The Complete Guide to Carbon Offsetting - Part 3.

Choosing Your Project

As parts one and two of our guide have shown, carbon offsetting is complex. The process of reducing your carbon footprint starts far before you actually commit to an offsetting programme; ceasing and reducing emissions are the best foundations for a company to successfully reach their emissions goals.

So before you start researching the best carbon offset projects to align with your company values, you need to prioritise an accurate assessment of where your emissions are currently produced, calculate how much they are and implement a long-term emissions reduction strategy. .

getting to grips with your business’ environmental impact

Any claims around being ‘carbon-negative’ or ‘carbon-neutral’ risk being at best hopeful and at worst greenwashing without having measured your total GHG emissions beforehand. As with anything, you cannot reduce something until you establish a baseline against which you are making a reduction.

The UK government has provided a guide which walks businesses through how to measure and report their GHG emissions. The guide is intended for businesses of all sizes and suggests online tools you can use to input your information. It also gives good examples of case studies of businesses who have used the guide.

It sets out very clearly what information you need to collect, how you can report your GHG emissions, what unit of measurement you should be using - even how to set targets to reduce your GHG emissions.

A link to the full guide can be found here.

The Government officially recommends the Carbon Trust’s carbon calculator along with Defra’s conversion factor excel sheet.

You may not be able to quantify your emissions down to the final particle but a thorough assessment of your Scope 1 and Scope 2 emissions will give you a solid foundation of where you need to start making reductions along with a direction of how to do this. Every company will have different pressure points and areas of excess emissions – where you decide to make cuts and focus your attention will be entirely up to you and the way your business works.

We’ve put together a list of 10 questions to help most businesses think critically about, and potentially substantially reduce, your company’s (GHG) emissions.

Once you’ve spent time assessing these areas and made what changes you can, you’re in a position to choose an offsetting project – along with making sure you are offsetting to the right amount.

choosing an offsetting project

There is a certain level of scrutiny you need to apply to make sure you find the right project and are happy that the work you are putting in is actually making a difference.

There are five main areas to keep in mind when considering which offsetting program is best for you:

1. Additionality

Carbon sequestration happens naturally – trees have been doing it for millions of years.

Additionality is the principle that a carbon offset project should reduce greenhouse gas emissions above the level of sequestration that would have happened even if the project had not been carried out, I.e. the project is making a genuine impact.

Whilst difficult to test, the UN Framework Convention on Climate Change recommends asking the following questions:

Legal and Regulatory Test. If the carbon offset project goes beyond being a form of compliance to meet regulations or industry standards , it may be additional.
Financial Test. Projects that would not exist if it was not for the financial investment coming from carbon credits qualify as carbon offsets. Those that do not rely on this revenue stream do not. Ie. it has to derive the majority of its revenue from the carbon offset projects it offers to be considered addition.
Barriers Test. This assesses the barriers to implementation of a project such as local resistance and lack of expertise. Too many hurdles to clear could risk the long-term viability of the project.
Common Practice Test. Projects using widely used technologies are not necessarily additional because it is likely that the benefits of carbon offsets are not determining whether the project is viable or not. (Again, renewable energy could be a prime example).

For more in depth questions to ask on this subject see Appendix 1 - Additionality

2. Verification

A credible offsetting project should have both internal monitoring and third-party verification of any guarantees made regarding carbon/ GHG reductions. It goes without saying that claims made by a given project must be actually achieved.

To monitor their guarantees, projects should have established methodologies or protocols for measuring GHG emission reductions that are made clear to potential customers (just remember that variances in methodologies could produce different results – even for the same project). Organisations verifying the quality of carbon offsets may conduct ongoing monitoring of such claims so their reporting should be up to date and easy to access if required.

Carbon offsets are verified by independent third-party providers. There is no one central international verifying body.

The Gold Standard is, literally, the gold standard certification when it comes to third party offsetting measurement and gives the best, most informed, objective information when it comes to choosing a project.

For more in depth questions to ask on this subject see appendix 2 – Verification

3. Permanence

It is important that projects do not risk losing any gains made through poor planning.

An overwhelming number of carbon offset projects rely on tree planting initiatives for carbon capture. But is there a guarantee that the trees you have paid to plant will be there in 20, 30, 40 years’ time when they are fully grown and sequestering more carbon than they did as saplings?

Is there any guarantee that they will not be sold for logging or contingency should they be lost to disease? Major, reputable projects should have insurance to compensate for reversals (e.g. fire in a tree planting project).It is important to investigate these factors before committing to a project.

For more in depth questions to ask on this subject see appendix 3 - Permanence

4. Leakage

This is dealing with any unintended consequences for if and when a carbon offset project impacts emissions beyond the project boundary. e.g. If a project that stops deforestation in one area causes this activity to migrate to another area.

5. Double counting and ownership questions

Ownership of carbon offset credits must belong to one claim (and therefore a single company or person). If not, projects may be double-counted and the quantity of GHG reductions may be overestimated.

Double counting can occur in multiple ways, and it may be difficult for companies to verify this is not occurring, e. To do your best due diligence on this, we recommend you ask:

For proof of how credits are retired – there should be a certificates system or transaction ID numbers that show when a credit is purchased and by whom. If there is not, the project should probably come off your potentials list.

Is the credit issued by the same project as is making the reductions? Some offsets which can be bought on the market are sold by one company, but actually produced by another (known as indirect emission reductions) Claims to these emission reductions are inherently riskier because there is always a chance that the agent company and the project manager are claiming the emissions reductions. For simplicity’s sake and peace of mind, we would recommend you only purchase from the projects creating the reductions themselves.

Breaking away from a business-as-usual scenario requires out of the box thinking. While this may appear daunting it is really a great exercise in creativity. Businesses who truly reflect and act on these points first will create much more innovative business-models and avoid falling into the trap of simply ‘planting more trees’.

NOTE: ESGmark® has produced this document as a reference guide only.

For help in calculating your organisation’s environmental impact and implementing a carbon reduction strategy, please contact us.

The full series includes Part 1 - Introduction and Part 2 - Cutting Through the Jargon.

We have plenty more resources on this including how to switch to a green energy supplier, 10 Ways to Reduce Your Carbon Footprint Whilst WFH and our Guide to the UN Sustainable Development Goals.

appendix of useful questions

appendix 1. additionality

Questions to ask yourself:

· Are data and assumptions used to justify the project’s additionality available and easily accessible?

· How reliant is a project on data and assumptions vs. tangible, provable measurements?

· If the project is not currently legally required, is there reason to believe that it is being undertaken in anticipation of future legal requirements (or to avoid triggering such requirements in the future)?

· How large is the project’s offset credit revenue stream compared to other revenue streams or cost savings achieved by the project?

· Would the project cease reducing emissions if it did not continue to receive carbon offset revenues?

· Does the project identify – and describe in detail – credible implementation barriers?

· Does the project make a compelling case that offset credit revenues are needed to overcome these barriers?

· Is there a clear and believable case that offset credit revenues were a decisive factor in pursuing the project?

appendix 2. verification

Questions to ask yourself:

· Is the project applying the most recent version of the verification protocol to quantify emission reductions?

· Are there any gaps or other discrepancies in project monitoring data, and have these discrepancies been properly explained and addressed?

· Is the quantification protocol methodologically and scientifically sound? (Does an internet search for the protocol/methodology bring up anything problematic?)

· Is the project verified by any third-party organisations that check the project’s quality