Carbon offsets: What they are and how they work

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The current trajectory, fueled by existing climate policies, is projected to lead to a global temperature increase of at least 2.7°C by 2100, far surpassing the ambitious Paris Agreement target of 1.5°C. To avert catastrophic consequences, transitioning to a net-zero carbon dioxide (CO₂) emissions economy by mid-century is an urgent necessity. Corporate <a href="https://climeworks.com/blog/key-steps-to-to-building-your-company-s-net-zero-strategy" class="link">net zero strategies</a> serve as pivotal tools in this global endeavor.</p><h3>The role of carbon removal offsets in addressing climate change</h3><p>To ensure that your net zero strategy contributes meaningfully to climate mitigation, a comprehensive approach is essential. As advised by climate experts, businesses must employ a multifaceted strategy that encompasses both emissions reduction and removal. The Science Based Targets Initiative (<a rel="noopener" target="_blank" href="https://www.linkedin.com/company/science-based-targets/" class="link">SBTi</a>) framework emphasizes the need to combine emissions reductions with the active elimination of unavoidable CO₂ emissions.</p><h3>Understanding carbon offsets</h3><p>While the concept of carbon offsets might seem complex, it's relatively straightforward. Any business operation inevitably releases gases into the atmosphere.</p><p>A credible net zero strategy requires businesses to invest in carbon offsets to mitigate their impact across these three scopes and contribute to climate change mitigation. Carbon offsets work by either removing carbon from the atmosphere or avoiding emissions in the first place.</p><h3>Carbon offset definition</h3><p>Let's return to the basics before tackling the difference. Any business in operation releases some quantity of global warming gases into the atmosphere. These emissions cover three scopes, which you can remember using the phrase: burn, buy, beyond.</p><ul><li><p>Scope 1, “burn,” covers direct greenhouse gas emissions such as those released from burning fossil fuels.</p></li><li><p>Scope 2, “buy,” covers indirect greenhouse gas emissions from purchasing electricity or heat.</p></li><li><p>Scope 3, “beyond,” covers those greenhouse gas emissions that are often beyond an entity’s control — for example, sourcing and transporting of goods, employee commuting, or disposal of company produce. </p></li></ul><p>As part of a credible<strong> net-zero strategy,</strong> a business will need to invest in carbon offsets (on top of reductions) to reduce their impact across these three scopes and do their part to help mitigate climate change. Carbon offsets facilitate this in two ways: by removing carbon emissions from the atmosphere. Keep reading, and we’ll explore these two types of carbon offsetting more deeply.</p><h3>Conventional carbon avoidance, and the types of carbon offset projects</h3><p>Conventional avoidance carbon offsets counteract future CO₂ emissions. This involves supporting projects that decrease emissions, such as preserving forests or promoting regenerative agricultural practices. These projects generate carbon credits, which businesses can purchase to offset their emissions. However, these face criticism due to the inherent uncertainty in measuring avoided emissions.</p><p>But while there’s some merit here, conventional avoidance carbon offsets face specific criticisms when used alone within net-zero strategies. Because the purchase of carbon credits effectively functions as a license to emit, the difficulty with measuring how much CO₂ has been avoided has come under some scrutiny. With many of them, you’re measuring a hypothetical situation that never actually occurred — i.e., would the forest have been cut down without the company’s intervention? Alternatively, how much carbon dioxide would have been released if a forest were logged? The answers can only ever be guesses or estimations, which begs whether a company purchasing avoidance carbon credits has neutralized its emissions. As Jonathan Goldberg, CEO of Carbon Direct, says, “The carbon avoidance in these offsets is counterfactual math. Maybe someone else can figure it out, but I can’t” <a rel="noopener" target="_blank" href="https://www.greenbiz.com/article/quest-carbon-offsets-almost-anything-goes" class="link">(Source)</a>. </p><p>Luckily, the market constantly evolves with increased guidance from entities such as The Voluntary Carbon Markets Integrity Initiative (VCMI). Additionally, at the end of 2021, <a rel="noopener" target="_blank" href="https://vcmintegrity.org/" class="link">The Taskforce on Scaling Voluntary Markets</a> (TSVM) proposed adding new criteria to registered carbon credits that would help bring more transparency to the market, allowing buyers a clearer view of the impact of their chosen projects. Early participation in voluntary carbon offsets is essential to further developing this and growing the market.