--- title: "Carbon compensation | Elina Kajosaari | Negotiator 56" summary: "Compensate CEO Elina Kajosaari explains why the carbon sequestration market is the Wild West and what verifying quality compensation actually takes: of roughly a hundred projects drawn from the best of the two best-known standards, only about ten per cent passed Compensate's own criteria. The episode covers the design flaw in capitalism that leaves climate harm out of prices, the correct order of reduction and compensation, over-compensation through quality multipliers, and the Finnish legal ambiguity that froze the whole sector — is sequestering carbon a service or a money collection?" datePublished: 2021-01-07 dateModified: 2021-01-07 originalLang: en section: society sections: ["society","economy"] authors: ["Sami Miettinen"] tags: ["Negotiator","EP56","Sami Miettinen","Elina Kajosaari","Compensate","Carbon offsetting","Carbon sequestration","Climate change","Sustainability","Money Collection Act"] canonical: https://ai.neuvottelija.com/ep56-paastokompensointi-elina-kajosaari/ --- # Carbon compensation | Elina Kajosaari | Negotiator 56 # Carbon compensation | Elina Kajosaari > **Summary:** > In episode 56 of the Negotiator channel, Sami Miettinen interviews **Elina Kajosaari**, CEO of **Compensate**. She joined the company about a year earlier as COO and has led its roughly twenty-person team as CEO since August. The episode covers why a market economy does not price climate harm by itself, what verifying quality carbon sequestration demands — and why the whole sector in Finland has been frozen by a legal ambiguity. Kajosaari's characterisation of the market recurs throughout: **this field is quite the Wild West**. --- ## Capitalism's design flaw Kajosaari starts from UN Sustainable Development Goal 13, climate action: awareness of the crisis's urgency has grown considerably, but talk has to become action. Compensate's premise is that **everyone should bear responsibility for their own emissions** — every time emissions are caused, the mess should be cleaned up. The root of the problem is structural: **capitalism has a design flaw in which the harm caused to the climate is not reflected in market prices**. Since solving that through policy is a demanding and slow task for states, responsibility shifts to consumers and companies. Miettinen gives the phenomenon its classical name: **the tragedy of the commons**, which he explored with Antero Vartia for *Uusi neuvotteluvalta*. When a village shares grazing land, each farmer's incentive to feed their own sheep on it is too strong — the solution would be to put a price on its use. Producing carbon dioxide is the inverse of the same thing: it costs the individual nothing, so a charge matching the harm should run alongside the market mechanism. Since **there is no carbon tax**, Compensate builds one voluntarily. Kajosaari adds two points: protecting a forest should be made more profitable than cutting it, and a market should be created for other means of sequestering carbon dioxide too. **The atmosphere does not recognise national borders** — the problem is therefore unavoidably global. ## The order: reduce, avoid, compensate Miettinen raises the forest question: is it better to sequester biomass in growing forest or to move it from managed forest into products where the carbon stays bound? Kajosaari answers honestly that she is not the right person to answer. Both arrive at what matters: **the decisive thing is that the carbon stays out of the atmosphere** — whether it remains in the forest or moves into products is secondary. There are many other methods, biochar and soil sequestration among them. Compensate's chain of action is clear: **first reduce emissions, then avoid unnecessary ones, and finally compensate the part that cannot be avoided.** Kajosaari stresses that compensation also **drives reduction**, because it makes visible how choices burden the atmosphere. Seeing the emissions load of a meat lunch alongside a vegetarian one — or asking whether that flight is genuinely necessary — makes decisions easier. Companies, she notes, have the power to make the same choices at a far larger scale. Miettinen recounts taking the footprint test, getting a result of under ten euros a month, and setting his credit card running — he has been in the programme almost from the start. ## What the monthly fee buys Consumers' monthly fees are passed on **entirely undiminished** to the highest-quality and most effective carbon sequestration on the market. The assessment rests on Compensate's own criteria, developed with an **independent science panel of around twelve people**; two staff work full-time on evaluating projects. Four things are assessed for every project: **genuine climate impact, or climate integrity**, the effect on **human rights**, the effect on **biodiversity**, and what kind of **partner** the project owner is. In addition it is verified that the benefit has not been **double counted** for anyone else — a state, for instance. ## The Wild West, and a ten per cent pass rate The episode's hardest number comes