How to compensate your carbon footprint

How can you make sure that you do not have a negative impact on the climate system and that you do not contribute to global warming? How can you do this in the most effective and fair way? The answer is simple and consists of two steps: 1) reduce your carbon footprint (your emissions of greenhouse gases). 2) compensate the rest of your carbon footprint by donating money to the most effective and ethically responsible organizations.

Concerning the first step: an average person in a rich country (e.g. Belgium) has a carbon footprint of almost 20 ton CO₂-equivalents per year. (See Eureapa or for Flanders the MIRA 2017 report De Koolstofvoetafdruk van de Vlaamse consumptie). With some eco-friendly technologies and behavioral changes (consuming less, using green electricity from renewable sources, isolating the house, setting room temperature low in winter, using public transport instead of car, eating vegan, buying second hand, avoiding flights, avoiding food waste) I manage to reduce my carbon footprint below 5 ton CO₂-eq. per year. This is below the world average per capita footprint (which is 7 ton CO₂-eq.) and corresponds with the climate target (maximum per capita emissions to avoid 1,5°C global warming) for the year 2025, so I’m a few years ahead.

But it is the second step that offers a lot of opportunities. What is the best donation strategy to offset our greenhouse gas emissions?

First, we can pick the lowest hanging fruit. A recent study in Science[1] demonstrates the cost-effectiveness of payments for ecosystem services: offering forest-owning households in poor countries annual payments if they conserved their forest. These financial incentives for forest owners keep their forest intact, so CO₂-emissions from deforestation are avoided. The net present cost to permanently avert a ton of CO₂ would be 2,2 euro. An organization that offers payments for ecosystem services is Cool Earth, which is according to Giving What We Can probably the most cost-effective organization to avoid CO₂-emissions. So I have donated 100 euro to Cool Earth, which offsets 45 ton of CO₂, which corresponds to my total carbon footprint for 9 years. In a sense, my past 9 years are now climate neutral. Addendum (2019): The effectiveness of Cool Earth has been criticized. Nevertheless, the Founders Pledge also made an analysis of effective carbon offestting charities, proposing Coalition for Rainforest Nations (CfRN) and The Clean Air Task Force. They claim the CfRN – which also focuses on forest protection – could have a carbon compensation cost-effectiveness of $0.12 per of ton of CO₂.

But if there are more highly cost-effective organizations, from a risk perspective it is better to fund more than one of those organizations. If you support only one organization, it might be the case that new evidence shows that that organization happens to be less effective than previously estimated. So if you can pick different low hanging fruits, it is better to not put too much of the same fruit in one basket.

So I can do better. A second very cost-effective intervention is the promotion of plant-based (vegan or vegetarian) food, because vegan products have a much lower carbon footprint compared to animal products. One of the most effective strategies could be online advertisements for plant-based eating. Animal Charity Evaluators gives estimations for its cost-effectiveness. The most pessimistic or conservative estimate is 3 euro per ton of CO₂ avoided: paying 3 euro for online ads results in 1 vegetarian year (the equivalent of one person eating a vegetarian diet for 1 year). And eating vegetarian or vegan reduces the carbon footprint with roughly 1 ton CO₂-eq. per year compared to an average omnivore.[2] Therefore I donated 100 euro to the Animal Charity Evaluators top recommended charities that invest in online ads, which results in 33 ton CO2-eq. averted, the equivalent of my total carbon footprint of the past 7 years. Addendum (2020): when taking into account the carbon storage opportunity cost, the cost-effectiveness of plant-based diets (in terms of less atmospheric CO₂ per vegan year) is probably 7 times larger than the abovementioned 1 ton CO₂-eq. per vegan year, making promotion of animal-free food one of the most cost-effective offsetting measures with multiple cobenefits.

Payments for ecosystem services and promotion of plant-based diets are probably the two lowest hanging fruits, the two most cost-effective interventions to reduce the global carbon footprint. They are able to reduce the greenhouse gas emissions in a short term (less than 10 years). Reducing emissions the next few years instead of in the far future is important, because we have to avoid exceeding hidden thresholds in the global climate system that could result in a runaway global warming due to positive feedback loops in the climate system. The earlier we reduce our global carbon footprint, the lower the risk of transgressing a hidden climate threshold.

However, not everyone can pick this lowest hanging fruit. Our global greenhouse gas emissions cannot be offset with merely those two cost-effective interventions. Over the longer term, after a few years, we will need other climate-friendly solutions. We can invest in e.g. renewable energy, but our current technologies are not yet the most climate-friendly. It might be much better to invest in scientific research, to invent new climate-friendly technologies that can be applied in the future. According to some economists and the Copenhagen Consensus Center, the benefit-cost ratio of doing more clean energy research could be 11 euro benefits (increased social, economic and environmental good) per 1 euro spent (invested costs). That benefit-cost ratio is an order of magnitude higher than 1 and could be much higher than e.g. doubling renewable energy or doubling energy efficiency with our current technologies.

Therefore, I also donated 100 dollar to cutting edge research done by one of the most prestigious technology universities: the Massachusetts Institute of Technology with its Energy Initiative Fund. We cannot predict how much CO₂ will be avoided by donating to research because we are uncertain about the new technologies that will be invented. But this investment may be worth 1100 dollar of benefits. Addendum (2019): Let’s Fund has made a comprehensive analysis, arguing for the importance of clean energy research and development. They propose a donation to the Clean Energy Innovation program at the Information Technology and Innovation Foundation (ITIF).

Apart from developing more climate-friendly energy technologies, also our food system can become more climate-friendly. One possibly very effective new food technology is clean meat: lab grown meat without the animal. The production of clean meat can become much more climate-friendly compared to the production of animal meat. Therefore I also donated 100 euro to the Good Food Institute, also a top charity recommended by Animal Charity Evaluators.

