Carbon Offsetting: Is It Good or Bad?

With growing public pressure and increasing regulations, businesses around the world are taking action to reduce their carbon emissions. To achieve carbon neutrality, some companies make use of carbon offset projects where it is difficult to reduce direct emissions. While some believe carbon offsetting is pivotal in meeting the ambitious global climate goals such as being carbon neutral by 2050, there has also been a lot of skepticism and controversy around this practice. Here is what you need to know.

What is Carbon Offset?

Carbon offset, in the broadest way, is a reduction of carbon emissions to compensate for the emissions of a company elsewhere. By paying for climate projects around the globe, companies are able to negate their unavoidable emissions. This is the concept: since all greenhouse gases combine in the atmosphere, it does not matter where the emissions are reduced as far as the effects on climate change go.

For example, if an air travel company wishes to lower its emissions, but is unable to switch to low-emission resources right away due to the nature of the industry, they can pay for renewable energy somewhere else in the world. This way the company can reduce their net emissions even when there is no feasible cleaner alternative.

For a company to measure and track their carbon offsets and count these reductions towards their climate goals, another term comes into play: carbon offset credit. Carbon offset credit refers to a transferable unit that represents an emission reduction of 1 ton of CO2. Companies receive carbon offset credits for their purchases from certified carbon offset projects, which they put towards their own emission reductions.

There are numerous carbon offset projects to pick from, such as tree planting and forest conservation programs, which count on the great carbon absorption capability of trees. Another option is soil management projects. Enriching the soil increases its carbon absorption, as well as helps avoid using artificial fertilizers that emit greenhouse gases. An innovative solution is direct air capture, where CO2 is directly removed from the air using chemical processes. It is also possible to pay for renewable energy sources to replace fossil fuel. These are only some of many, and with the market for carbon offset solutions growing there will be even more options.

The Positive aspects of Carbon Offsetting

Carbon offsetting can be a powerful tool in reducing emissions for a number of reasons. First, it allows companies that are not able to make large-scale changes to their business infrastructure to start cutting emissions right away. Companies that are currently reducing their direct emissions, on the other hand, can make up for the residual emissions through carbon offsetting and claim carbon neutrality.

There are also many external benefits of carbon offset projects that may go unnoticed. Projects towards expanding and preserving forests, for example, also generate biodiversity, protect wildlife and plant species, as well as sustain water and air quality in the area. As another example, investing in low-carbon energy sources such as clean burning cookstoves can immediately improve air quality.

The external benefits are not limited to the environment.. Many carbon offset projects are based in marginalized communities, where the economic benefit of carbon offset projects is imperative. The projects not only help generate wealth for the communities, but also create employment opportunities.

A great example is the Mikoko Pamoja project, which ensures preservation and restoration of mangroves in the Gazi bay of Kenya. A powerful carbon absorber, Mangroves help combat climate change, while the project itself creates jobs and a steady income for the local community. Furthermore, the income generated by the project has been used for the development of local infrastructure, such as installing water in the village, as well as purchasing supplies and textbooks for the local school.

Concerns about Carbon Offsetting

Despite all this, carbon offsetting faces criticism by many. Among the most frequently voiced concerns is that companies can pay for projects that would have happened without their support and claim to have reduced emissions. Here, the concept of additionality comes into play. Additionality is defined as net reductions beyond those that would have occured before intervention. However, determining the additionality of a project calls for meticulous accounting, which is why many of the carbon offset projects may fall short of this.

Another concern raised by many is that carbon offset projects may overpromise and underdeliver. For example, in tree planting projects, it is assumed that the trees will reach adulthood and use their full carbon absorbing capacity. However, if the program does not commit to preserving the trees it will only provide a small portion of the reductions.

A third concern is double-counting, which occurs when two companies claim the reductions from the same offset. This is obviously problematic, with both companies continuing their emissions with good conscience, while only half the amount is actually being offset.

Picking a Project

Although carbon offsetting offers many great benefits, there is some valid criticism. There are numerous carbon offset projects and some are better than others. According to the Carbon Offset Guide, there are three components of a reliable carbon offset program.

First is clear eligibility definitions and criteria for the design and first implementation phases of a project. This is to address the matter of additionality, confirming that a purchase will result in new carbon reductions.

Second is meticulous monitoring and project maintenance to ensure that the project performs according to the expectation, as well as overseeing of the verification and certification so that reductions are only offered for sale when the project is implemented.

The final component is transparent registration systems that clarify ownership, allow companies to trade offset credits, and track credit spending to prevent double-counting issues.

Conclusion

Ultimately, to combat climate change, total emissions need to be cut off as quickly as possible. So for all its upsides, carbon offsetting can never be the permanent solution. Where emission cannot be avoided, however, carbon offsetting is the next best thing. Even then, companies have to be mindful in choosing reliable carbon offset projects where emission reductions are delivered as efficiently and timely as promised.

How Could Faradai Sustain Support Your Business?

With our solution Faradai Sustain, we assist businesses big and small to use carbon offsetting to meet their climate targets. We partnered with API-first carbon removal marketplace Patch to democratize access to certified, long-term offsets. Together with Patch, we provide you with plentiful options for reliable and verifiable carbon offsetting in categories such as biomass, soil management, energy efficiency and more. Using Faradai Sustain, you can purchase, track, and manage your certified carbon offset credits all in one platform.

Faradai Sustain takes great care with the issues of additionality and maintenance, letting you track your project status. In order to avoid any instances of double counting or out of stock, we reserve the proper allotment of credits in our systems upon receiving a credit purchase request. For transparency and verifiability, the project certifications are available for you to view, download, and share at any time. The project certifications also include the proof that the applicable carbon offset project developers have retired all Credits on behalf of our customers in its corresponding registry, and provide proof of Credit delivery from the relevant project developers. All the projects are verified 3rd party groups including but not limited to CarbonPlan, BeZero, Verra, Gold Standard, Climate Action Reserve, and American Carbon Registry.

In addition to carbon offsetting, Faradai Sustain helps businesses with all things sustainability, including accurate and up-to-date emission calculators, data management for Scope 1, 2, and 3 emissions covering 2000+ activity data such as waste, water, transport, and supply chain, target setting in line with Science Based Targets Initiative (SBTi), progress tracking and more.

To find out more about how Faradai Sustain handles carbon offsetting and could support your business in sustainability transition start free now at  https://sustain.faradai.ai