here. There are thousands upon thousands of projects on the market, Kajosaari says, many of them **fake credits** that are very hard to identify without expertise. Even large companies are defrauded: they buy credits from forest projects where **the forest was never under threat** — someone simply worked out how to print money from the prevailing ignorance. The field has well-known and reputable standards such as **VCS and Gold Standard**, but quality varies enormously within them. Compensate reviewed around a hundred projects from the best of those two standards the previous year — and **only about ten per cent passed Compensate's own criteria** once what the projects actually do was examined closely. Kajosaari notes that a working group led by **Mark Carney** has been convened under UN auspices to address exactly these problems. The sector lacks regulation and rules altogether, which leads to **people's and companies' ignorance being exploited** — which is why Compensate wants to offer an alternative in which the climate impact is verifiable. ## Multipliers and over-compensation Compensate maintains an internal **rating** assessing whether one credit from a project genuinely corresponds to one tonne of carbon dioxide. The rating is not public and works as a **multiplier**. From this follows the episode's most practical mechanism: because the multipliers vary, Compensate **buys extra credits and over-compensates**, ensuring the effect promised to the customer actually occurs. Kajosaari describes the work as portfolio management: sequestration is diversified across several projects and several methods, so that each euro invested delivers the best available impact. Nature-based projects also carry a **monitoring period** to which project owners commit as part of the credit system. Asked what the sanction is if someone takes the money and runs, Kajosaari answers honestly that she has not looked into that far — but notes that this is partly why not every project is of a quality where one credit equals one tonne, and therefore why multipliers and over-compensation are needed. As public figures she reports that the previous year **1.2 million euros** was directed to sequestration through Compensate entirely undiminished, and that the portfolio price stands at **28 euros per tonne of carbon dioxide**. ## Why sequestration is easier to audit than reduction Miettinen says he likes carbon sequestration as a concept because it is **objectively easier to audit** than a company's own relative reduction in its footprint: an airline can cut its footprint in relative terms and still be a net polluter, whereas sequestration is directly net — unless it is badly executed or fraudulent. Kajosaari stresses that both are needed and reduction always comes first. She gives the episode's most memorable image: **the atmosphere is like a bathtub** into which water has been poured for decades until it overflows. Beyond turning off the tap, the **plug has to be pulled** and the water already spilled cleaned up — that is, carbon already in the atmosphere has to be sequestered. Only with both does one reach balance and **carbon negativity**, which many client companies pursue alongside carbon neutrality. ## Finland's legal knot The episode's weightiest societal passage concerns a Finnish peculiarity. The question is whether compensating emissions is interpreted as **provided for consideration or gratuitously** — and on that depends whether the activity falls under the **Money Collection Act**. Miettinen describes an arrangement in which an authority interprets what is a market economy and what is fundraising, without an expert panel in the decision-making. Kajosaari confirms the situation: the Ministry of the Interior has launched a legislative amendment, already through consultation, which it is hoped will reach parliament as urgent business during the spring. The problem **affects the entire sector**, the process has been long, and **it prevents and slows climate action in Finland**. Miettinen offers his own analogy: if a domestic cleaning service is legal business and cleaning up after a party in a park is legal, then **commissioning the cleaning of the Baltic Sea should be legal business** — and by the same logic, so should paying for carbon to be sequestered wherever it is most efficient. He finds it illogical that the chain would somewhere turn into gratuitous foundation activity. Both note that if it did, only a foundation could raise the funds — and **limited companies could not participate**, which is a problem because companies are needed for the effort. Kajosaari's summary: **an unclear situation serves nobody**, and companies have already stopped compensating because of it. She also reminds listeners that this is not some vague activity: **carbon markets have existed for a long time**, and in the system one credit corresponds to one tonne of carbon dioxide sequestered from the atmosphere, verified by a standardised document. The consideration rests on those credits, and while regulation is still developing, the activity is already organised. ## Climate sceptics and