The Complete Guide to Carbon Offsetting - Part 1.

The Complete Guide to Carbon Offsetting - Part 1. Introduction

Carbon offsetting is a practice aimed at mitigating the impact of an individual’s or organisation’s Greenhouse Gas (“GHG”) emissions. It has been around for years but with the rise in corporate responsibility, emissions reporting and public awareness, interest in carbon offsetting schemes has exploded.

As Friends of the Earth put it – “Offsetting. Everyone’s at it.”

A few years ago, carbon offsetting meant planting trees as part of a reforestation project but the scope and sophistication of such projects has expanded exponentially in recent years. Reforestation is still a fundamental part of offsetting but projects now include community based agriculture schemes, localised sustainable development schemes, smart green tech that can turn every day infrastructure into carbon sinks and so much more.

First thing’s first though, what exactly is carbon offsetting?

Carbon offsetting is the process of trying to compensate for the carbon dioxide released into the atmosphere as a result of your personal and business activities. Carbon offsetting does not reduce emissions but acts as a counterbalance to what has been produced.

A carbon offset occurs when an individual, company or organisation directly (for example planting trees in their own garden, or installing solar panels on their own property) or indirectly (by funding projects in other locations) removes greenhouse gases from the atmosphere or prevents a certain quantity of greenhouse gases from being released.

Given the complexity and scale of what’s required, carbon offsetting is now almost always outsourced to a paid third party.

How does it work - a brief explantion of the science and process

The impact of CO2 on the climate is the same regardless of where it is produced, and the same goes for offsets.

As the Stockholm Environment Institute’s Carbon Offset Research and Education (CORE) initiative explained, “carbon offsetting is possible because climate change is a non-localised problem”. Greenhouse gases spread throughout the atmosphere, “so reducing them anywhere contributes to overall climate protection” - that means, for example, that a flight taken in Europe can be offset by a totally unrelated scheme operating in the Far East.

When you ‘offset’ you are not immediately sucking your own or your business’ carbon emissions for that day out of the air, you are funding the removal of your cumulative emissions (as measured up to a certain amount over a given period of time) of the equivalent amount somewhere in the world.

To participate in carbon offset schemes, individuals or companies firstly measure their carbon footprint and calculate the amount of gas they use. For every kWh of gas used, carbon is released - everything from business travel to lighting and heating to the data centres that host your business software, all the way down to the ink and paper for your printers. It all adds up.

To counter this, offsets for every tonne of carbon released are available by supporting green projects around the world. These projects are widely available – and of variable quality – through a variety of schemes, volumes and pricing options dependent on how much you want to offset.

At this stage we should point out that carbon offsetting is not the perfect solution. It is a way to alleviate your carbon footprint but it will not nullify it. Best business practice is to cease, reduce and finally offset – I.e cease anywhere possible to have an immediate impact in your outputs, reduce in all other areas of your life/business so that emissions are lessened at the source – then offset as your last possible alternative. It is a good stop gap answer for companies already engaged in carbon reduction schemes and represents a way to mitigate the worst impact of carbon production.

why is carbon offsetting important?

Carbon credits are an investment in emission reductions to drive the transition to a low-carbon economy. Even with clean energy gaining real traction, there is an enormous gap to fill to meet the ‘well below 2°C’ target the Paris Agreement set for limiting global temperature rise. Companies that set Science Based Targets, and follow through with policies to get them there, demonstrate best practice when it comes to corporate responsibility on climate action. In the UK, SMEs are responsible for nearly 1/3 of the country’s greenhouse gas emissions but only 3% say they have accurately measured their carbon footprint. The carbon offsetting process can deliver real world improvements in the fight against climate change – but only when done with proper data.

An important consideration to bear in mind is that responsible ESG policies are fast becoming a license to operate. As we have written elsewhere, consumers now expect companies to have credible and provable ESG policies – otherwise they look for alternatives. The regulatory landscape is demanding ever more in terms of environmental standards compliance and reporting. National commitments to the post COP26 will enforce greater accountability for corporates to take climate action. UK targets will require all greenhouse gases to be net zero by 2050 leading to higher taxation of GHG emissions. Even if your business hasn’t yet been affected, any business trading with larger national and multi-national organisations will soon be swept up in supply chain audits and commitments on the part of those larger organisations to cut their emissions across their entire operating network, including suppliers, contractors and partners.

Final THoughts

Carbon offsetting is complicated, flawed and easy to criticise but also well intentioned. In itself, carbon offsetting doesn’t go anywhere near close enough to closing the gap on what is needed in terms of GHG emissions reduction. Oxfam has estimated that the total amount of land required for planned carbon removal could be five times the size of India - the equivalent of all the farmland on the planet. But done properly, it helps. As with any system it is liable to be misused and a small handful of cynical organisations will use carbon offsetting as a license to pollute I.e. they continue doing exactly what they are doing now but gloss over their activities by offsetting what should really be reduced.

Offsetting done properly does help though and there is a place for it. The majority of organisations we hope, will see carbon offsetting in its fuller context I.e. adopting its rightful place in an action list of priorities, in other words, as part of a system of ceasing GHG emissions first, reducing second, and then finally offsetting. This is the process we need to embrace to stand any chance of meeting the 2° degrees climate pledge.

In part 2 we will be exploring some of the critical terminology used in carbon offsetting and cutting through the jargon to it down into layman’s term.