As more and more businesses aim for carbon neutral and Net Zero, carbon offset credits are in high demand. How to know your offsets are having an impact? Making sure they’re additional helps.
What are carbon offsets?
Every business needs to aim for ‘Net Zero’ greenhouse gas emissions. Getting to absolute zero emissions is incredibly hard, so unavoidable emissions need to be compensated for to achieve Net Zero. ‘Compensation’ can be bought in the form of carbon offset credits from the global voluntary carbon market.
Credits are investments in projects which typically either prevent CO2 from entering the atmosphere, or directly remove CO2 from the atmosphere. Projects can range from cleaner cookstoves for local communities and capturing harmful methane gas at landfill sites, to afforestation and reforestation projects. Projects are typically in less economically developed countries, but more and more UK-based offsetting schemes are emerging.
NOTE: Carbon offsets are often referred to as GHG - Greenhouse Gas - offsets, depending on their impact. We use the term carbon offset as an umbrella term.
Offsets - The Good, the Bad, and the Inefficient:
Often, much criticism is directed to afforestation and reforestation projects. Whilst planting trees is often cheaper than other offsetting projects, most trees have a 40 year maturity period and their carbon-removal efficiency is low after being planted. Carbon offsets accounting for a specific reduction in carbon entering the atmosphere need to happen within a certain, fairly immediate, time period. Interestingly, the TerraPass offset portfolio features no tree-planting projects. Many favour energy based projects, such as cleaner cookstoves, which are more immediate and long lasting in their impact - and which focus on a wider breadth of the Sustainable Development Goals by commonly having a more widespread social impact too.
However, many criticise the use of carbon offset credits as a concept - arguing that fuel combustion from supply chains in Europe cannot be ‘reversed’ by mangrove planting in Madagascar, for example. It’s essential for brands to acknowledge and understand this perspective, especially when communicating their offsetting strategies. Focus should be on the mitigation of total emissions, with clear and communicable reduction targets, to avoid any offsets purchased being viewed by consumers as a ‘get out of jail free’, or ‘get out of jail for a small fee’, card.
The global sustainability movement has triggered a recent resurgence in the global voluntary carbon market. Whilst this is a good sign, recent research by UCL and Trove Research raises concern that the global offset market could be flooded with old poor quality carbon credits, which are currently in reserve.
What constitutes a poor quality carbon offset? Many factors hinge on efficiency, which itself comes down to the additionality of the carbon offset.
Additionality is the premise that those offsets, or projects, remove CO2 from the atmosphere, and that this wouldn’t have happened without the carbon credits being purchased. In essence, the purchase must be a clear “go or no-go” for the project to happen. After all, what is the point in investing in renewable energy if the local economic market makes wind farms more profitable, and so in the pipeline to be built, anyway? Purchase of poor quality carbon offsets, which are not additional, fails to meaningfully reduce CO2 emissions and so fails to compensate for the unavoidable emissions produced by companies (which is the whole point …).
How to avoid purchasing non-additional offsets?
Additionality isn’t linear, and it relies on scenario planning without revenue from the carbon offset. This itself is complex, and is subject to bias from stakeholders. Therefore, the best way to analyse additionality is by asking ‘how likely is it that this project is additional?’.
Carbon Offset Guide recommends asking these questions:
Did the project secure a buyer for offset credits before implementation?
How large is the project’s offset credit revenue stream compared to other revenue streams or cost savings achieved by the project?
Would the project cease reducing emissions if it did not continue to receive carbon offset revenues?
If the project is not (currently) legally required, is there reason to believe that it is being undertaken in anticipation of future legal requirements (or to avoid triggering such requirements in the future)?
Also, you can make sure your offsets are verified by Gold Standard, Verra, Carbon Action Reserve (among others) to ensure they’re additional! Additionally, many partners like Carbon Trust and Planet Mark ensure that offsets bought through them are Gold Standard.
How important is this?
It’s essential. With companies like BP declaring it will be carbon neutral by 2050 by offsetting over 415 million tons of carbon emissions, if those offsets are less effective than commonly believed, progress will be mis-represented and climate change will keep accelerating.
For more perspectives, follow up with:
Following the Footprints interview with TENZING Natural Energy, who have purchased Gold Standard offsets as part of their journey to Carbon Neutral.