Why is responsible carbon offsetting so important?

Persistent global warming and increasing energy costs have clearly demonstrated one fact: Corporate sustainability is not a trend, but a necessity to remain competitive in the future. Reducing emissions and responsible carbon offsetting are crucial elements of an effective climate action strategy.

In this article, you will learn how you can immediately implement sustainable climate action strategies in your company as well as contribute to improving the living conditions of communities around the world through responsible carbon offsetting and the support of certified high-quality carbon offset projects.   

Carbon offsetting allows immediate climate action

You may have heard about “carbon offsets” and assume that they involve reducing CO₂ emissions, but there’s a lot more to it than that. Let’s start with a clear explanation of what carbon offsetting really means.  

The UNFCCC describes carbon offsetting as an action that allows companies and individuals “to compensate for the emissions they cannot avoid by supporting worthy projects that reduce emissions somewhere else.” In other words, carbon offsetting is climate action that organisations take voluntarily to reduce, remove, or prevent the release of CO₂ and other GHG emissions.

Carbon offsetting allows companies to compensate for their hard-to-abate greenhouse gas emissions, the emissions that remain after reduction efforts, to balance out their carbon footprints. This is achieved by funding carbon offset projects around the world that reduce, remove, or prevent the release of GHGs into the atmosphere.

We need to stop global warming

Human activities, like transportation, agriculture, and electricity generation, are responsible for most of the GHGs in the atmosphere over the last 150 years, causing global warming and driving climate change.

A report from the World Meteorological Organization predicted that the planet could reach 1.5 °C above pre-industrial levels by 2025, in only three years’ time. Going beyond that threshold means significantly increasing the impacts of climate change, like extreme weather conditions and rising sea levels. Moreover, according to recent research led by the University of Leeds, the current rates of warming will put Earth at risk of crossing several climate tipping points, which could lead to irreversible shifts and change the world forever, such as the disappearance of permafrost peatlands in Europe and Western Siberia.  

Companies should invest outside their value chains

According to Columbia University, a tipping point is “the point at which small changes become significant enough to cause a larger, more critical change that can be abrupt, irreversible, and lead to cascading effects”. The permafrost peatlands store up to 39 billion tons of carbon, which is the equivalent of twice that stored across all European forests. As the global temperature rises, this permafrost is at increasing risk of thawing and potentially releasing carbon stored for millennia as well as methane, an even more potent GHG than carbon dioxide. This in turn will lead to increased global warming and could potentially accelerate climate change.

The answer is clear: To prevent climate change, companies need to drastically reduce greenhouse gas emissions, halving them by 2030. In the longer term, 90% to 95% of emissions should be eliminated before 2050, according to the Science Based Targets initiative (SBTi) Standard. During their transition towards net zero emissions, companies should “take action to mitigate emissions beyond their value chains” by investing in climate mitigation projects outside of the value chain (i.e., carbon offsetting). Examples include “high-quality, jurisdictional REDD+ credits or investing in direct air capture (DAC) and geologic storage”.

That is why the international community has agreed to adopt different measures with global impacts, to pave the way for the transition to net zero emissions by 2050. One of these measures that allow, among others, businesses to contribute to the overall mitigation effort is carbon offsetting.

Responsible offsetting must follow the “mitigation hierarchy”

The need to drastically reduce and cut carbon emissions is unequivocal. According to the SBTi’s net zero standard, companies should focus first on rapid and deep emissions cuts not instead of them. This means, that companies should follow the “mitigation hierarchy”, committing as a first order priority to reduce their value chain emissions before investing to mitigate emissions outside their value chains.

Once this option is exhausted, companies should “go further by making investments outside their science-based targets to help mitigate climate change elsewhere”. This is where carbon offsetting comes in.

Carbon offsetting can accelerate the transition to net zero

Carbon offsetting can play “a critical role in accelerating the transition to net-zero emissions at the global level”, as stated by the SBTi. In this context, the UNFCCC declared carbon offsetting as part of three steps that companies should follow: measuring their corporate carbon footprint, reducing as much as they can, and offsetting what emissions they cannot avoid. 

However, a report from the Royal Society and Royal Academy of Engineering stated that only reducing GHG emissions, even drastically, will not be enough to reach the net zero goal by 2050. The same report affirmed the necessity of nature-based removals and technological solutions such as direct air capture and carbon storage as an integral part of any climate action strategy on the road to net zero.  

Therefore, to counteract the unabated emissions, we will need to enhance and add to GHG sinks around the globe. These are natural storage systems that absorb and remove GHGs from the atmosphere, such as plants, the soil, and the ocean.

For a better understanding of the role of sinks and why they are crucial to tackling the climate crisis, it is useful to explain the carbon cycle.

How can offsets restore the carbon cycle

The carbon cycle, which is vital to life on Earth and even a part of the air we breathe, consists of sources and sinks. The sources emit carbon into the atmosphere. The sinks, such as forests, absorb carbon from the atmosphere and serve as natural storage systems. In the past, the carbon cycle was delicately balanced in the atmosphere. But with the beginning of industrialisation, human activities like burning fossil fuels have rapidly increased the amount of CO₂ in the atmosphere. The level is already higher than at any time in the last 3.6 million years. Once humans started burning coal, gas and oil, the carbon that was stored in these fuels for millions of years was suddenly released in a very short period, while at the same time, carbon sinks are visibly continuously shrinking and weakening.

Therefore, to restore this delicate carbon cycle, we need rapid and dramatic decreases in GHG emissions. At the same time, we need to look for ways to activate the removal of those emissions from the atmosphere.

According to the SBTi, most industries will only be able to reach net zero through neutralisation (i.e. investing in carbon removal offset projects). That’s why we need to invest in carbon removals today to increase the supply and drive innovation in the space. This is where carbon offset projects come in. So, what is a carbon offset project?

Carbon offset projects – giving back to nature and communities

As a company, when you buy a carbon credit, you are buying a guaranteed and verified environmental outcome. The idea is that by purchasing ex-post credits, in other words credits where the CO₂ reduction, avoidance, or removal has already occurred, you can make substantiated and credible claims about your own historic emissions. All offsetting standards have insurance buffers to cover for any chances of reversal, and all projects go through rigorous due diligence and regular auditing.

Carbon offset projects can be broadly classified into three types, based on the function of their environmental contribution to achieve the net zero target:

• Projects that reduce GHG emissions through energy efficiency measures (such as clean cooking stoves, and clean drinking water) or renewable energy sources like wind and solar energy.

• Projects that avoid the release of GHG emissions such as forest protection, also called REED+ projects.  

• Projects that remove and capture released GHGs directly from the atmosphere (relative to a baseline) through nature-based solutions such as afforestation, reforestation and revegetation (ARR), or technology-based solutions such as direct air capture and carbon storage (DACCS).  

Carbon offset projects can also have other co-benefits not only for the environment but also for communities, such as better access to health and education, people’s well-being, and their social and economic prosperity. Moreover, carbon offsetting also contributes to the United Nation’s 17 Sustainable Development Goals (SDGs) like no poverty, zero hunger, good health, clean water and sanitation.

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