Carbon offsetting: An essential strategy for reducing carbon footprints

26 Jun 2023 | 11 min read

Carbon offsetting: An essential strategy for reducing carbon footprints

As the effects of climate change become increasingly dire, acting on our shared responsibility for reducing carbon emissions is more critical than ever. One increasingly popular strategy is carbon offsetting — a practice that empowers individuals, organizations, and countries to neutralize their carbon footprints by investing in projects that reduce or remove greenhouse gas (GHG) emissions elsewhere. But what is carbon offsetting, how does it work, and what role does it play in the global fight against climate change?

Understanding carbon offsetting

A carbon offset represents the reduction of one metric ton of carbon dioxide or its equivalent in other GHGs. When the number of carbon offset credits bought is equal to an individual or organization’s carbon footprint, they effectively become carbon neutral. The money invested in these credits often flows into environmentally friendly projects, such as reforestation, renewable energy, and green technologies.

Carbon offsetting is a reduction in GHG emissions made to compensate for emissions made elsewhere. These offset credits serve as evidence that an organization or individual has reduced their emissions. Thus, the term “carbon offset” pertains to both the credit and the act of carbon offsetting.

Carbon footprints: Direct and indirect emissions

A carbon footprint encompasses the total GHG emissions generated by the activities of a person or organization, including direct and indirect emissions. Direct emissions are those that originate from sources owned by the reporting entity — for example, the carbon dioxide emitted from a company-owned delivery vehicle.

Indirect emissions, on the other hand, result from activities that the reporting entity doesn’t directly control. These include emissions from upstream and downstream activities, such as the supply chain. For example, the production of a T-shirt results in indirect emissions at various stages — from the cultivation of cotton to the shipping of raw materials and the final product, and eventually, to the decomposition of the material in a landfill.

Many websites, including the U.S. Environmental Protection Agency (EPA), provide free carbon footprint calculators to help individuals and organizations assess their carbon footprints.

The carbon offsetting process

The carbon offsetting process can be either voluntary or regulatory, involving both organizations and individuals. In essence, a person or a company pays a broker to remove a portion of carbon from the atmosphere, often in a different part of the world.

Consider an individual taking a flight that will release a certain amount of GHG into the atmosphere. They can use a tool to calculate the emissions produced by that flight and buy a carbon credit from a broker to offset those emissions. The broker deducts a fee and invests the remaining money in a project that reduces carbon emissions, such as reforestation.

Carbon credits today cost $3 to $5 per ton of carbon emissions, but the price is expected to rise dramatically in the next decade.

The role of technology in carbon offsetting

Tools like AiDash Biodiversity Net Gain Management System (BNGAI) can streamline carbon offsetting, and support informed and effective decisions in the fight against climate change. BNGAI tools can help measure carbon footprints, identify potential areas for emission reduction, and plan for sustainable future activities.

Regulations and steps to offset carbon emissions

Regulations like the British Standards Institution’s PAS 2060 Standard for Carbon Neutrality provide guidance on how to demonstrate carbon neutrality and develop a carbon management plan. To offset carbon emissions, an organization can follow these 3 steps:

  • Calculate and measure emissions: Organizations can use internationally recognized accounting standards like the GHG Protocol Corporate Accounting and Reporting Standard to measure and manage their GHG emissions. This protocol categorizes emissions into 3 scopes:
    • Scope 1: Direct emissions from sources that an organization owns or controls.
    • Scope 2: Indirect emissions from electricity, steam, heating, and cooling resources that an organization purchases.
    • Scope 3: Other indirect emissions originating from an organization’s value chain.
  • Reduce emissions where possible: After measuring emissions and identifying their sources, an organization can develop a sustainability strategy. The Science Based Target Initiative (SBTi) provides guidelines for reducing emissions, advising companies to use 80% renewable electricity by 2025.
  • Offset remaining emissions: Emissions that cannot be reduced outright can be offset by investing in certified projects that remove or reduce carbon dioxide.

The real value of carbon offsetting

Offsetting can play a crucial role in combating climate change, but it is only one of many necessary climate solutions. While offsets do not directly deter polluters from producing GHGs, they do encourage better carbon policies and implementation where there previously were none.

To truly solve climate change, leading carbon emitters must commit to carbon neutrality. This means developing sustainable supply chains and investing in renewable and clean energy sources.

