Carbon Offsetting refers to the concept that people and businesses who emit carbon can offset their emissions by paying someone else to plant trees, preserve forests or develop renewable energy. The voluntary market for carbon offsets has experienced impressive growth.
Carbon offsets can be complex to implement successfully; any successful offset must address issues related to leakage, additionality and accounting.
Projects
Carbon offsets are credits designed to assist individuals, businesses and governments in mitigating emissions by investing in projects designed to decrease greenhouse gas pollution and offset high-emission activities such as flying, automobile purchases and industrial processes. Carbon offsetting credits may be purchased to mitigate environmental impacts of activities like these such as flights, automobile purchases and industrial processes.
Carbon offsetting projects typically include tree planting, renewable energy development and waste capture. Building and operating a biogas digester to convert agricultural or landfill waste into clean renewable energy reduces methane emissions that contribute to climate change, as does planting trees where deforestation would otherwise take place.
To qualify as additional, a project must also be free from leakage; that is, emissions reduced in one area won’t lead to increases elsewhere. Companies offering carbon credits ensure their credits come from programs certified as meeting specific criteria such as independently verified and scalable projects in order to prevent this type of scenario from unfolding.
Assessing these criteria can be challenging, however. For example, tree-planting projects cannot always accurately predict how many trees will live past harvest time and therefore may not guarantee permanent greenhouse gas emission reduction. That is why NativeEnergy maintains a buffer pool of credits not sold that serves as a reserve in case any project underperforms.
Offsetting programs must ensure their efforts do not compromise other environmental and social goals, including indigenous communities that use the land for food or resources, or nature preserves that provide economic livelihood for local residents as reported by the Environmental Justice Atlas.
Critics often argue that offsetting is ineffective at combatting climate change. Instead, they assert it’s better to make reductions at their source rather than pay someone else to make reductions for us. Only by restricting global emissions can we have any hope of stopping runaway global warming; but taking any steps toward cleaner future should never be avoided!
Additionality
Additionality is one of the primary criteria used to evaluate carbon offset projects, indicating whether or not they are making an impactful difference in real world conditions (i.e. compared with what would have occurred without them; see business as usual scenario). This metric assesses whether or not projects make real world differences through comparison of impacts to expected effects (i.e. business as usual scenario).
Carbon offsets can help compensate for emissions that cannot be reduced through operations alone, making them an integral component of any net zero strategy. But knowing whether the credits you purchase really make an impactful statement about their purchase can be daunting; key is evaluating each carbon project on its own merits while being cognizant of potential risks that could undermine its additionality.
For a carbon project to qualify as “additional,” it must create emission reductions beyond what would have occurred through business as usual. This can be difficult when working with projects already being conducted in real life; additionality requires creating additional emission cuts beyond what would otherwise occur through their normal course.
Carbon offset projects aim to plant trees to mitigate greenhouse gas emissions that would otherwise be deforested for economic gain by local communities, however this practice must not already be being done by governments or other organizations.
As for companies reducing their own emissions, additional emission reductions will only qualify as “added” if these go beyond what would have occurred regardless of a carbon offset program. While this may sound simple enough in theory, in practice this can prove tricky to implement successfully.
Reduce these risks by making sure that your carbon offsetting strategy consists of high-quality projects that meet the criteria of credit buyers like Sylvera. We use a scoring framework tailored specifically for each carbon project type in order to identify risks and identify potential additionality issues – this ensures that carbon offsets purchased are truly additional and have positive effects on climate change.
Leakage
Carbon offsets must fulfill their promises if we’re to tackle climate emergency effectively, yet unfortunately most don’t. Too many offsets sold by brokers, businesses, and governments don’t actually reduce emissions; because underlying projects are poorly managed or monitored; or because there is no transparency into what’s actually taking place on the ground.
Offsets provide a solution in a world where many governments, businesses and individuals choose to ignore environmental regulations by compensating for greenhouse gas emissions with projects that remove or absorb carbon from the atmosphere elsewhere – for instance planting trees to absorb CO2 as they grow or providing energy-efficient stoves in rural communities. It’s important to remember that too cheap an offset may not generate sufficient pressure for consumers or companies who emit significant quantities of pollution to change their behavior – potentially giving them license to continue polluting.
This problem is compounded for nature-based offsets, which operate in globalized commodity markets where goods can easily be substituted and market links extend beyond project accounting boundaries. Even after decades of research into carbon leakage and extensive portfolio of nature-based mitigation projects, it remains challenging to accurately measure or manage market leakage from these interventions.
Leading third-party certification standards appear to significantly understate leakage compared with research literature, and current tools for measuring leakage at project level are unreliable in practice. To address these barriers, our conceptual framework offers three principles for avoiding market leakage by design that we advise both offset developers and certifiers on.
First, all interventions that reduce supply to markets (including forest protection) should adhere to a stringent standard of leakage risk analysis. Second, irreducible uncertainty regarding an intervention’s true impacts requires using upper bound estimates rather than lower ones. Thirdly, due to risks involved in estimating leakage risks projects with high leakage risks should not substitute for avoided emissions when meeting compliance settings.
Accounting
Accounting for carbon offset requires a level of scrutiny not seen with most tangible assets. A carbon credit is not recognized until a landowner meets what’s known as “realizable criterion,” meaning they can expect to capture and store significant quantities of carbon over the life of the project. Once this criterion is met, an offset buyer can claim they have offset their emissions by purchasing credits from them.
Determining whether carbon captured and stored through offset projects are truly additional to any reductions that would have happened anyway is often difficult, particularly with projects such as tree planting or providing low-energy light bulbs to developing countries. To qualify as additional, offset projects must demonstrate that their lightbulbs wouldn’t have been purchased anyway by residents in these communities.
As we seek sustainable development worldwide, it is crucial that carbon reduction projects offer more than simply avoiding emissions; they must also deliver social and environmental benefits aligned with the UN Sustainable Development Goals (SDG). Examples may include restoring biodiversity, reducing all forms of poverty, providing access to water and sanitation and empowering all women and girls.
Offset buyers must ensure that projects they purchase credits for do not endanger local ecosystems or indigenous communities. This can be particularly problematic with forestry offsets, where disruption to species populations and populations could displace populations from their homes. Hiring accredited verifiers with standards tailored towards providing co-benefits for local nature and people may help minimize this risk.
Carbon-removal projects must also be permanent for them to have any real effect on climate change, although this can be challenging given that carbon removal projects tend to be expensive; should prices fall below a threshold where polluters feel pressure to stop, they could buy credits from others instead. To overcome this obstacle, dynamic carbon markets can offer incentives for companies investing in carbon removal while auditing systems can combine traditional financial auditing expertise with knowledge of greenhouse gas accounting and environmental chemistry chemistry.
