What is carbon offsetting?

What is carbon offsetting?

At its core, carbon offsetting is a way to balance out the emissions you or your business can’t quite eliminate by investing in projects that reduce or remove an equivalent amount of carbon dioxide (or other greenhouse gases) elsewhere.

The idea is simple: for every ton of CO2 you emit, you fund a project that reduces CO2 emissions by the same amount. These projects can range from planting trees, to capturing methane at landfills, to funding renewable energy development.

Done correctly, as part of a holistic strategy, it can be a valuable tool in the fight against climate change. But there are some pitfalls to watch out for, and not all offsetting projects are created equal.

Is carbon offsetting just greenwashing?

While the concept of carbon offsetting is well-intentioned, it’s not without its challenges. There are a couple of common mistakes that businesses (and individuals) can make when trying to offset their emissions.

Offsetting without measuring and reducing first

One of the biggest pitfalls is using carbon offsetting as a get-out-of-jail-free card without first doing the hard work of measuring and reducing your own emissions. Imagine someone who eats an entire cake every day but tries to balance it out by running on the treadmill for 20 minutes. Sure, the exercise is good, but wouldn’t it make more sense to eat less cake in the first place? The same principle applies to carbon offsetting.

Some businesses have been guilty of this approach—offsetting their emissions without seriously trying to reduce them first. This can lead to accusations of "greenwashing," where companies appear more environmentally friendly than they really are. A classic example is the airline industry, where some companies have offered carbon offsets to passengers without taking substantial steps to reduce their own operational emissions.

Investing in low-quality offsetting projects

Another common mistake is investing in low-quality carbon offset projects that don’t deliver the promised environmental benefits. Not all offset projects are created equal—some are well-designed and provide genuine reductions in emissions, while others might be less effective or even counterproductive.

For example, there have been cases where tree-planting projects funded by carbon offsets didn’t achieve their goals because the trees planted were unsuitable for the local environment or weren’t properly maintained. In other instances, projects that claimed to reduce emissions were found to have little impact, or the emissions reductions were already set to happen without the extra funding from offsets. Companies that invest in such projects can find themselves in hot water.

So what makes a good carbon offset project?

Given the potential pitfalls, it’s crucial to understand what makes a good carbon offset project. If you’re going to use offsets as part of your carbon management strategy, you want to ensure that they’re actually making a difference. Here are five basic principles that define a high-quality carbon offset:

1. Additionality

A good carbon offset project should provide "additionality." This means that the emissions reductions would not have happened without the project being funded by the offset. In other words, the project should go beyond what’s already happening and create new benefits. If a renewable energy project, for instance, was already going to be built without your funding, it doesn’t count as a true offset because it’s not adding anything extra to the equation.

2. Verifiability

A credible carbon offset project must be verifiable. This means that the emissions reductions it claims to achieve can be accurately measured and independently verified by a third party. Without verification, there’s no way to know if the project is actually delivering the promised benefits. Reputable offset programs will often be certified by recognized standards like the Gold Standard or the Verified Carbon Standard (VCS), which require rigorous monitoring and reporting.

3. Permanence

Permanence is another key factor in a good carbon offset project. This principle refers to the long-term sustainability of the emissions reductions. For example, if a project involves planting trees to absorb CO2, those trees need to stay standing and healthy for decades to ensure they continue to sequester carbon. If there’s a risk that the trees could be cut down or destroyed by fire in a few years, the permanence of the offset is compromised.

4. No leakage

Leakage occurs when reducing emissions in one area inadvertently causes an increase in emissions elsewhere. A good offset project should minimize or eliminate leakage. For instance, if protecting a forest in one location leads to increased deforestation in a nearby area because the demand for timber hasn’t changed, the overall benefit of the project is diminished. Effective offset projects take steps to ensure that emissions reductions are not simply shifted to another place or activity.

5. Social and environmental co-benefits

High-quality carbon offset projects often provide additional benefits beyond just reducing carbon emissions. These co-benefits can include supporting local communities, preserving biodiversity, or improving air and water quality. For example, a project that involves restoring a degraded ecosystem might not only sequester carbon but also provide habitat for wildlife and create jobs for local people. Projects with strong co-benefits are often more sustainable and can have a positive impact on both people and the planet.

Conclusion

Carbon offsetting can be a valuable tool for businesses and individuals looking to balance out their carbon footprint, but it’s not a silver bullet. To be effective, offsetting should be part of a broader strategy that prioritises measuring and reducing emissions first, with offsets used to tackle the emissions that can’t be eliminated.

When choosing to offset, it’s important to be selective about the projects you invest in. High-quality carbon offset projects should be additional, verifiable, permanent, and free from leakage, with the added bonus of providing social and environmental co-benefits.

By adhering to these principles, businesses can ensure that their offsetting efforts genuinely contribute to the fight against climate change, rather than simply serving as a greenwashing exercise.

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