</p> </div> </div> </div> </section> <section class=" py-14 md:py-16 lg:py-20 first:-mt-14 md:first:-mt-16 lg:first:-mt-20 !pt-0 "> <div class="page-container "> <div class="col-start-[content-l] col-end-[content-r]"> <div class="grid-container "> <div class="col-start-1 col-end-13 md:col-end-13 max-w-body-text"><figure> <picture> <source srcset=" /glide/containers/images/iceland/iceland.jpg/63cde6583e5ac746b9ae8ffe19a128f3.webp 375w, /glide/containers/images/iceland/iceland.jpg/31159e65b10545ff429b69c4f69d8c2b.webp 640w, /glide/containers/images/iceland/iceland.jpg/d5e22bf5445991ed55895b5e8229a340.webp 1280w, /glide/containers/images/iceland/iceland.jpg/6318a156e254d9392d205438b30208d3.webp 1920w, /glide/containers/images/iceland/iceland.jpg/48e1489c1319e188497c9cb133ff2e01.webp 2500w " sizes="(min-width: 768px) 768px, 95vw" type="image/webp" > <img width="1200" height="851" src="/glide/containers/images/iceland/iceland.jpg/52ffa7c889090b888cf45811c2b250a1.jpg" alt="Carbon removal offset" class="" loading="lazy" > </picture> </figure></div> </div> </div> </div> </section> <section class=" py-14 md:py-16 lg:py-20 first:-mt-14 md:first:-mt-16 lg:first:-mt-20 !pt-0 "> <div class="page-container "> <div class="col-start-[content-l] col-end-[content-r]"> <div class="prose"> <h3>Carbon removal offsets, high-quality carbon removal</h3><p>This solution directly reduces the concentration of CO₂ in the atmosphere. They are crucial for addressing historic emissions and neutralizing unavoidable emissions, even after achieving net zero. Methods include afforestation, bioenergy with carbon capture and storage (BECCS), enhanced weathering, and direct air capture and storage (DAC+S). They can be used for two purposes: </p><ul><li><p>To remove historic emissions.</p></li><li><p>To remove unavoidable emissions and help companies reach net zero.</p></li></ul><p>According to the Science Based Targets initiative (SBTi), we must reduce our CO₂ emissions by at least 90% before 2050, but there will still be around 10% of unavoidable emissions remaining. The IPCC has emphasized that carbon removal is essential to neutralize these unavoidable emissions and keep global warming below 1.5°C. We need to extract billions of tons of CO₂ from the atmosphere before 2050 and beyond — even if we reach net zero by 2050, we’ll still need to remove 3-12 Gt of CO₂ every year. That’s why businesses need to invest in high-quality carbon removal to help scale new technologies. Several solutions are currently on the market, including afforestation, bioenergy with carbon capture and storage (BECCS), enhanced weathering, and direct air capture and storage (DAC+S) — which is what we do here at Climeworks. </p><p><a href="https://climeworks.com/direct-air-capture" class="link">Direct air capture</a> is a carbon removal technology that captures carbon dioxide from the atmosphere using special filters. The CO₂ is then heated, combined with water, and injected underground. It’s an attractive carbon removal solution because of its permanence, as the captured CO₂ is geologically stored for over 10,000 years, but it’s also fully measurable and verifiable. We can track exactly how much CO₂ is extracted from the atmosphere, and we’ve designed the first DAC+S methodology with Carbfix to verify our carbon removal services.</p><p>To learn more about our technology to fight global warming, <a href="https://climeworks.com/carbon-removal-technology" class="link">visit our carbon removal solution page.</a></p><h3>Choosing the right approach: how to use carbon offsets</h3><p>While both options have their roles to play, carbon removal offsets offer a more robust foundation for a net zero strategy. They directly address the root cause of climate change by removing CO₂ from the atmosphere. However, a balanced approach may involve combining both offset types, gradually transitioning towards a greater emphasis on carbon removal.