When the Green Guides were first issued in 1992, Time Magazine had not long ago run a cover story on the coming ice age, Tipper Gore was arguably the more famous of the Gores, cows were known for producing milk not methane, and folks still remembered that carbon was something you put between two sheets of paper when you were typing and wanted a second copy. In other words, nobody much worried about carbon emissions or offsetting them.
A lot has changed.
In its proposed revisions, the FTC takes a first, tentative step to providing guidance on carbon offset claims. However, there are still a number of areas where the agency (for now) has decided not to provide guidance. Even so, of course, the FTC retains the right to proceed under Section 5 if it finds a particular claim misleading.
So where has the agency provided direction?
First, you can't claim you're free of something if you contribute to the same or a similar environmental harm through other means. So, if you've offset your carbon but emit a not insignificant amount of other greenhouse gases, and haven't offset those, then an unqualified carbon offset claim may be misleading.
Second, the greenhouse gases a company offsets are already in the atmosphere, but, depending on the type of offset, it may be years before those emissions are fully offset. For example, if you plant a tree today, it will "offset" carbon dioxide as it grows and matures . . . or it could get hit by lightening, struck by a car or gnawed down by a beaver and offset little if any carbon. Companies' practices have differed in how they deal with this issue. However, the proposed revision states that for an offset claim to be unqualified, the offset must fully occur in less than two years. The Commission, however, is specifically seeking comments on this proposal.
The FTC partially answered the question of "additionality," i.e. if the tree would have been planted anyway, can you count it as an offset? The agency stated that there were too many unresolved "technical and environmental policy issues" for it to propose any guidance with respect to additionality, but the agency did propose that, if the offset activity is required by law, it cannot be marketed as an "offset."
What is a legitimate offset? There has been scientific debate as to whether some activities truly offset carbon emissions (think iron fertilization to create plankton blooms). The FTC declined to provide guidance in this area. Nor do we think you should expect them to do so anytime soon, as this is largely a scientific and not a consumer perception issue. Specifically the Commission noted that identifying allowable offset projects would put the Commission in the role of setting environmental policy. The Commission did, however, make clear that offset claims must often be substantiated by competent and reliable scientific evidence. The FTC also cautioned that companies should be wary in using RECs (renewable energy credits) as offsets in part because of issues relating to additionality and possible double counting by the REC generator and fossil fuel-fired facility. Finally, the Commission warned that such obvious misleading practices as selling the same offset twice would constitute a violation of Section 5.
Last, but not least, the Commission also did not provide guidance on how companies should measure the carbon they claim to be offseting. For example, two companies may make similar products, but one obtains a lot more components from third parties. As a result, even though overall the carbon emission from the manufacture of the two products may be similar, one company may have far less carbon to offset if it considers only its own emissions. Is there an obligation to look "downstream" at least to some degree, particularly if the offset claim is an unqualified one? In a similar vein, the Commission requested guidance on whether an unqualified claim that a product was manufactured using renewable energy would be interpreted to include other parts of the distribution chain, such as delivery trucks. We note that when addressing the use of Made in USA claims by manufacturers the Commission has indicated that materials sourced from third parties often must be included in the relevant calculation.
Given the emerging nature of these claims and the as yet unresolved scientific debate surrounding some of these issues, expect to hear more from the Commission in the future, either through law enforcement activity or additional guidance.