What is carbon offsetting?
In practice, this implies purchasing carbon credits from a third party for a certified unit of emission reduction or removal equivalent to part or all of a company’s carbon emissions.
While we believe the focus should always be on reducing emissions, carbon offsetting can be a responsible and action-oriented step for hard-to-abate emissions on the road to Net Zero. When considering whether or not to offset your historic emissions, it is recommended that you establish both your short and long-term climate action goals. This will allow you to better understand what benefits historic offsetting will bring to your company and whether it will help you reach these goals.
How do I avoid pitfalls?
Consider the following to avoid the most common pitfall of offsetting and accusations of greenwashing.
- Choose verified credits: There are many rigorous certification processes on the offset market to ensure projects deliver on the removals or prevented emissions they promise. They can therefore be verifiable, permanent, enforceable and impactful. Verifications to look for when browsing credits include: The Verified Carbon Standard, The Gold Standard, The American Carbon Registry and Plan Vivo, among others.
- Ensure your credits have been retired: Credits verified by these standards are available through many third-party brokers. When purchasing carbon credits, always ensure you receive confirmation from the broker that the credit has been officially retired. This confirmation ensures that the credit cannot be resold and double-counted.
- Consider third-party verification: Companies who share that they have achieved carbon neutrality may opt for the third-party verification of this claim under the PAS 2060 program. PAS 2060 assures both the carbon accounting and purchasing of offsets. Third-party assurance is a valuable tool to counter greenwashing.
- Be transparent: When choosing to offset your historic emissions, be as transparent as possible when communicating how offsetting sits in your wider carbon management strategy. Recognising that offsetting is used only where you cannot reduce, acknowledging where you need better data and communicating your reduction plans can help you mitigate risk.
How do I choose a provider?
If you choose to offset, you’ll find many different carbon offset projects and providers. The following questions can help you narrow down your choices:
- Where do you want to make an impact? Is there a specific geography for which you would like to support environmental protection or development?
- What kind of project do you want to support? Projects span environmental protection, technological innovation and community development. Considering the beyond-carbon impacts of a project which aligns with your company mission can help you identify a good fit.
What are the costs associated with offsetting?
The cost of offsetting your emissions is determined by the type of carbon offset project, the carbon standard under which it was developed, the location of the offset, the co-benefits associated with the project, and the year the offset occurred.
Supply and demand have a significant impact on the market cost of offsetting. This is driven by a current surplus of offsetting projects which is expected to be diminished by growing demand. Offsetting costs can range from $1 to over $100 per tonne of CO2e, depending on the chosen project.