A Guide to Carbon Offsetting

Global carbon emissions continue to be on the rise, reaching a new record high of 33.1 GtCo2 in 2018 (1). To put this number in perspective, the average Asian elephant weighs approximately 4 tons and is made up of a solid condensed body, carbon dioxide on the other hand, is a barely visible gas, lighter than air, which floats upwards on the wind. The amount of carbon dioxide that was released into the environment in 2018 is equal to 8,275,000,000 Asian elephants.

Carbon dioxide of course is the number one cause of warming to the earth’s climate. Elephants are not.

Carbon dioxide is one of many greenhouse gases (GHG) that react with other compounds in the atmosphere to create toxic substances that deplete the ozone layer. Greenhouse gases also inhibit the earth’s ability to reflect rays from the sun away from its surface, trapping heat within the atmosphere. Known as global warming, environmentalists, politicians and businesses worldwide are therefore trying to find a way to reduce the amount of carbon in the atmosphere while also maintaining a semblance of the status quo way of life.

Carbon offsetting has become a trending topic when it comes to possible strategies to combat the climate crisis, appearing in many businesses' climate action plans. But what is a carbon offset? And is it really a solution to the climate crisis?

What is a Carbon Offset?

Defined by David Suzuki as “a credit for emissions reductions given to one party that can be sold to another party to compensate for its emissions” (2), carbon offsets occur when an organization or individual invests in actions that either removes an equivalent volume of greenhouse gas emissions from the atmosphere or prevents the equivalent amount of emissions through a “carbon offset project”. A few examples of carbon offset projects include tree planting, energy efficiency projects, and investing in renewable energy. In simpler terms, carbon offsets are a way for corporations or individuals to “cancel out” the carbon that they have released in the environment (3).

Offsets for Businesses and Corporations

Carbon offsetting is centered around carbon credits, where a company receives a credit when they invest in an emissions reduction project. The credit is equal to the amount offset and then allows the company to emit that carbon itself (4).

One approach that many corporations take to offsetting their carbon emissions is becoming carbon neutral. When a business is carbon neutral this means that they have net zero emissions because they have purchased offsets that equal the quantity of carbon released into the atmosphere. The process of becoming carbon neutral begins with the calculation of GHG emissions. Companies like Carbon Footprint and Less have resources online that help companies to calculate their emissions. Once emissions are calculated, there are many different approaches to offsetting them.

Less, a subsidiary of Bullfrog Power (A Canadian green energy company) (5) describes a 3-step process to offsetting. The first is to reduce the amount of GHGs that are being produced, if possible (6). For many companies, this is nearly impossible since there are no alternatives to their current carbon emitting practices which would allow for them to practically continue their operations. The next step, switching green is where companies work to transition to green alternatives that are less harmful to the environment, like placing solar panels on top of their offices or using electric delivery vehicles (7). The final step is offsetting, through purchasing offsets directly by tonnes of carbon or investing in carbon offset portfolios (8).

Companies may purchase offsets directly by tonnes of carbon following the calculation of the amount of carbon emissions they are trying to offset. They may submit this number to a website such as Less and can purchase a carbon credit equal to the amount of carbon submitted, directly on the website. Companies like Less charge for these carbon credits by tonnes of carbon and the money invested into them will in turn be invested into carbon offset portfolios.

Carbon offset portfolios include projects that are directed towards reducing the amount of carbon in the atmosphere through various initiatives such as carbon storage (i.e. tree planting), gas trapping (i.e. landfills trapping methane from decomposing garbage), and clean energy that replaces fossil-fuel burning (i.e. wind or solar power) (9). These projects belong to different standards of carbon credit; standard, referring to the quality of the project following purchase of an offset. For example, Less offers either investments in Gold Standard international projects, or CSA-certified Canadian projects that are achieved through purchasing a Gold Standard-certified emission reduction (CER) or CSA Standard-certified Canadian based offset, respectively (10).

Gold Standard is a third-party offset company established by WWF (World Wildlife Foundation) and other NGOs (Non-Governmental Organization) to ensure that when a business purchases an offset certificate or carbon credit, the project receiving the investment uses the highest level of environmental integrity and contributes to sustainable development (11).

