A Guide to Carbon Offsetting

What is Carbon Offsetting?

A carbon offset is a way to compensate for your emissions by funding an equivalent carbon dioxide saving elsewhere.  Offsets are measured in tonnes of carbon dioxide-equivalent (CO2e). One ton of carbon offset represents the reduction or removal of one ton of carbon dioxide or its equivalent in other greenhouse gases. The Oxford Principles for Net Zero Aligned Offsetting and the Science Based Targets Initiative’s Net-Zero Criteria argue for the importance of moving beyond offsets based on reduced or avoided emissions to offsets based on carbon that has been sequestered from the atmosphere, such as CO2 Removal Certificates (CORCs).

With the increase of population, more specifically urban population due to densification, there is more of a demand for carbon offsetting.  Within the voluntary market (see below for definition), demand for carbon offset credits is generated by individuals, companies, organisations, and sub-national governments.  They purchase carbon offsets to mitigate their greenhouse gas emissions.  They do this to meet carbon neutral, net-zero or other established emission reduction goals. The voluntary carbon market is facilitated by certification programs (e.g. Puro Standard, the Verified Carbon Standard, the Gold Standard, and the Climate Action Reserve).  They provide standards, guidance, and establish requirements for project developers to follow in order to generate carbon offset credits. These programs generate carbon offset credits provided that an emission reduction or removal activity meets all program requirements, applies an approved project protocol (also called a methodology), and successfully passes third party review (also called verification). Once carbon offset credits are generated, any buyer may purchase them; for example an individual may purchase carbon offsets to compensate for the emissions resulting from air-travel.

 Are there different types of Carbon Credits?

There are two types of markets for carbon offsets

Voluntary emissions reduction (VER): A carbon offset that is exchanged in the over the counter or voluntary market for credits.  VER, are usually created by projects which have been verified outside of the Kyoto Protocol. One VER is equivalent to 1 tonne of CO2 emissions. Through these schemes, industries and individuals voluntarily compensate for their emissions or provide an additional contribution to mitigating climate change.

Certified emissions reduction (CER): Emission units (or credits) created through a regulatory framework with the purpose of offsetting a project's emissions.   Certified Emission Reductions (CERs) are a type of emissions unit (or carbon credits) issued by the Clean Development Mechanism (CDM) Executive Board for emission reductions achieved by CDM projects and verified by a DOE (Designated Operational Entity) under the rules of the Kyoto Protocol. 

CERs can be used by listed countries to comply with their emission limitation targets or by operators of installations covered by the European Union Emission Trading Scheme (EU ETS) in order to comply with their obligations to surrender EU Allowances, CERs or Emission Reduction Units (ERUs) for the CO2 emissions of their installations. CERs can be held by governmental and private entities on electronic accounts with the UN.  CERs can be purchased from the primary market (purchased from an original party that makes the reduction) or secondary market (resold from a marketplace).

 When do you need to Offset?

When an organisation is on their path to Net Zero, they may look to offset their emissions on their journey.  At the start of a organisation’s reduction, they may need to understand their footprint as a whole or just in scope 1 & 2.  Here a business can start to understand the task at hand and start to plan their goals to be Net Zero.  They can choose to offset from this point on or just use it at the end of the journey when they have reduced their emissions to a point when they cannot do any more and they are looking for carbon absorption projects to offset the remaining carbon.  This decision is a personal decision to any business.  If a decision is made to become Carbon Neutral whilst on the longer journey to Net Zero, we can work with the organisation to align offsetting to their business values from projects all over the globe that are each adding value in their own way. 

 What benefits are there to Offsetting? 

Carbon offsetting has many benefits and it can help some businesses who have reduced their emissions as much as possible or in some industries, they have no other options. On a business level this means that is allows organisations to meet their sustainability goals.   

When they choose to offset they can choose from many different projects domestic and overseas.  These can be from certified tree plantation, through to infrastructure projects such as Hydro dams and wind turbines.  The offsetting can help to finance these projects and encourage the schemes to be more appealing than going for traditional fossil fuel power plants.  The knock on impact of all the projects is job creation, helping to fight inequality and it can help to bring more to communities that didn’t before have power, clean water or regular work.    Each project has their own special impacts so please see our projects page that talks through all the benefits of each project CNG works on. 

 Are there any drawbacks to Offsetting?

One main and valid concern for Carbon Offsetting is that businesses will look to continuously offset their carbon oppose to changing or improving their business or business process.  If you think that a business, in this cause a haulage company is reviewing how to move to a Carbon Neutral state.  One of these decisions is for the business to move from the current diesel or petrol vans to electric vehicles (EV’s) Once they review the cost to move to electric, i.e. £50,000 per EV and compare this to the cost of offsetting the carbon from the current fossil fuel fleet, they pursue the route of no change and just offset the carbon.  They can do this and claim that they are working towards a carbon neutral state.  Realistically, no change is being made more the business is ticking a box for compliance.  This tick box could be to say they are working on their ESG for a supply chain questionnaire.

Back to Blog