What should carbon offsets really cost?

Imagine being offered $13 to store a tonne of garbage for 1,000 years. Sounds ridiculous, right? Yet, that’s essentially the deal with carbon offsets at current market prices.

A carbon offset is a promise to prevent a tonne of carbon dioxide from entering the atmosphere for at least 100 years. In 2024, the average price on the voluntary carbon market was a mere $13 USD per tonne. Historically high, yet laughably low by any rational measure.

I’m deeply skeptical of anyone claiming they can reliably sequester a tonne of CO₂—or anything—for centuries, for a one-time payment of $13. It’s no surprise that investigations, like The Guardian’s, reveal that 90% of rainforest carbon offsets are effectively worthless when such inadequate prices prevail.

Even in regulated markets like the EU Emissions Trading System, where prices hover around €71 ($76 USD) per tonne, the cost is shaped more by political tolerance than true economic necessity.

Image: Ollie Heather (aged 12)

So, what should carbon offsets really cost? It depends on the methodology used, but here are some examples / guidelines:

• Direct Air Capture (DAC): Currently ranges between $250-$600 USD per tonne, with a long-term goal of $100 USD per tonne.

• Nature-based Solutions: Cheaper, with added benefits like biodiversity, but risk of carbon re-release remains. In New Zealand, the breakeven price for indigenous afforestation is about $80 NZD ($50 USD) per tonne.

• Social cost of carbon: Generally estimated between $50-$100 USD per tonne, reflecting the broader damage each tonne of CO₂ causes.

• NZ ETS: The Climate Change Commission predicts prices need to hit $250 NZD ($150 USD) per tonne to drive meaningful behavioural change.

Given current solutions, I would suggest $100 USD per tonne should be the baseline assumption for talking about carbon credits. For nature-based methods, additional funds should be earmarked for long-term resilience and disaster mitigation.

To the innovators tackling climate change: Don’t let impossible economics deter you. Price your solutions based on actual costs today, not on hoped-for efficiencies down the road. Plan for disaster, mitigate risks, be honest about the real costs of sustainability, and push back against the illusion that we can fix climate change for $13 per tonne.

Let’s shatter the myth that climate solutions are cheap.

Jamie Heather is managing director of ZERO21 and Carbon Critical.