Part 01: What is carbon offsetting?

November 10, 2021


Welcome to our series about carbon offsetting, the sustainability hero with a complex backstory and more than one skeleton in its closet!

As climate change becomes an increasingly tangible concern, reducing carbon emissions (or achieving net zero emissions) is becoming a priority for individuals, companies, and governments alike. Carbon offsetting is a conceptually neat and cost-effective way to eliminate - or rather, counteract - carbon emissions. In reality, the solution is not as simple as waving the offsetting wand. While there has been a proliferation of offsetting schemes over the last decade or two, they’re not all created equal.  Upon closer inspection, many programmes fail to deliver. For companies turning to carbon offsetting with the best of intentions, i.e. working in earnest towards reducing environmental impact rather than merely seeking a feel-good PR story, this comes as a disappointing blow.

We trust that our customers and partners are invested, as we are, in taking meaningful action where sustainability is concerned. In this series piece we unpack the realities of offsetting - the good, the bad, and the ugly - to show how it can (and can’t) be part of an impactful sustainability strategy for your company. 

Over the next few weeks we will post a new chapter on Tuesday and Thursday of this multi-part series that will culminate in a full unabridged version at the end.

What is carbon offsetting?

So, what exactly is offsetting?

The theory is simple: when one party emits carbon, they can pay someone else to perform equal and opposite actions on their behalf, to “cancel out” their emissions. In other words, through offsetting, institutions and individuals may balance out their carbon output by investing in green technology and sustainable development projects. 

"Net Zero" is when emissions equal offsets.

Broadly speaking, there are two kinds of carbon offsetting schemes: “Reduction” Schemes aim to reduce future emissions by improving existing processes. These schemes typically invest in renewable energy projects such as the construction of wind farms. On the other hand, “Removal” Projects focus on the here and now, by extracting or absorbing carbon and other greenhouse gases from the atmosphere. This can involve natural methods such as mass tree planting, or may take a tech-based approach, such as developing carbon capture and storage solutions (CCS) which lock away  industrial emissions from before they are released into the atmosphere.

Carbon offsetting schemes are predominantly invested in by developed nations, but the majority of schemes are situated in developing nations, often as part of the Clean Development Mechanism (CDM), the United Nations’ carbon offset scheme. CDM projects frequently involve reforestation of woodland or mangrove forests, protecting forested land from destruction, or replacing outdated technology with ”cleaner” alternatives such as introducing LED lighting to rural communities. The CDM aims to be win-win, with sustainable development going hand-in-hand with limiting present and future carbon emissions.

Investing in carbon offsetting is now a well-worn route for companies looking to boost their sustainability credentials, but how did this strategy become so ubiquitous (and is it a good thing)? The answer, as you may have guessed, is... Complicated. 

Want to understand the hows and whys of offsetting?  Read part 2 through the link below

Part 02 - Understanding Carbon Markets: The who, how, and why of offsetting

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About the author:

Helena Maratheftis writes regular content for Converge. She is a creative with an academic background in biology (BA) and the environmental sciences (MSc). Her special interest lies in science communication.

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