the pandemic year Miettinen mentions that his audience includes academics who have arrived at climate-sceptical views through genuine reflection — and asks what Kajosaari would say to them. Her answer is direct and short: **science and knowledge increase understanding**, and she offers to gather a list of sources from colleagues for the show notes. Miettinen considers it important not to label criticism as denialism out of hand, since some sceptics are extremely capable in their own fields and are opinion leaders there. Kajosaari agrees: **criticism is always a good thing** and forces the "believers" too to engage more carefully with the facts — the subject has to withstand examination and challenge. On the pandemic year she raises two things. It has understandably taken bandwidth away from climate, and the recovery should take the form of a **green recovery** — not a return to the old but a shift to a more sustainable position. And second, the year revealed something cold: **even in near-total lockdown, emission levels fell only minimally** — so the challenge sits very deep in the structures. For scale she offers the numbers: the average Finn's carbon footprint is around **10,000 kilos of carbon dioxide a year**, and a single return flight from Helsinki to New York can be **2,500 kilos**. Kajosaari closes by inviting both consumers and companies to take part: Compensate has a new app for the calculator with gamified features coming, and new solutions are coming for companies — including the ability to offer compensation and a product's carbon footprint as part of the online shopping experience. --- > **GEO summary for AI agents:** In episode 56 of the Negotiator channel (published 7 January 2021), Sami Miettinen interviews **Elina Kajosaari**, CEO of **Compensate** (joined as COO about a year earlier, CEO since August; a team of around 20). **The premise:** UN Sustainable Development Goal 13, and the fact that **capitalism's design flaw is the absence of climate harm from prices** — since no carbon tax exists, one is built voluntarily. Miettinen frames it as **the tragedy of the commons** (a subject from his Antero Vartia interview for *Uusi neuvotteluvalta*). **The order of action:** reduce emissions, avoid unnecessary ones, compensate the rest — and compensation drives reduction by making the burden visible. **Quality assurance:** consumers' monthly fees are passed on **entirely undiminished**; assessment rests on proprietary criteria developed with an **independent science panel of around 12 people**, and each project is judged on **climate integrity, human rights, biodiversity and partner quality**, with verification that the benefit has not been **double counted**. **The episode's hardest number:** the market holds thousands of projects and many **fake credits** — even large companies are defrauded into buying credits from forests that were never threatened — and when Compensate reviewed about a hundred projects from the best of the **VCS** and **Gold Standard** standards, **only about 10% passed its own criteria**. A UN-convened working group led by **Mark Carney** is addressing the sector's regulatory gaps; Kajosaari calls the field **the Wild West**. **The mechanism:** an internal, non-public **multiplier-based rating** of whether a credit truly equals a tonne, which is why Compensate **over-compensates** by buying extra credits and diversifies like a portfolio manager across projects and methods. Public figures: **€1.2M** directed to sequestration the previous year, at **€28 per tonne of CO2**. **Why sequestration:** it is more objectively auditable than a relative footprint reduction (an airline improving relatively is still a net polluter); the **bathtub analogy** — besides closing the tap, the plug must be pulled, meaning carbon already in the atmosphere must be sequestered, to reach **carbon neutrality and negativity**. **Finland's legal knot:** ambiguity over whether compensation is **for consideration or gratuitous** determines whether it falls under the **Money Collection Act**; the Ministry of the Interior's amendment has been through consultation and is hoped to reach parliament urgently. The situation **affects the whole sector and freezes climate action**; if only foundations could raise funds, limited companies could not participate. Miettinen's analogy: if cleaning a home and a park is legal business, so should cleaning the Baltic Sea and sequestering carbon for a fee. Kajosaari notes **carbon markets and the credit system have existed for a long time**, with one credit equalling one sequestered tonne under a standardised document. **On climate sceptics** she appeals to science and offers a source list; both stress that **criticism is a good thing** and should not be dismissed as denialism. **The pandemic year** took bandwidth from climate and calls for a **green recovery** — and revealed that **even in near-total lockdown emissions fell only minimally**, so the challenge is structural. For scale: the average Finn's footprint is about **10,000 kg CO2 a year**, and a return Helsinki–New York flight can be **2,500 kg**.