Examples of carbon offsetting

Carbon offsetting projects take many forms:

  • Forestry: Tree planting projects restore areas facing deforestation. Trees absorb and hold carbon that would otherwise contribute to global warming.
  • Agriculture: Farmers use technology to maximize resources and reduce waste when growing crops.
  • Aviation: Airline operators optimize flight paths with AI to minimize the creation of contrail clouds.
  • Renewable energy: These projects replace fossil fuel use with clean, renewable energy, such as that generated from a wind farm.
  • Water management: Projects get clean water to areas with polluted or otherwise contaminated water to reduce the need to chemically treat or boil water.
  • Waste management: Projects capture the methane generated in landfills from waste disposal.
  • Carbon sequestration: Projects use carbon capture and storage to put carbon in places where it’s unlikely to be released back into the atmosphere.
  • Energy efficiency: Projects aim to improve the efficiency of existing infrastructure by upgrading building insulation, for example.

Transparency about offsetting strategies and supported projects is essential to avoiding accusations of greenwashing — a practice where organizations falsely present their products, goals, or policies as environmentally friendly.

Carbon offsetting serves as a powerful tool in the arsenal against climate change, allowing organizations to counterbalance carbon emissions and take a step towards a more sustainable and balanced future. Harnessing technology like AiDash BNGAI can make this process even more efficient and impactful.

FAQ Section

Q: Is it possible for any company to achieve carbon neutrality through the use of carbon offsetting?

A: Theoretically, the answer is yes: Any company can become carbon neutral by implementing carbon offsetting strategies. But, in reality, while carbon offsetting is an extremely powerful tool, it’s not a cure-all for every organization’s carbon difficulties.

Carbon offsetting is often seen as a way of buying an organization out of a carbon problem. However, paying for emissions doesn’t encourage a business to alter its behaviour, reevaluate its processes, or innovate in ways that might lead to lower emissions in the first place. Carbon offsetting is more of a bandage on a wound rather than an antibiotic that cures the infection.

To achieve carbon neutrality, an organization needs to look beyond offsetting. What actions can they take to slash their direct emissions, push for renewable energy, and demand sustainable practices across their supply chain? Only after they’ve exhausted these measures should offsetting should be considered, to address whatever emissions remain.

Q: Why are some critics skeptical about carbon offsetting?

A: Critics often point out that carbon offsetting practice could potentially become an “easy way out” for businesses. Their concern is that organizations might see offsetting as a green pass, a way to plaster over harmful practices rather than making meaningful systemic changes, such as energy efficiency upgrades, waste reduction, or a shift to renewable energy sources.

Q: Do carbon offset projects always work as intended?

A: The impact of carbon offset projects can vary significantly based on numerous factors. For example, let’s take a project that aims to grow a forest to absorb CO2. Actual carbon absorption rates may vary based on:

  • Growth rate of the trees.
  • Potential risks, such as forest fires or diseases.
  • Possibility that the trees might be cut down in the future.

Thus, while many projects may start with the best offsetting projections, actual rates of carbon absorption will vary, based on both natural and manmade activity.

Q: Can carbon offsetting alone stop climate change?

A: Carbon offsetting is an essential tool in the fight against climate change, but it is not the sole answer to our environmental challenges. While it can contribute significantly, other strategies — such as reducing emissions, adapting to changes, and creating more sustainable societies — are essential. The battle against climate change must be multi-faceted.

Q: How can I be sure that my carbon offset purchase is making a real difference?

A: It takes some homework to ensure that your carbon offset purchase has a genuine impact. Look for projects that are verified by reputable third parties, meaning they’ve been thoroughly vetted, and their claims of emissions reduction are reliable. Projects certified by standards like the Gold Standard, Verified Carbon Standard (VCS), or the United Nations’ Clean Development Mechanism (CDM) are usually good bets.

Another way to ensure carbon offsets are valid is for organizations to create their own: Businesses such as utilities, farming, mining, and timber can look to the carbon reduction potential of their own land holdings as a simpler and more affordable way to measure, control and implement this element of their carbon reduction strategy.

AiDash’s expansion of BNGAI allows organizations to use satellite imaging combined with AI to determine the amount of carbon captured in land, predict the potential to capture additional carbon, and help build plans. The solution not only provides measurements that meet carbon credit standards, but also continuous evidence to prove that credits are based on additional carbon captured and that carbon remains permanently captured in the ground, which is crucial for credible ESG reporting.

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