Blog: CO₂ Offsets
The good resolutions for 2022 have just been made. Time to tackle your company's offset strategy as well. We explain what is important in CO₂ compensation.
The terms CO₂ compensation or carbon offset are on everyone's lips. Their goal is to achieve climate neutrality. A company buys carbon credits to offset its CO₂ footprint. In this way, it shows its employees and customers that it is committed to a more sustainable future and takes responsibility for its emissions.
However, the concept of carbon offsetting is often misused. In fact, the issue is complex. At first glance, it is often impossible to distinguish between reputable and bad providers of carbon credits. We have therefore summarised what you need to know in order to avoid stumbling blocks and to define a sensible strategy for offsetting emissions in your company.
The term carbon offset always comes up when defining a sustainability strategy. The Gold Standard certification organisation defines the term "carbon offset" or "carbon credit" as a "certified reduction or removal of one tonne of carbon dioxide equivalent (tCO₂e) from the atmosphere". But what is the point of offsetting - isn't it just an excuse to pollute the environment even more with a clear conscience by making companies pay for it? The answer is a clear no - at least if CO₂ offsetting is used correctly. Read on to find out exactly what this means. What's more, most climate action projects not only have an impact on the environment. They also contribute to achieving the 17 Sustainable Development Goals developed by the United Nations.
Companies should only offset emissions once they have done everything they can to reduce their carbon footprint. This is also the clear message of the Science-Based Targets initiative. It supports companies in setting emission reduction targets that are in line with those of the Paris Agreement. In its guidelines, the organisation states that carbon credits should only be used to neutralise residual emissions (emissions that companies cannot reduce due to technical limitations) or to finance climate action measures that are taken beyond the emission reduction targets. Here, one could accordingly also speak of "climate contributions" instead of "carbon offsets", according to the proposal of another organisation, the Net Zero Initiative.
Buying carbon credits does not immediately offset your carbon footprint because your greenhouse gas emissions end up directly in the atmosphere. Offset projects, however, take years until emissions can be avoided or CO₂ can be captured. And yet, by buying carbon credits, you offset your carbon emissions and contribute to global climate neutrality. What types of carbon offsets are there? You now know the concept of carbon offsetting. Still, it's not easy to navigate the crowd of offset projects on the market. To give you a better overview, let's take a closer look at the terms carbon emissions and carbon sinks. By 2020, we will have emitted 38 billion tonnes of CO₂ worldwide. These emissions come from the use of fossil fuels and from changes in land use, such as transport, agriculture, buildings, and energy production. Around 40% of these emissions are captured by natural carbon sinks. There are two types: vegetation and the oceans. The remaining 60% of emissions remain in the atmosphere. They amplify the greenhouse effect, which is responsible for climate change.
You now know the concept of carbon offsetting. Still, it's not easy to navigate the crowd of offset projects on the market. To give you a better overview, let's take a closer look at the terms carbon emissions and carbon sinks.
By 2020, we will have emitted 38 billion tonnes of CO2 worldwide. These emissions come from the use of fossil fuels and from changes in land use, such as transport, agriculture, buildings, and energy production. Around 40% of these emissions are captured by natural carbon sinks. There are two types: vegetation and the oceans. The remaining 60% of emissions remain in the atmosphere. They amplify the greenhouse effect, which is responsible for climate change.
There are two types of offset projects: Carbon abatement projects reduce emissions emitted by human activity (see the left side of the graph). Carbon removal projects, on the other hand, increase the amount of emissions that are captured by natural carbon sinks. They therefore limit the amount remaining in the atmosphere (see the right side of the graph).
These offset projects reduce CO2 emissions caused by human activity. They include, for example, reducing emissions from deforestation and forest degradation (REDD+), energy efficiency and switching to alternative fuels, or improving land and waste management. Most of the available offset projects fall into this category.
They increase the amount of carbon sequestered by carbon sinks. Simply put, these projects remove carbon dioxide directly from the atmosphere. This category includes biological sequestration, in which carbon is sequestered in the soil (e.g. through afforestation). In the "direct air capture" method, on the other hand, CO2 is sucked directly out of the air. And with capture and storage, it is not even released into the atmosphere, but is stored in underground reservoirs.
You now know why and when you should offset your company's emissions and know the different types of offset projects. Now you know how to choose suitable projects for your company. We show you which criteria the projects should fulfil and how you can avoid financing greenwashing projects. These are not only bad for the environment, but also damage the credibility of your company.
The following list summarises what you should consider before buying carbon credits. It is based on the Oxford Principles for Net Zero Offsets, the Gold Standard assessment criteria and the BeZero assessment system. Accordingly, a carbon credit should meet the following criteria:
1. Real : The amount of emissions avoided or carbon removed is based on realistic underlying assumptions. This avoids over- or double-counting. This criterion ensures that the amount of avoided or removed CO2 emissions is not overestimated.
2. additional: The emissions would not have been avoided or eliminated without the project.
3. permanent: In some cases, carbon storage can be reversed. This is the case, for example, in afforestation projects when trees and forests are damaged. This criterion is therefore particularly important if the project is located in an area exposed to political instability or high risks of climate change.
4. independently verified: Project data and impacts are verified by a third party and the verification process is transparent. This third party can be a certification body. The most common standards are the Gold Standard, the Verified Carbon Standard (VCS) and the Climate Action Reserve (CAR). All credits issued on the basis of such a standard are regularly verified by a third party.
When choosing a project, make sure that it meets as many of these points as possible. Ideally, it should also meet your company's corporate and social responsibility goals.
Now you know the conditions and pitfalls that companies should be aware of when defining an offset strategy. You can now implement the following measures to offset your remaining emissions until 2021 (and beyond).
We cannot repeat it enough: it is essential to determine the amount of greenhouse gases your company emits and identify the main drivers of your footprint. This will reduce your environmental impact and fulfil your duty as a company to report on sustainability. Our easy-to-use carbon footprint calculator CARMA will help you assess where your greenhouse gas emissions come from. If you don't want to calculate your footprint yourself, contact our advisory service at email@example.com.
Once you have identified the main sources of yourcarbon footprint, you can start implementing the reduction measures. Don't worry, here too we make it easy for you! In our previous blog articles, you can find tips on reducing emissions in the areas of energy and mobility. In CARMA, you also have access to a list of CO2 reduction measures that you can implement in your company in each category (energy, mobility, food, office and IT...). This also includes a checklist for the step-by-step implementation of the respective measure.
For the remaining unavoidable emissions, you can use the tips in this blog post to offset emissions and voluntarily fund additional carbon capture and avoidance projects. Be sure to choose high-quality offset projects. They should be certified, genuine, additional, permanent, independently verified and in line with your company's CSR objectives. Don't forget to communicate your choice of offsets transparently! To save you time in your research, we have collected some suitable projects for you. You can buy them here in our webshop.