Everything you need to know about carbon offsets
Your carbon offset questions answered
What is a carbon offset?
The process begins with project developers designing projects with the aim of reducing carbon dioxide emissions.
When the developer establishes their project – such as a solar power plant – they can opt to go through a stringent assessment methodology developed by a carbon standards organisation (like the Gold Standard and the Verified Carbon Standard), to assess the real-world reductions of emissions which will be caused as a result of the project activity.
This impact is measured in tonnes of carbon dioxide (tCO2) or tonnes of carbon dioxide equivalent (tCO2e). Carbon dioxide equivalent refers to a unit of measurement that is used to standardise the climate effects of various greenhouse gases based on their global warming potential over a specific timeframe. The tonnes of carbon dioxide equivalent that has been reduced (or removed) by the project activity, is represented by a ‘carbon credit’ which is issued to the project developer. The carbon credit is often considered as a permit or licence to emit that one tonne of carbon dioxide (or carbon dioxide equivalent).
The developer is then welcome to sell these credits to other parties who are looking to buy them to offset their emissions. ‘Carbon offsetting’ is therefore a term which describes the act of purchasing credits to balance (or ‘offset’) the emissions caused by an activity – like a personal annual footprint, or the emissions caused through a company’s operations.
Once purchased, the buyer then can ‘retire’ the credits, meaning that they can no longer be bought or sold, and the right to produce the emissions which the credit represents is gone forever. In this way, credits provide a vehicle for converting money into climate impact.
Can't I just offset my emissions by planting trees?
Lots of organisations will advertise the opportunity to plant trees to balance emissions – but this should not be considered an ‘offset’ (unless the project has been issued with carbon credits by a reputable carbon standard) and you cannot make claims to carbon neutrality or net-zero through doing this. You might notice that often these kinds of organisations will conspicuously avoid using the word ‘offset’ for this reason.
If you want to offset the carbon footprint of something – for example to make claims about your business being carbon neutral – you should do so with verified tonnes of emissions reductions, by purchasing carbon credits.
There is a growing market for carbon removal offsets as businesses push for net-zero targets. Over time, more nature-based carbon removal projects will become available – but these must only be used for offsetting purposes if, and only if, they have been issued with verified credits by a recognised standard. Without a proper accreditation process, such as the Gold Standard or the Verified Carbon Standard, the credits are not a verified carbon offset, and you cannot make claims to being a carbon neutral or net-zero organisation. Effective carbon offsets all share some key characteristics; the carbon emissions avoided by the project must be evidenced, the avoided carbon emissions have to be accurately measured, the avoided emissions must be permanently avoided and not released sometime in the future, and leaked carbon emissions released by the project must be accounted for. Read our handy guide to understanding why Ecologi does not use reforestation projects to offset carbon emissions.
What's the difference between reduction and removal offsets?
Carbon reduction refers to reduced or avoided emissions as a result of the project activity.
For example, a solar power plant can be issued with carbon reduction credits because the renewable energy it produces displaces emissions-heavy energy generated from fossil fuels in the national grid.
The voluntary market for carbon reduction credits is well-established, and there are millions of credits for carbon reduction in circulation already. Examples of projects which have been issued carbon reduction credits include wind farms, solar power plants, avoided deforestation projects, and the distribution of fuel-efficient cookstoves.
You can use carbon reduction credits to go carbon neutral, provided that you have purchased sufficient credits to account for the emissions that you produce. You cannot rely on carbon reduction credits to become net-zero.
Carbon removal refers to emissions which have been removed from the atmosphere and stored (thus negating their global warming potential) as a result of the project activity.
For example, types of potential carbon removal projects might include the production and burial of bio-oil, bioenergy with carbon capture and storage (BECCS), direct air capture with carbon storage (DACCS) and enhanced weathering.
Tree-based removals, such as the Woodland Carbon Code issues credits to forestry projects in the UK after a woodland project reaches a certain age, to recognise the fact that the trees in the project are sufficiently mature to sequester (absorb) carbon from the atmosphere and store it in their biomass. However, there are ongoing conversations about the permanence of tree-based and nature-based removals as solutions and whether they can be considered to be removals as opposed to reductions.
Different approaches have different storage potential – since some methods of storing the sequestered carbon (like burying it underground) are more easily guaranteed to be permanent than others (like maintaining a forest).
