Virgin Australia flight emits 17.8 t/CO₂-e and passengers could offset that by paying (after tax) $332.64.

And Qantas passengers create either 15 t/CO₂-e or 17 t/CO₂-e, depending on whether their Boeing 717-200 has a business class section, which costs a total of $193.60 or $220 to offset. 

What exactly did my offset payment buy? 

If $178–220 seems low to offset an entire flight, it will buy several tonnes worth of carbon credits. 

Neither airline would answer specific questions on how much it pays for carbon credits, and therefore how it prices passenger offset fees.

Qantas said the fee is a fixed dollar-per-tonne/CO₂-e figure, calculated on “a weighted average price of the offset cost from the projects in the portfolio”.

Virgin Australia declined to answer any questions.

Organisations seeking to offset their own emissions buy carbon credits from projects that remove or prevent an estimated tonnage of CO₂-e from entering the atmosphere each year. Those tonnes are sold as carbon credits. Purchased credits are then “retired”, or cancelled, so they can’t be used again to offset multiple tonnes of carbon. 

On our escape-to-the-Sunshine-Coast flight, Jetstar’s estimated emissions and fee infers it’s paying a carbon price of $10.80 t/CO₂-e. The same data works out to $18.71 t/CO₂-e, after tax, for Virgin Australia, and $12.86 t/CO₂-e at Qantas.

The average price per tonne of abatement sold at the last government carbon credit auction in April, run by the Clean Energy Regulator (CER), was $15.99 t/CO₂-e.

James Schultz, co-founder and CEO of environmental markets investor GreenCollar, says this is a floor price for carbon abatement projects in Australia. However, that doesn’t mean companies can’t, and don’t, shop around globally for better prices: by buying a portfolio of offsets from registries around the world they can bring down the overall cost. 

Tasman Environmental Markets buys the offsets for Qantas. 

Enright says the way they lower the overall portfolio cost is by balancing highly priced credits, such as from savannah burning in the Northern Territory – which he says could cost around $25/tonne – with cheaper credits, for example from projects like Indian renewable energy, which might cost $3/tonne. 

“A company says: ‘we want to offset this volume and have a budget of this, what can you fit within that budget?’ And we negotiate a price for the cost of the offset,” Enright says. Importantly, the amount of carbon taken out of the atmosphere or prevented from going into the atmosphere, is exactly the same – be it via preventative burn-offs in Australia or wind energy in Tamil Nadu, he says.

The amount of carbon taken out of the atmosphere or prevented from going into the atmosphere, is exactly the same – be it via preventative burn-offs in Australia or wind energy in Tamil Nadu.

But the cost of doing so differs: the cost of building and maintaining wind turbines in a developing country like India is negligible compared to the ongoing costs of savannah burning, which needs rangers to be employed to manage an area the size of Tasmania, plus helicopter costs and tight seasonal windows. 

Unsurprisingly, there’s also an element of public relations to carbon-portfolio building. 

GreenCollar’s Schultz says companies that want to buy for particular attributes, for instance saving koala habitats or the Great Barrier Reef, can expect to pay more. Fewer credits are generated from these activities, they are in demand from organisations wanting to burnish their Aussie credentials, and the co-benefits – such as job creation for Indigenous communities and protecting endangered species – means they attract a higher price tag.

“We take a distinct view that co-benefits are very valuable and we don’t want to sell them at just a $1–2 price increase [on top of the carbon abatement price] because there’s a lot of nice stuff here,” Schultz says. “We want to explicitly value it and explicitly price it.”

For example, the Queensland Government’s Land Restoration Fund, from which GreenCollar secured funding for several projects, was buying credits for specific local goals around biodiversity, water quality and social values, at an average price of $39/tonne.

Virgin Australia declined to answer questions about who it buys carbon credits through or which projects it is currently purchasing from. According to its website, the airline buys offsets from the Tasmanian Land Conservancy, which acquires private land for conservation. All credits are Australian Carbon Credit Units (ACCUs) from the CER. 

