Carbon Offset

Carbon offsets are tradable “rights” or certificates linked to activities that reduce the amount of carbon dioxide (CO₂) in the atmosphere.

By buying these certificates, a person or company can finance projects that help to combat climate change, alongside measures to reduce their own carbon emissions. In this way, the certificates “offset” the buyer’s CO₂ emissions by reducing CO₂ emissions elsewhere by the same amount.

How does buying CO₂ offsets keep CO₂ out of the atmosphere?

Carbon offsets finance specific projects that either reduce CO₂ emissions or “sequester” CO₂, i.e. remove all CO₂ from the atmosphere and store it. Some common examples of projects are: afforestation (with very strict rules), renewable energy development, carbon sequestration agricultural practices, waste and landfill management, human rights and family planning. Carbon offsets are given to project owners, who sell them to third parties, such as companies that want to offset CO₂ released into the atmosphere by paying to remove CO₂ elsewhere.

Although carbon offsetting is easy to understand, its production presents a number of challenges. To issue carbon offsets, a project must demonstrate that it actually reduces emissions. It must also be possible to accurately calculate the amount of CO₂ removed from the atmosphere. This process requires well-documented standards and protocols, and a reliable method to check that the project is doing everything it claims. These procedures are costly and may be specific to a particular project type. But without them, we cannot be confident that buying carbon offsets will actually reduce the amount of CO₂ in the atmosphere.

Benefits and challenges

The benefits of carbon offsets may outweigh the challenges. Imagine, for example, a company trying to switch from a process that emits a lot of CO₂ to a carbon-free but expensive technology. If the company can emit carbon offsets for every tonne of CO₂ that its new technology keeps out of the air, selling such offsets could help finance the investment.
This principle can be applied at national, regional or sectoral level. Countries, states or industries that have emission reduction targets can buy offsets from other countries, states or industries where it is cheaper to reduce greenhouse gases. This could make it cheaper overall for the world to meet its emissions targets.

While carbon offsets offer attractive benefits, it is important to bear in mind the challenges and costs of their use, including the difficulty of verifying the environmental benefits. A number of studies examining offset markets have found evidence of ‘over-crediting’, i.e. selling offsets that promise more emission reductions than they actually achieve. A further concern is whether companies and countries are using carbon offsets as a ‘get out of jail free card’ to avoid reducing their own carbon emissions. However, when used properly, offsetting is a useful tool in the fight against global warming, the OurOffset team guarantees that.