*This guest article was written by our carbon offsetting partner ClimateSeed.
Carbon offsetting has become a well-known term by now. But that doesn’t mean it’s always clear how it actually works.
This article will guide you in selecting high-quality carbon offsetting projects that fit your business:
- Which offset projects can you choose from?
- What criteria should you consider?
- How can you ensure your offset choices don’t affect your reputation?
Let’s dive into it.
First – what’s a carbon offset again?
IPCC defines a carbon offset as “any activity that compensates for the emission of carbon dioxide (CO2) or other greenhouse gases (measured in carbon dioxide equivalents, CO2-eq) by providing for an emission reduction elsewhere”.
Organizations can compensate for the CO2 emissions they haven’t managed to reduce yet. By purchasing carbon credits that contribute to a certified emission reduction project (carbon offsetting project). Here: 1 carbon credit corresponds to 1 tonne of CO2 -eq.
It’s important to note that the offsetting process is complementary to the impact reduction strategy of your company. It should never replace it. Always actively reduce your emissions first.
1. Which offset projects can you choose from?
In the voluntary carbon market, there are two types of offset projects you can choose from that are divided into categories.
These projects prevent carbon emissions that would have been released into the atmosphere. It’s divided into 4 categories:
1. Renewable Energy: renewable power infrastructures that contribute to the decarbonization of the local energy grid.
2. Energy Efficiency and Fuel Switching: energy-saving measures that reduce carbon emissions and replace fossil fuels with sustainable energy sources.
3. Household Devices: efficient cookstoves that significantly reduce wood consumption. Or individual biogas digesters that provide sustainable fuel to local communities, prevent deforestation, and avoid GHG emissions.
4. Water Management: projects that supply clean water to households in rural communities, remove the need to boil water, and reduce GHG emissions.
These projects reduce carbon emissions by absorbing them from the atmosphere (depending on the methodology used, these projects can either be removal, avoidance- or both.). It’s divided into 3 categories:
1. Agriculture: agricultural practices that store carbon in soils while restoring biodiversity and developing new sources of income for smallholders.
2. Forestry and Land Use: projects that protect and restore existing forest areas threatened by deforestation. (Depending on the methodology used, these projects can either be removal, avoidance- or both).
3. Waste Management: landfill projects designed to capture the methane released by waste disposal, which can turn it into clean fuel.
2. What criteria should you consider for selecting high-standard offset projects?
1. Projects must be certified
An offset project must be certified by an international or national standard to issue carbon credits. The standard differs depending on the project typology.
Here’s the list of the most common international & national standards:
First, third-party auditors verify the number of emissions absorbed or avoided during a specific period by the project compared to a baseline (base scenario), following methodologies established by the standards. After that, the standards can issue the carbon credits. All credits generated by a certified project are accounted for on the standard’s registry (each standard has its registry).
Registries are crucial to avoid the risk of double-counting. Double counting happens when two or more organizations monetize and claim the same credit. Once an organization decides to purchase carbon credits, intermediaries such as ClimateSeed settle the contribution on behalf of their clients. They transfer the credits and cancel them once the credits are retired.
Following the certification and the credit issuance, periodical monitoring and reporting activities are performed to ensure the continuity of the projects.
2. Emissions removal is proven
All emission removals – and the project activities that generate them – should be proven to have genuinely taken place.
3. Emission removal is measurable
All emission removals should be quantifiable, using recognized measurement tools (including adjustments for uncertainty and leakage), against a credible emissions baseline.
4. The offset project is additional (adds value)
The project needs to be issuing carbon credits in a threatened area so that the added value is real. Financial additionality, which means that the project could not exist without the issuance of carbon credits- is also needed.
5. Emission removal is independently verified
All emission removals should be verified to a reasonable level of assurance by an independent and qualified third party.
6. Every carbon credit is unique
No more than one carbon credit can be associated with the single emission reduction or removal of one tonne of carbon dioxide equivalent (tCO2 -eq). Carbon credits have to be stored and retired in an independent public registry.
7. Carbon credits are permanent
Carbon credits represent permanent emission removals. This means emission reductions represented by the carbon credits can’t be reversed after the credits are issued.
For example, trees are planted as means of capturing carbon. However, a forest fire or logging happens in the next hundred years. In this case, permanence isn’t met as the captured carbon is released back into the atmosphere.
8. Offset projects should have co-benefits
Co-benefits are all the positive externalities enabled by your chosen offset project. They can truly increase the quality and positive impact of the offset project.
Carbon reduction projects preserve the planet, help local communities, and protect biodiversity. Additionally, they support the achievement of the UN Sustainable Development Goals (SDGs), which also lead to co-benefits for everyone.
So, make sure the project matches your organization’s environmental and social goals.
9. Carbon credits should be transparent
Ensure the price margins of your purchased carbon credits are clear and the money goes to local communities. It is important to purchase the credits from a transparent player. It’s a common practice in the market to buy carbon credits through resellers, of which most do not show transparent margins. The result: you don’t know how much of your contribution is actually going to the project and local communities.
3. How can you ensure your offset choices don’t affect your reputation?
Transparent reporting and communication related to a company’s environmental strategy and carbon offsetting are essential to avoid greenwashing. Some tips on communicating your offsetting efforts:
- Focus your communication on your environmental impact reduction process as a whole. Offsetting should be considered as a complementary action to strong reduction efforts. This means a company should report its annual carbon footprint (scope 1 & 2, and 3) and detail its carbon reduction efforts – before even talking about carbon offsetting.
- Use the term carbon neutrality correctly, and when possible – avoid using it. According to the IPCC definition, “carbon neutrality” is a generic term that is scientifically valid on a global level. It indicates a worldwide equilibrium (equal state) between anthropogenic emissions and anthropogenic absorption. An organization, product, or service cannot be carbon neutral by itself but can contribute to achieving global carbon neutrality.
- Be wary when communicating about SDGs. Ensure that you provide detailed information (KPIs) about how you are targeting them.
Measure, Reduce, Offset, and Report
Measure, Reduce, Offset, and Report. These are the 4 steps for an effective strategy to reach net-zero emissions and the 1.5°C goal established by the Paris Agreement.
Extreme weather events such as droughts and floods will increase. This heavily influences us all, but has an even greater impact on the poor and most vulnerable. To avoid future environmental and humanitarian disasters, supporting emission reduction projects (offsetting) definitely helps.
Want to learn more about carbon offsetting? Read ClimateSeed’s full guide on carbon offsetting right here.