Qantas has a much broader portfolio, globally. Its website mentions a North Kimberley fire abatement project, wind power in India, and an arrangement to buy credits from Australia Post’s carbon neutral package delivery system. 

The Jetstar website points to a Cambodian cooking stove project, and rainforest protection projects in Papua New Guinea and Peru from the developing country fund Reducing Emissions from Deforestation and Degradation or REDD+.

Qantas’ Climate Active disclosure shows its FY 2018-19 portfolio also included renewable energy projects in China, the Philippines, India, Vietnam, Brazil, Indonesia and Taiwan, a Thai biomass project, and REDD+ credits in Tasmania and Brazil.

Where’s my offset tree? 

Although airlines make lofty claims in their marketing about how your offset fee is “contributing to the conservation of 12,000 hectares of important Tasmanian wilderness” (according to a post-flight email from Virgin Australia), or “conserves 300,000 hectares of virgin [Amazon] rainforest, which prevents the carbon stored in the trees from being released into the atmosphere” (that’s Jetstar), all passengers can know for sure is that they bought a percentage of a carbon credit.

“What we can’t do – we’d love to but we can’t – is say ‘hey Gemma, congratulations, you’ve planted three trees in southern California’,” Enright says. “Because what you’ve actually paid is going towards supporting a community that is already doing that, and because you’re funding that they will continue doing that going forward.”

A credit is from a verified activity that has either already absorbed or prevented carbon from going into the atmosphere – so a passenger’s figurative tree has already been planted and has been absorbing CO₂-e for some time. But verification of potential CO₂-e that hasn’t been released into the atmosphere or has been absorbed is both misunderstood and, in some cases, problematic. 

Verification of potential CO₂-e that hasn’t been released into the atmosphere or has been absorbed is both misunderstood and, in some cases, problematic. 

Schultz says carbon accounting for credit-producing projects must show that an area faces a real threat of degradation, and also demonstrates that without its activities that loss, say deforestation, would have happened. 

“It’s quite important for people to understand that these are models – they’re not like you have a crystal ball that says ‘this is exactly what would have happened’,” he says.

“Our measurements are all based on these theoretical ideas of what would happen in the real world. 

“The basic premise is if we know something was going to be cleared, or under threat of being cleared, and we can demonstrate it was going to be cleared and the timeframes [in which] it was going to be cleared, there’s a significant benefit.”

But that relies on the project, and the registry that verifies it, accurately doing that accounting. You’d best believe that claims and counter-claims about this absorb a lot of oxygen.

In April, a joint Greenpeace and the Guardian investigation uncovered problems in the way REDD+ projects were accounting for carbon, and the ability of a range of projects sold to airlines around the world to offset emissions in the way those companies claimed they could.

“The way baselines are calculated makes it possible for projects to overestimate their climate benefit by miscalculating the level of deforestation that would occur if they didn’t exist,” the researchers found. 

“We analysed 10 reduced deforestation offsetting projects relied on by major airlines as part of their emissions reduction pledges and certified by Verra, the biggest issuer of carbon credits in the world. We conducted satellite analysis of deforestation in and around projects backed by BA, easyJet, and United Airlines, examined project documentation, interviewed multiple leading experts, and commissioned on-the-ground reporting.”

The investigation raised questions over the way credits were estimated for deforestation projects including Cordillera Azul National Park in Peru, from which Qantas has bought credits in the past, and voluntary projects in Brazil. 

In a statement Verra disputed the findings and said the investigation did not give enough credit for the role carbon market investment played in preserving rainforests. 

What’s not in dispute is the impact of air travel on carbon emissions: aircraft are heavy emitters, with the saving grace that a relatively small (and wealthy) proportion of people can afford to be frequent flyers. If people thus privileged won’t contribute to offsetting the emissions their flights produce, who will?