</p><p>The important thing to remember is that if you’ve started with one type, there’s no need to change your portfolio overnight. You can gradually start investing in CDR, evolving your portfolio towards 100% removals as outlined in <a rel="noopener" target="_blank" href="https://www.smithschool.ox.ac.uk/research/oxford-offsetting-principles" class="link">The Oxford offsetting principles</a>.</p><p>It’s about creating a robust net zero strategy with a holistic approach, using all the tools available to us to do our part in mitigating climate change. As Katharine Hayhoe, Chief Scientist at The Nature Conservancy, writes: “We have to turn off the hose (reduce emissions), make the drain bigger (carbon removal), and learn how to swim (resilience), and the faster we turn off the hose, the better off we'll all be.”</p><h3>To conclude, let's quickly mention carbon credits</h3><p>Carbon credits are a tradable unit representing one metric ton of carbon dioxide equivalent (CO2e) that has been reduced, sequestered, or avoided. They are issued through verified carbon projects such as renewable energy initiatives, forest conservation programs, or emissions reduction technologies (e.g. DAC+S).</p><p>Businesses can purchase carbon credits to offset their emissions, a practice known as carbon offsetting. By purchasing carbon offsets to offset their emissions, businesses can demonstrate their commitment to sustainability and reduce their overall carbon footprint.</p><p>It's important to note that carbon credits should not be viewed as a substitute for reducing carbon dioxide emissions. They are a complementary tool that can help businesses achieve their net zero goals while supporting positive environmental outcomes and differ from carbon dioxide removal. Also, the quality and integrity of carbon credits vary, so it's crucial to select projects that are verified by reputable standards and have a measurable impact on emissions reduction.</p><h3>Frequently asked questions</h3><h5>How are removal offsets different from carbon offsets?</h5><p>Carbon offsets typically involve projects that avoid greenhouse gas emissions, such as renewable energy projects or reforestation. Carbon removal, on the other hand, focuses on actively removing carbon dioxide from the atmosphere and storing it long-term.</p><h5>How can I purchase CO₂removal?</h5><p>You can purchase carbon removal through various platforms and organizations. However, It's important to choose reputable providers that offer high-quality, verified offsets. Have a look at our offering.</p><h5>Should I rely on removals only?</h5><p>No. Prioritizing reducing emissions through energy efficiency, renewable energy adoption, and sustainable practices remains crucial.</p><h3>Ready to take action?</h3> </div> </div> </div> </section> <section class=" py-14 md:py-16 lg:py-20 first:-mt-14 md:first:-mt-16 lg:first:-mt-20 !pt-0 "> <div class="page-container "> <div class="col-start-[content-l] col-end-[content-r]"> <div class="grid gap-x-grid-gap gap-y-14 md:grid-cols-2 md:gap-y-grid-gap lg:grid-cols-3"> <article class="group space-y-4"> <a href="/direct-air-capture" aria-label="Direct Air Capture technology" tabindex="-1" class="block overflow-hidden"> <div class="aspect-video bg-gray-light"> <picture> <source srcset=" /glide/containers/images/orca/orca_roadmap_1920x1080.jpg/6896d8a7823a277272a435f71f41035c.webp 375w, /glide/containers/images/orca/orca_roadmap_1920x1080.jpg/0bbb06d9b487791616e2ca1cd68344a0.webp 640w, /glide/containers/images/orca/orca_roadmap_1920x1080.jpg/9fabd2b26fdf06a35964522e82571e76.webp 1280w " sizes="(min-width: 1280px) 368px, (min-width: 768px) 447px, 95vw" type="image/webp" > <img width="1920" height="1080" src="/glide/containers/images/orca/orca_roadmap_1920x1080.jpg/39d0fd307b4e2a3078ce2688be932bde.jpg" alt="Direct Air Capture technology" class="transition-transform duration-500 group-hover:scale-105" loading="lazy" > </picture> </div> </a> <div> <h3 class="heading-h5 transition-opacity hover:opacity-60"> <a href="/direct-air-capture">Direct Air Capture technology</a> </h3> <div class="prose"> <p class="line-clamp-6"> Our Direct Air Capture (DAC) technology is one of the key technological solutions to fight climate change. </p> </div> </div> </article> <article class="group space-y-4"> <a href="/subscriptions-co2-removal" aria-label="Remove CO₂ (B2C)" tabindex="-1" class="block overflow-hidden"> <div class="aspect-video bg-gray-light"> <picture> <source srcset=" 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Carbon offsets: What they are and how they work