As of March 2022, there are no artificial carbon dioxide removal technologies which exist at comparable scale to the projects available for carbon reduction. Technology currently on the market is likely to be experimental and its impact less verifiable than carbon reduction projects. The race currently is on to scale up reliable carbon removal capacity so that businesses and individuals can contribute towards projects which actively remove carbon from the atmosphere. When this market emerges, businesses will be able to use carbon removal credits to contribute towards their net-zero strategies – provided they have reduced all possible emissions first.
This last point is vital: capacity for carbon removal will take time, and will always be relatively limited. Organisations must understand that the way to reach a sustainable future is to first set both short and long-term emission reduction targets, to dramatically and urgently decarbonise in line with these targets, to prioritise taking action to mitigate emissions beyond their value chains, and to finally offset those hard-to-reduce emissions.
Can carbon offsets solve climate change?
Implemented properly in line with the highest carbon standards, and as part of a wider strategy of decarbonisation, yes.
Offsets are a vital contributing component of a comprehensive plan to stop global warming, but they do need to be used as part of this wider framework.
The single most important marker as to whether the world can meet the aims of the Paris Agreement – aiming for 1.5ºC or at most 2ºC warming by the end of the century – is rapid and permanent decarbonisation. Reducing emissions should always come before relying on offsets.
The University of Oxford’s 2020 report, the Oxford Principles for Net Zero Aligned Carbon Offsetting, describes carbon reduction offsets as “necessary but not sufficient to reach net-zero in the long run”, pointing out that a shift to carbon removal projects will be needed over the years to 2050, as reliable carbon removal projects become more widely available. They, like us, stress the importance of reducing emissions as a first priority.
What carbon offsets are great at is providing much needed funding to incredible projects around the world that are helping to drag down emissions. Implemented properly, alongside real emissions reduction strategies, offsets are a vital tool in our arsenal for solving climate change.
What is the right way to use carbon offsets?
- Firstly, measure your emissions. If you are an individual and you want to offset your own footprint, we have done this for you, by calculating the average annual footprint of a person living in your location, and building this coefficient into our subscription plans.
- Next, make a science-based plan to reduce your emissions, and start implementing it. This may take the form of mapping out an emission-reduction strategy to be validated by the SBTi, or implementing concrete actions in your day-to-day life to lower your carbon footprint, such as choosing greener travel alternatives or incorporating more plant-based options in your diet.
- Once you have reduced your emissions as much as you can, turn to offsetting to account for the residual emissions.
By skipping step 2, you’ll have a high chance of being called-out for greenwashing.
If you are a business, or an individual living in a high-emitting country, there is no excuse for choosing not to take control of your carbon footprint, and bringing it down. If there are emissions reductions that could potentially be made, there is no more immediate and direct climate solution than reducing them. You can use the Goals section on your Ecologi profile to set targets to reduce your emissions.
The different ways of reducing emissions (like flying less, or going vegan) come with varying degrees of difficulty, and some emissions reduction techniques may require more effort, depending on your lifestyle. Unfortunately, the reality is that going beyond the status quo to reduce our emissions is necessary to combat the current climate crisis. There are simply no credible models which project that carbon removal will be sufficient to accommodate our current global emissions – every pathway shows we have to reduce our emissions. For this reason, reductions always come first.
What makes a good carbon offset project?
There are various general rules for what makes a good carbon reduction project:
- The carbon reduction has to be real. There has to be evidence that the project will actually reduce emissions, in the quantities claimed in the project design.
- It has to be additional. Projects are ineligible to be issued with credits by reputable carbon standards (such as the Gold Standard and the Verified Carbon Standard) unless they can prove that the emissions reductions would not have taken place in the absence of the project activity. For example, a project capturing methane from a landfill cannot be additional if its host country has a law which states all landfills have to capture their methane emissions – because those emissions reductions would have to take place, regardless of the project activity.
- The carbon reduction must be quantifiable. For a project to be certified and issued with carbon credits, the emissions reductions must be accurately measured.
- The reduction in carbon emissions has to be permanent. The project must meet a standard (set within the specific methodology established by the relevant carbon standard) to ensure that the emissions reductions claimed are likely to be permanent.
- The carbon reduction has to be verifiable. Independent third-parties must be able to routinely verify the project is making the stated emissions reductions all through the project’s lifespan.
