What makes a good carbon offset?

written by Richard Tipper | Chairman of Ecometrica

Carbon credits come in various shapes and flavours but essentially they aim to denote the removal of a unit of greenhouse gas from the atmosphere or the avoidance of a unit of emissions to the atmosphere.

Credits are generated through standardised processes and the units are held on digital registries where they can be transacted and retired against commitments to offset emissions.

For some observers there is no such thing as a good carbon offset – they represent a distraction from the urgent need to curb fossil fuels and other sources of emissions; a “get out of jail” card for polluting industries.

For others, notably the recipients of carbon finance, they represent a valuable source of investment to implement low emission processes or improve land management that is not available from other sources. Proponents on the buy-side point to the cost-effectiveness of this arrangement in delivering affordable emission reductions in the short-term while low carbon technologies that will remove the problem are developed over the longer-term.

Whatever the pro’s and con’s, a recent surge in voluntary commitments for net zero and carbon neutrality has spurred demand for offsets. High demand combined with supply restrictions as some standards have raised the bar on project eligibility have led to substantial price increases over the past 2 years. 

So, if you are going down the offset route here are some simple pointers to help you avoid the worst and seek out the best:

1. The best offset is the offset you don’t have to buy because you’ve reduced emissions. Any emission reductions you achieve this year will not only save the cost of the offset for this year, but for every year the switch to a greener alternative is delayed.

2. In addition to internal emission reductions, it is worth considering the potential for removals and avoided emissions within your supply chain and neighbourhood. These so-called “insets” can be reflected in your greenhouse gas footprint under conventional greenhouse gas reporting methods (see the original paper on insetting for details). 

3. When sourcing credits, always purchase from projects that have been approved by a standard, such as VCS / Verra, Gold Standard, Plan Vivo, ACR (in USA) or Woodland Carbon Code (in UK). Note that each standard has its own distinctive characteristics (more in a future blog) but it is worth noting that there is a general trend away from energy based projects towards nature based solutions such as tree planting and avoided deforestation. Projects issuing credits under these standards should meet basic levels of Additionality – is the project genuinely moving the dial on reductions?, Robust Quantification – are the GHG impacts correctly calculated, relative to a credible Reference Level, taking account of Permanence and Leakage?, Social Impacts – is the project having a positive social impact? Legal and Operational Standing – does the project have proper legal standing, ownership of the carbon benefits and is it properly administered? Some standards focus more on certain issues such as social impacts, others focus on specific types of project activity or jurisdiction.

4. Do your own research on shortlisted projects to check a few basics. We recommend the following basic checks, even where projects have been approved by standards:

• Check the project coordinates are given – not just as a pin on the map but a polygon showing the actual extent of project area, especially in the case of nature based projects;

• Check whether the project has posted recent reports on progress and that is appears to be actively managed and staffed by a competent local team;

• Check whether the project has at least some degree of national or regional recognition and appears to have local community involvement;

• Check the project’s entry on the relevant registry. Is it up to date? Can the reseller or project provide assurances that your credits will be properly transacted?

• If the project involves a commercial activity, such as energy supply or commercial forestry, check that the carbon claims are not doubly-counted against the products;

• Check the vintages of the credits that you are being offered. If they are over 4 years old, there should be an explanation of how these remain valid and why they did not sell to previous buyers.

5. Avoid offers from non-registered projects, for general tree planting schemes or other informal sources.

Above all, don’t be afraid to ask basic questions such as: “if the trees are planted on community owned land has the community given the project the right to sell the carbon?” or “if these cookstoves are preventing emissions from deforestation, can you show me the forest that is being saved?”. 

The carbon offset community has developed a lot of complex language and terminology. Sometimes this is used as a shield to fend off inconvenient questions but don’t be deterred.

Declaration of interest: Ecometrica is not directly involved in the transaction of carbon offsets or development of offset projects, although our software and data products are sometimes used by companies involved in regulated and voluntary carbon markets. Ecometrica purchases Plan Vivo credits to compensate for its Scope 1,2 & 3 emissions. However, the company does not claim to be Net Zero or Carbon Neutral.