What are carbon offsets?
A carbon offset is a general reference to a reduction in greenhouse gas (GHG) emissions that is used to compensate for or mitigate emissions that occur elsewhere. Offsets can be generated in multiple ways such as capturing and/or burning the methane (CH4) produced by farms or landfills before it enters the atmosphere, planting trees to absorb carbon dioxide (CO2) from the atmosphere, and improving energy efficiency to reduce energy use and lower corresponding CO2 emissions.
Offsets are intended to make it easier and more cost-effective for organizations to pursue emissions reductions anywhere in the world. Investing in high-quality certified offsets is widely considered an effective way to combat climate change for organizations that accept responsibility for their carbon footprints and are looking to mitigate the emissions that they cannot eliminate through their operational practices.
For emissions reduction projects to generate carbon offsets, they must meet a series of requirements, including external verification, additionality, permanence, and avoidance of overestimation or subsequent environmental and social impacts.
- External verification must be conducted by a third-party organization that can confirm the validity and accuracy of the offset claims and estimated GHG emissions reduction.
- The offsets must contribute to an additional reduction to ongoing efforts to reduce carbon emissions in order to meet the additionality Any reductions contributing to the offset must be dedicated to the offset market and provide options to mitigate emissions. Therefore, reductions from offsets cannot be the result of existing projects or the result of changes that would have occurred even without the offset.
- Permanence is the criteria that states the reductions cannot be reversed and that the emissions are not reintroduced into the atmosphere.
- Lastly, avoidance of overestimation or subsequent environmental and social impacts ensures that offsets are not being overstated and that there are no unintended negative impacts on ecosystems and communities that counteract the emission reductions.
Why would an organization choose to use carbon offsets?
Carbon offsets offer several benefits to organizations to help reduce their carbon footprint. Along with their key benefits to creating reductions in GHG emissions, voluntary carbon offset purchases also have the potential to:
- Empower individuals and organizations to take responsibility for their climate impact and demonstrate leadership on climate change by going beyond existing government regulations or incentives.
- Provide another stream of income for project developers by making GHG reduction projects more economically viable.
- Promote innovation and bring economic and environmental co-benefits to communities where the offset projects take place.
- Put a price on the carbon emitted. This extra expense can provide an incentive to make further emission reductions in the future and build support for government regulations that put a price on carbon.
- Better understand the magnitude and cost of GHG emissions, and the need to make reductions. Calculating emissions to purchase offsets is often the first opportunity for many organizations and individuals to understand these issues.
How are carbon offsets measured?
Offsets are measured in metric tonnes of carbon dioxide-equivalent (CO2e) resulting from a project’s impact. One tonne of carbon offset represents the reduction of one tonne of CO2 or its equivalent in other GHGs. GHGs differ in terms of their ability to increase global temperature and are equated like currency exchange rates to the most common greenhouse gas, CO2.
What is an offset purchase?
Purchasing a carbon credit means that you gain ownership of an equal amount of carbon offsets. One carbon credit is equal to one metric tonne of CO2e removed from the atmosphere or prevented from entering the atmosphere by a specific project. An offset is a virtual improvement in GHG emissions, not a physical improvement. Like online currency, although the offset purchase is not tangible, you own the right to trade the “currency” and count that offset against your project emissions.
Two of the most common carbon offset project types are renewable energy and energy efficiency projects. Renewable energy projects, such as wind or solar, avoid the GHG emissions associated with burning fossil fuels to generate electricity or heat. Energy efficiency projects, such as more efficient lighting systems, use less energy and reduce GHG emissions.
Additional examples of offsets can include nature-focused mitigation such as tree planting or soil-management techniques, which remove carbon from the atmosphere and store it in living plants and soils; and methane-focused mitigation such as livestock-waste management and landfill gas recovery, which capture and eliminate the potent greenhouse gas.
When seeking carbon offsets for your organization, the following steps are necessary to pursue an appropriate and verifiable approach to your mitigation strategy:
1. Identify the quantity of carbon offsets necessary to achieve your emissions reduction objective.
2. Contact a qualified consultant or licensed broker to identify carbon offset projects which have carbon credits available for purchase, with associated prices.
3. Determine from which project your organization would like to purchase carbon credits.
4. Leverage the consultant or broker to facilitate the purchase and provide sale agreement.
5. Retire carbon credits in your organization’s name and list on the relevant public registry.
Every tonne of CO2e offset has a specific serial number that contains a link to the project that generated the offsets and allows it to be individually bought and sold. ADEC ESG Solutions can help you understand the process of voluntary carbon offsets and whether they are a good fit for your organization.