- It has to ensure no leakage. Leakage is when the project activity causes higher emissions to occur outside the project boundary. The project has to prove that whilst it is reducing emissions, it is not causing increased emissions elsewhere.
At Ecologi, every project we support is listed as a climate solution by Project Drawdown. This Project demonstrates that the solutions needed to curb climate change already exist. By ensuring every project we support is on their list, we can ensure that we are making a meaningful climate impact.
When selecting our projects, we also look for other important factors as well, like the project’s verified co-benefits, and how they support local communities and biodiversity, and their contribution to the UN Sustainable Development Goals.
Our overarching impact strategy is guided by our expert Climate Committee, who help us decide which project types are the most effective and reliable, and help to steer our decisions on where our subscriber funding is likely to have the most impact.
How does Ecologi ensure the projects it funds are good ones?
Right off the bat, we exclude certain projects that we don’t think are suitably aligned with Ecologi’s mission and values.
For example, this includes large hydroelectric dams, which are notorious for causing huge negative impacts on communities and biodiversity. Small, in-stream hydro is very different though, and we do consider supporting these types of projects because they do not displace people or disrupt wildlife habitats and migration patterns in the same way.
Next, Ecologi only buys carbon credits for use as offsets if they are accredited by one of the industry-leading carbon standards.
At the time of writing, this means we have only ever purchased carbon credits from projects which have been accredited by either Gold Standard or the Verified Carbon Standard. You can see the full list of all the credits we’ve bought and retired, on our Public Impact and Operations Ledger.
Projects are continually monitored by the relevant issuing authority, to ensure they continue to deliver emissions reductions as laid out in their original project designs. Usually, the accreditation of a project also involves the inclusion of a third party validator as well.
Through their public registries, these bodies ensure that each carbon credit has specified ownership and, once retired, can no longer be bought or sold.
In addition to being accredited by one of these carbon standards, Ecologi has internal processes by which we scrutinise and monitor the projects for which there are credits available on the market each month. These include profiling the project for risk based on its project type and location, and examining any other accreditations it may have – such as the Climate, Community and Biodiversity Standard, or SDVista.
Finally, often we will opt to purchase credits through partners of ours, such as Pachama, who employ complex geographical imaging to monitor the projects. This is especially helpful when assessing the merits of avoided deforestation projects (often known as REDD+ projects) – because it allows us to make clear assessments of any changes in the amount of plant material within the project boundary. Some new technologies and platforms can also use LiDAR to provide estimates of the actual carbon content of the project area, as well as providing scores for the project’s additionality, carbon reduction permanence, and co-benefits.
Which carbon standard is the best?
No carbon standard can ever be perfect, but some are more comprehensive and reliable than others.
Gold Standard is a non-profit organisation, developed by the WWF alongside other environmental groups, to strengthen the environmental and social benefits of carbon offsetting. It is widely respected within the sector.
Another of the top recommendations by the SEI study was the Verified Carbon Standard – then in its infancy – which operates as a more base-level carbon standard from Verra, which can be accessorised by stand-out projects with other certifications like the Climate, Community and Biodiversity Standard (CCBS; designed to verify impacts on local communities and wildlife) and the Sustainable Development Verified Impact Standard (SDVista; designed to verify impacts which contribute towards specific UN Sustainable Development Goals).
How can Ecologi provide carbon offsets so cheaply?
Ecologi works in partnership with large project developers and exchanges, to buy carbon credits in bulk.
Part of the reason that we are able to provide credits relatively cheaply is because we buy them at great volume. If you buy an individual credit directly from a registry, it might cost you something like £25 (approximately $35 / €30) or more. Every month, we buy tens of thousands of credits on behalf of our entire community, and so we can access far cheaper prices per tonne.
In addition, our margins are small, since we commit to spending at least 85% of individual subscription and marketplace revenue, and 77.5% of business subscription revenue on climate impact. This means we don’t add much mark-up to the sales price when we sell offsets on our platform.
The price also depends on the project type and what’s called the ‘vintage’ (when the emissions reduction actually took place). Some project types like wind energy are relatively cheap per tonne, whereas others like forestry are comparatively expensive (and carbon removal projects are far more expensive still). Because of our model, where our community funds two projects which change each month, we are able to build a portfolio pairing which uses higher volumes of cheaper credits with lower volumes of the more expensive ones, to offer the overall package at a more affordable price.