The discussion surrounding carbon offsetting has been ongoing for quite some time. In this article, we aim to clarify the significance of both carbon avoidance and offsetting and how they contribute to the battle against climate change.
Carbon offsetting has grown in popularity recently, leading to significant market growth in the area. This is demonstrated by the fact that the voluntary market was valued at around $2 billion in 2021, and it is projected to reach a value of $10-40 billion by 2030.
However, despite its popularity, some critics view carbon offsetting as a form of greenwashing rather than a legitimate strategy to reduce emissions – so what’s really going on, and should you consider using offsets?
What is carbon offsetting?
Carbon offsetting is the act of accounting for a person/business’s carbon footprint by financing initiatives that reduce greenhouse gas emissions elsewhere, mitigating the environmental impact of one’s own activities.
Examples of carbon offsetting include investing in:
- Renewable energy projects in developing countries
- Reforestation and forest conservation
- Implementing external carbon capture & storage solutions (CCS)
There are a number of providers who can support companies with carbon offsetting, including Carbonfund, Terrapass, and ClimateCare.
What is carbon avoidance?
Carbon avoidance involves implementing operational improvements to an organisation with the purpose of completely bypassing, or ‘avoiding’, the production of greenhouse gas emissions in the first place.
This is a proactive approach which requires companies to identify sources of emissions, develop effective reduction strategies, and invest necessary resources to implement those strategies.
Examples of carbon avoidance activities include:
- Replacing a polluting logistics fleet with an electric one
- Reducing energy consumption
- Generating renewable energy on-site
- Partnering with suppliers who demonstrate low-carbon emissions
Unpacking the debate
In recent years critics have argued that offsets are simply a form of greenwashing, allowing buyers to pay someone else to take climate-friendly actions instead of taking real, often resource intensive and costly, steps to reduce their own emissions, sometimes seen as a ‘get out of jail free’ card for companies.
Recent investigation from The Guardian into major carbon offset providers, such as South Pole and Verra, have also cast doubt on the effectiveness of offsetting programs, with the research suggesting that purchased credits may not always reflect genuine carbon reductions.
The providers in question have disputed the analysis presented. With offset certifier, Verra, issuing a direct response challenging the claims made in the report.
However, proponents of offsetting believe the method to be a viable solution to account for difficult-to-tackle emissions that lie outside of their control, such as scope 3 emissions, while directing much-needed financing towards essential areas of climate change.
The Climate Change Committee in the UK reinforces this perspective, affirming that the acquisition of high-integrity carbon credits by businesses can provide a “small but important” impact in facilitating the transition towards achieving net zero emissions.
Should companies use carbon offsets?
The question of whether companies should use carbon offsets is nuanced, and the answer is not a straightforward “yes” or “no”. Ultimately, it depends on two main factors:
Which offsets are being used
Although the debate over the quality of offsets persists, it is clear that not all offset projects are created equal in terms of effectiveness. With prices ranging from less than £1 to as high as £50 per unit of carbon removed (depending on the type of offset used), there are both low and high-quality offsets available.
Businesses that rely on inexpensive offsets may think they are receiving a good value, but the actual effectiveness of these offsets is likely quite low, resulting in the company not accounting for as much carbon as they believe.
The best approach is to choose a rating provider that employs strict methodologies to distinguish effective projects from ineffective ones. This results in a clearer understanding of the projects that will make a genuine carbon reduction.
How offsets are being used
Carbon offsets are not inherently bad; they can be a valuable tool to help businesses reduce greenhouse gas emissions that simply cannot be avoided, for example those produced by industrial processes or suppliers that are beyond a company’s control.
Offsets should serve as a complementary approach rather than a replacement for preventing emissions from occurring in the first place. They should be viewed as the last line of defence.
Furthermore, businesses that rely on offsets should be consistently evaluating their emissions to recognise any areas that were previously addressed by offsets that can now be avoided due to technological advancements or changes in partnerships. By doing so, they can continue to make progress toward their sustainability goals and move away from relying on offsets as a solution.
Offsets can serve as a short-term solution to a long-term problem, but only when used responsibly and transparently. By carefully verifying the credibility of the offset and using them as a last resort, companies can continue to support positive actions in the battle against climate change.
Although there are doubts about the effectiveness of offsets, in cases where there are no other viable solutions available, utilising them can be the preferable option. In such scenarios, choosing to offset carbon emissions instead of allowing them to go unchecked appears to be the more sensible and responsible choice.
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