However, merely employing climate-friendly technologies will not be enough, because there is a risk for a rebound effect: the efficiency gains might be lost due to increasing consumption levels. For example the investment in scientific research led physicists to the development of highly energy efficient LED-light bulbs. That was a very cost-effective investment because companies and households can now switch to LED-lights. That is why those physicists earned a Nobel price. However, this lowers the electricity consumption and hence the costs. Due to lower electricity costs, households might increase the use of light bulbs or might have more money left for other consumption activities such as an extra travel by plane. This could partially negate the energy efficiency gains.

How can we avoid this rebound effect? The economically most effective way is either a carbon tax or a cap-and-trade system (a governmental auction of tradable emission permits). There is a European Emissions Trading System (ETS) for some European industries, but this is not yet implemented in a fair and most effective way. Therefore, I donated another 100 euro to the Carbon Market Watch. To promote the idea of a carbon tax, I donated also to the Carbon Tax Center and Citizens’ Climate Lobby.

What would the situation be if there was a global cap-and-trade system? In such a system, the governments would distribute a fixed amount of emission permits. Every person on earth would get an equal share of emission permits to be used for one’s own emissions or to be sold if one’s own emissions are lower than the maximum fair amount of emissions (the cap) allowed per person. The poorest people have fewer emissions than the cap, so they could sell their non-used emission permits to the richest people who have more emissions than their maximum allowed level. If such a system would be present, people who have more emissions than the cap would have to buy emission permits at a price of roughly 100 euro per ton of CO₂, increasing with 5 euro per year (this would be the price of an efficient carbon tax to achieve climate targets and to reduce global warming below 1.5°C[3]).

In our current economic system, people in rich countries don’t buy emission permits, even though they have emissions higher than the cap. This is basically equivalent to saying that when rich people have emissions above the maximum allowed level, they are stealing emission permits worth 100 euro per ton CO₂ from the poorest people who barely emit any CO₂.  Therefore, we have a duty to donate money to the poorest people, as a remuneration fee for stolen goods. An organization that give direct cash transfers to the poorest people, is GiveDirectly, a top charity recommended by charity evaluator GiveWell. I have donated 100 euro to GiveDirectly, which is equivalent of buying from the poorest people a virtual emission permit of 1 ton CO₂.

And last but not least, I had the choice to pay a remuneration fee for all the health damages caused by my carbon footprint. The highest estimate of loss of healthy life-years (Disability Adjusted Life Years or DALYs) from climate change that I could find in the literature, is 0,003 DALYs per ton CO₂-eq.[4] So emitting 1 ton of CO2 means the loss of 1,3 healthy days due to global warming. This is the health impact of malnutrition (harvest losses due to bad weather), diarrhea, cardiovascular diseases (heat deaths), malaria (mosquito spread due to higher temperatures) and floods.

How can I compensate for these damages? Again I can pick the lowest hanging fruit by donating money to the most cost-effective health organizations. One organization is the Against Malaria Foundation, also a top charity recommended by GiveWell. I donated 100 euro to this organization, with which they can save 1 healthy life year. In terms of health benefits, this is the equivalent of avoiding 300 ton CO₂ emissions. At a yearly emission rate of 5 ton CO2, this donation avoids climate change related human health damages that I caused for my entire adult life (i.e. 60 years).

As a summary: I reduce my carbon footprint by reducing my consumption. This also saves money, allowing me to donate about 40% of my income to the most effective charities. This month, I donated 700 euro to offset my carbon footprint in multiple ways. First I picked the lowest hanging fruit by donating 200 euro to the two most cost-effective CO₂-compensation mechanisms (payments for ecosystem services and promotion of plant-based diets), which avoids emissions that I emit over 16 years. I donated 100 euro to scientific research about climate-friendly energy technologies with an expected benefit worth 1000 euro, and another 100 euro to develop climate-friendly food technologies. I donated 100 euro to implement economic systems (a carbon tax or cap-and-trade) to avoid rebound effects generated by the development of new, more efficient technologies. Finally I paid the poorest people to buy from them virtual emission permits worth 1 ton of CO₂ (about 1/5 of my yearly emissions) and I compensated for the climate change human health damages caused by my emissions over my entire adult life. All of this more than offsets my total carbon footprint for this year.

Note: people in Belgium can make a tax deductible donation to GiveDirectly or the Against Malaria Foundation at:
Koning Boudewijnstichting, Brederodestraat 21 – 1000 Brussel
IBAN: BE10 0000 0000 0404
BIC: BPOTBEB1
with as message for AMF:  TGE – UK – Against Malaria Foundation
and for GiveDirectly:  TGE – GB – GiveDirectly UK

[1] Jayachandran S. e.a. (2017). Cash for carbon: A randomized trial of payments for ecosystem services to reduce deforestation. Science  Vol. 357, Issue 6348, pp. 267-273.

[2] Springmann M. e.a. (2016). Analysis and valuation of the health and climate change cobenefits of dietary change. Proc Natl Acad Sci. 113(15):4146-51.

[3] This value is a rough estimate of an efficient carbon tax, based on the ‘high damage scenario’ under ‘random estimated climate sensitivity’ according to: Simon Dietz & Nicholas Stern (2014). Endogenous growth, convexity of damages and climate risk: how Nordhaus’ framework supports deep cuts in carbon emissions. Centre for Climate Change Economics and Policy, Working Paper No. 180 http://www.lse.ac.uk/GranthamInstitute/news/dietz_stern_june2014/

[4] Goedkoop M. e.a. (2009). ReCiPe 2008. A life cycle impact assessment method which comprises harmonised category indicators at the midpoint and the endpoint level. Report I: Characterisation. Ministry of Housing, Spatial Planning and Environment, the Netherlands.

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