Carbon Offsetting - Explained

Climate experts warn that without carbon offsetting schemes, humanity has almost no chance of achieving a 1.5 degree world.

What is carbon offsetting?

Carbon offsetting refers to the reduction or removal of greenhouse gas (GHG) emissions from the atmosphere in one place, in order to compensate for emissions generated in another. 

For an organization to claim a carbon offset, it must take full responsibility for the carbon or carbon equivalent being prevented from release or removed from the Earth’s atmosphere. 

In order for carbon offsetting to be effective it must be integrated into an organization’s wider climate strategy. Legitimate carbon offsets are used to complement GHG emission reductions and cannot be used to simply replace reduction activities.

Why is carbon offsetting important?

Carbon offsetting can play a crucial role in collective climate action. The intention is the prevention from release and/or the active removal of harmful GHG emissions from the atmosphere; helping us to achieve a 1.5 degree temperature target (detailed in the Paris Agreement), and to avoid the worst impacts of climate change. 

Much recent climate science, including IPCC reports, has been unequivocally clear that humanity has essentially no chance of hitting the emissions levels necessary to meet the 1.5 degree temperature target if it does not engage seriously with carbon removals on a mass scale. This is where funding offsetting projects, whether it be reforestation, renewable energy technologies or industrial scale direct carbon capture (among plenty of other initiatives), can play an absolutely critical role in the fight against climate change.

‍The controversy surrounding carbon offsetting

The majority of countries across the world have committed to net zero targets by 2050 and pretty much all are relying on some form of offsetting. A regular and not unfair criticism of carbon offsets, used by some climate activists including Greta Thunberg, is that offsets are used as a way of allowing large companies a 'free pass' to continue polluting. This is why it's so important that offsets complement a company's holistic climate strategy rather than replace it.

On the other hand, some critics claim that carbon offsetting schemes are not ambitious enough. The Secretary-General of the United Nations and the UN Environment Programme (UNEP) argue that carbon offsets have an important role to play in the green transition and that we must continue funding and upscaling them.

With the increased prevalence of net zero targets and an associated uptick in interest in offsetting projects, it is clear that we need to be engaging with them in the right way.

To that end, a range of carbon offsetting best practices have been developed over the few past decades. The ‘Oxford Principles for Net Zero Aligned Carbon Offsetting’ outline how offsetting should ideally be approached, to ensure unintended risks to and consequences for society and nature are averted. These principles outline that an optimal approach to offsetting should:

• Prioritise reducing direct and indirect emissions - Minimising the need for offsets in the first place. 
• Ensure environmental integrity - Use offsets that are verifiable and correctly accounted for and have a low risk of non-additionality, reversal, and creating negative unintended consequences for people and the environment. 
• Maintain transparency - Disclose current emissions, accounting practices, targets to reach net zero, and the type of offsets you employ.
• Implement a long-term strategy to transition over time to an offsetting approach increasingly composed of carbon removals with long-lived storage capacity; such as Carbon Capture and Storage (CCS) technology.

Carbon Prevention Vs. Carbon Removal

‍Carbon credits (Prevention) – A carbon credit is a tradable permit or certificate representing a 1 tonne unit of carbon dioxide, or equivalent (CO2e), which has been prevented from polluting the atmosphere. Organisations, as well as individuals, are able to compensate for their carbon footprint by purchasing and retiring carbon credits.

To qualify for a carbon credit certification bodies, such as Verra or Gold Standard, use their criteria to select projects and have registries to indicate who has retired the credits.  

Most people will be aware of forestry schemes but carbon credits also exist for other mitigation projects, such as wind farms, solar panels, and fuel efficient cookstoves– all of which are a part of Minimum’s world-class offsetting portfolio. 

‍Carbon removal – Due to the severity of the climate crisis, carbon prevention is simply not enough at this late stage. Removing harmful greenhouse gases from the atmosphere is now a necessity, to ensure society does not cause irreversible ecological damage. 

Carbon removal refers to the act of drawing GHG emissions out of the atmosphere and responsibly storing the gases indefinitely. 

Both natural and technological instruments can be used to achieve this, depending on the offsetting party’s financial budget and strategy. Existing carbon removal techniques include: planting trees and plants such as mangroves, seagrass, algae, and saltmarshes; carbon capture and storage (CCS), carbon farming, ocean fertilisation and enhanced weathering– a sophisticated geoengineering approach. 

‍How to choose a carbon offsetting project?

At Minimum, we have developed our own unique offsetting criteria to ensure we select only offsetting projects of the very highest quality and which have the maximum impact. Our approach centres on enhanced diligence of any project we work with to guarantee that the carbon offsets we use have proven causality, additionality, permanence and secondary impacts. The image below highlights how one of the carbon removal schemes we partner with, Charm Industrial, is examined against our criteria.

It is also important to ask the following questions when selecting a carbon offsetting initiative:

• Does the project support broader sustainability and development goals?
• How does the offset provider ‘retire’ offsets? - ensuring the carbon credit can only be used once.
• Does the provider offer advice on carbon footprint reduction and ways to live more sustainably?
• Can the project assure additionality? In other words, was it only made possible by carbon funding?
• What is the organisation's mission and are they transparent?

With scientists predicting that, in order to achieve net zero by 2050, up to 10 gigatonnes of carbon dioxide will need to be removed from the atmosphere every year on top of many times that in reductions, it is clear we are going to need organisations to make massive emission reductions as well as to engage with significant carbon offsets (done in the right way!) to avoid climate disaster.