Carbon Offsets


Carbon Offsets are anything that reduces emissions elsewhere to make up for carbon dioxide (CO2) or other greenhouse gases (measured in carbon dioxide equivalents [CO2e]) that are emitted. No matter where such reductions in emissions take place, the climate benefits from them since greenhouse gases are widely distributed in the Earth’s atmosphere. An activity is deemed “carbon neutral” if carbon reductions equal the overall carbon footprint of that activity. In a carbon market, carbon offsets can be purchased, sold, or traded.

What is a Carbon Offset?

Despite having significantly different meanings, the terms “carbon offset” and “carbon offset credit” are synonymous. In simple words, a carbon offset is a process of reduction in greenhouse gas emissions or an increase in carbon storage used to balance emissions that take place in other locations.

This is a type of asset which may be transferred that has had its emissions reduced by an amount equal to one metric tonne of CO2 or another GHG, as determined by authorities or independent certifying bodies. The option to “retire” an offset credit allows the buyer to use the underlying decrease towards their own GHG reduction goals.

How are carbon offsets generated?

One of three techniques is used by emission reduction initiatives to lessen atmospheric concentrations of greenhouse gases:

  1. By removing a greenhouse gas from the atmosphere that would otherwise be released and destroying it. A landfill’s methane gas collecting project is an illustration of this.
  2. By generating energy from a clean, renewable resource, which avoids the need to do so by burning fossil fuels, which release greenhouse gases into the atmosphere when burned. Wind energy is one illustration of this.
  3. By removing greenhouse gases from the atmosphere by capturing, storing, or “sequestering” them. A project that encourages the healthy development and preservation of forests is an illustration of this.

What the ways do carbon offsets stop CO2 from entering the atmosphere?

Carbon offsets support specific programmes that either lower CO2 emissions or “sequester” CO2—that is, extract some CO2 from the atmosphere and store it. Reforestation is one of the most often used initiatives to provide carbon offsets. The owners of the projects earn carbon offsets, which they then sell to other parties, such as companies, in order to remove CO2 from another source in order to balance the amount of CO2 they release into the environment.

Although it’s easy to understand what carbon offsets are, it can be challenging to actually create them. To receive carbon offsets, a project must show that it will actually reduce emissions. The amount of CO2 that is being kept out of the atmosphere must also be measured precisely.

A trustworthy mechanism to verify that the project is delivering on its promises is required for this process, together with clear criteria and processes. These procedures could be expensive and specific to a certain project type. We cannot, however, be certain that buying carbon offsets genuinely contributes to lowering atmospheric CO2 without them.

What is the process of Carbon offsetting?

As a component of compliance programmes like the European Union Emission Trading Scheme (EU ETS; a regional carbon market where European countries can trade carbon allowances to meet regional emission-reduction goals) or the United Nations Framework Convention on Climate Change (UNFCCC) Kyoto Protocol, carbon offsets can be purchased and sold.

In such compliance programmes, one advantage of carbon offsetting is that it enables emission reductions to take place where costs are lower, resulting in higher economic efficiency where emissions are restricted.

According to the Kyoto Protocol, developed-world countries must reduce their greenhouse gas emissions in comparison to their levels in 1990. A party can sell an unused emissions allowance to a party beyond its limit as permitted by the Kyoto Protocol, which may assist them reach their desired limit. This treaty permits the trading of carbon offsets too.

A technique known as joint implementation (JI) allows Kyoto Protocol parties to receive offsets whereby one party constructs an emission-reduction or emission-removal project in another nation where emissions are restricted.

The Clean Development Mechanism (CDM), which allows for the procurement of offsets, enables parties to undertake projects in developing nations where emissions are not otherwise constrained.

Challenges of Carbon Offsetting?

The process of carbon offsetting has a variety of difficulties, such as estimating the carbon benefits and confirming that a party is indeed reducing its greenhouse gas emissions. In order for a carbon offset to be effective, the project’s reduction in greenhouse gas emissions must be greater than it would have been without the offset.

Therefore, it is necessary to compare the carbon benefits of each project to what would have happened in a business-as-usual situation. For example, it would not be appropriate to take down a tree that was planted to absorb future carbon. Leakage, which occurs when deforestation is simply moved rather than stopped, is the unexpected increase in emissions brought on by carbon offset programmes.