Compensation – real climate impact or just hot air?

Monday, December 7, 2020

By Eftimiya Salo

Eftimiya Salo is a Sustainability Specialist at Compensate. She works closely with Compensate’s Scientific Advisory Panel and is responsible for project evaluation and selection.


Evaluating the true climate impact of carbon capture projects is a must to ensure that compensating one's emissions makes an actual difference for the climate.

Often, carbon capture projects fall short of their promises and sell what my colleague, Compensate’s Head of Sustainability, Niklas Kaskeala calls " a car without an engine ". 

Understanding carbon offsets has proven to be a difficult task, as outlined in the recent GreenBiz article “In the quest for carbon offsets, (almost) anything goes” .  Unless you’re an expert, it can be very easy to get overwhelmed and confused by the variety of different terms and metrics used to calculate impact.

In forest protection projects, carbon credits are created by predicting the deforestation which would occur if the project didn’t exist. Reference areas are used to estimate potential deforestation, and the assumption is that the same “amount” of deforestation would happen in the project area were it not protected.

That sounds great, but here’s the problem:

The internationally recognized carbon standard methodologies accept a wide variety of projections and reference areas. Sometimes they are very similar to the project area, sometimes they are not. For realistic assumptions to be made, the reference area should be as similar as possible in terms of landscape, population density, socioeconomic factors, forest type, access to roads, and more. 

Problems arise when these unrealistic deforestation predictions are applied to the actual project area. This often leads to basically comparing apples with oranges.

For a non-expert, it is next to impossible to know whether the forest protection project has any real impact or whether it’s just hot air based on unrealistic – and often intentionally exaggerated – predictions.

The fact is that compensating with credits from these kinds of projects does not have any positive impact on the climate. Even worse, buying low-quality credits could actually add carbon into the atmosphere according to Jonathan Goldberg , CEO of Carbon Direct.

What is the real impact of 1 carbon credit?

The international carbon standards are fundamentally flawed because they accept methodologies based on unrealistic deforestation predictions. The result is credits being issued and sold where 1 carbon credit does NOT equal 1 tonne of CO2 removed from the atmosphere.

Such credits have flooded the market due to their low price and inflated carbon credit volumes based on unrealistic deforestation predictions.

At Compensate, we work closely with the scientific community to understand the forest science behind the numbers. It’s complex, but crucial for ensuring true climate impact. Our strict evaluation criteria is designed to take into account various risks and uncertainties related to the estimated emissions avoided by preventing deforestation.

The most significant factors in the carbon credit calculations are the baseline emissions and the carbon stock estimates. Estimating these can “make or break” the true climate impact. Carbon stocks tell us how much carbon is stored in a forest, which is then multiplied by the hectares predicted to be deforested in the absence of the project. So, if this number is overestimated, so is the climate impact of the project.

A common issue observed in many projects is artificially inflating the baseline emissions in order to generate more carbon credits for the project. More credits equals more profit, thus taking credit for what the project didn’t do. An example of this would be taking a small, heavily deforested reference area next to a big city or coast, and using this to predict 100% deforestation of an entire project area that is isolated with small population density, over the next 30 years.

By scoring the projects against our evaluation criteria, developed in collaboration with the Scientific Advisory Panel, we are closer to estimating the true climate impact of one carbon credit. We do this by dividing the project’s score from the evaluation with the maximum points available. Our experience shows that the real impact of projects with the best internationally recognized standards can vary from 0.1 tCO2 to 0.8 tCO2.

This means that the credits in these projects, which are being sold as equivalent to 1 tonne CO2, actually correspond to only 0.1-0.8 tonnes CO2 removed from the atmosphere. This is important especially when making the claim to be carbon neutral: Buying offsets from low-quality projects to reach net-zero can result in more carbon in the atmosphere, because the project isn’t actually removing as much carbon as it says it is.

Ensuring true climate impact

To overcome the flaws of the standards and ensure true climate impact, we:

  • Evaluate the projects with the help of the Scientific Advisory Panel, with special attention on how the project has derived the amount of carbon removals.

  • We use open source satellite maps ( Global Forest Change and deforestation maps) to compare the actual historic deforestation in the area with the projections estimated in the project.

  • We are currently exploring opportunities to use satellite technology to analyze the reliability of the deforestation projections and to monitor the project area for illegal logging.


By Eftimiya Salo

Eftimiya Salo is a Sustainability Specialist at Compensate. She works closely with Compensate’s Scientific Advisory Panel and is responsible for project evaluation and selection.

Offsetting with low quality projects does not have any positive impact on the climate. It can actually do the opposite: add carbon into the atmosphere.

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