An example of a Gold Standard international project is the Vietstar Municipal Solid Waste Treatment Plant in Vietnam. This plant recycles plastic, as well as collects local solid waste and converts it into compost that can be used by local farmers. This removes methane; a GHG; from the environment. The plant treats approximately 400,000 tonnes of organic waste matter per year and has succeeded in enhancing the local economy by creating almost 810 jobs. Projects like these aid in cleansing the atmosphere of toxic compounds and offsetting emissions, as well as provide greener alternatives (i.e. compost soil in the place of manure use in farming) for communities to reduce their emissions. The plant is expected to produce 53,568 tonnes of compost and prevent the emission of 182,000 tonnes of carbon dioxide annually (12).

One well known company that uses carbon offsets is Microsoft, exceeding expectations by vowing to become carbon negative by 2030. This means that rather than being just carbon neutral (no net carbon emissions), the standard they are currently at through heavy investing in offsets, Microsoft is actually working to remove more carbon from the environment than it actively releases (13). To become carbon negative, Microsoft will use multiple negative emission technologies, such as soil carbon sequestration, direct air capture, and reforestation (14).

To fund their sustainability improvements, Microsoft has an internal carbon tax that is paid by each division in the business based on their carbon emissions. In addition to this, their Climate Innovation Fund will invest $1 billion over the next four years in new technologies and solutions. Microsoft will invest based on four main criteria; climate impact, underfunded markets, shared alignment, and climate equity. Their investments will allow for projects to have the capital needed to scale in the market (15). Therefore, while Microsoft is still emitting carbon, their funding into these innovations is essential as they provide the funding for the innovations to actually be able to exist.

Offsets for Individuals

On an individual level, one can calculate their emission footprint easily online. An example of this is the website, https://www.carbonfootprint.com/calculator.aspx. Following this, one can invest in sustainable practices or buy offsets and invest in carbon offset portfolios.

To help make the process easier, a new app yet to be released called “Klima”, works to help users by asking general questions about lifestyle, then estimating individual carbon emissions.The app gives viable options for how one can individually offset their emissions. It also gives suggestions for how to lower your original footprint, which should be the primary focus when considering offsetting (16).

There are many everyday actions individuals can take to lessen their emissions. Even just reducing the heat in your house by one degree can reduce energy consumption by 8% (17). Other actions that reduce emissions include, cutting down on transportation emissions by buying locally, and using energy efficient appliances in your home (18)

Individuals can also buy offsets online, though one should ensure such offsets are certified by independent groups such as Gold Standard.

The Positives and Negatives of Carbon Offsets

In theory, carbon offsets are an ideal concept. The idea of emitting freely yet still being able to reduce your overall footprint is an appealing concept. However, in reality, they are only beneficial as a final option to compensate for the emissions released when there is no feasible alternative.

There are some benefits to carbon offsets. Firstly, they help to fund renewable energy projects which should help to drive up the pace of renewable energy development (19). Secondly, when a business decides to participate in carbon offsetting it forces them to acknowledge where in the supply chain they are causing the most damage and quantify the amount of damage done (20).

Unless a company is vowing to become carbon negative, carbon offsets do not reduce the net volume of carbon emitted into the air. While corporations are taking a step in the right direction when choosing to offset, it can become a way for corporations to fail to take adequate responsibility for their actions. Instead of investing in cleaner processes to begin with, companies are just focusing on carbon credits. Alternatively, corporations should be actively trying to reduce their emissions at the source. Another downside to carbon offsets is the issue of possible scams and incomplete carbon offset projects. For example, the Vatican bought offsets for all its 2007 emissions to reach its goal of becoming the world's first carbon neutral state. The offsets were supposed to be spent on the planting of thousands of trees in Hungary, however no trees were ever actually planted (21).

The Takeaway

The overall take-home message on carbon offsets is that they are a beneficial way for businesses and individuals to reduce their net carbon emissions, but not a viable first option for reducing the total amount of carbon in the atmosphere. It is most important that we first try to reduce the amount of GHGs that we emit and follow this up with offsetting in situations for which there is no alternative. Offsetting is a last resort when fighting our warming climate, but it is definitely a step in the right direction.

1. https://www.iea.org/reports/global-energy-co2-status-report-2019/emissions

2. https://davidsuzuki.org/what-you-can-do/carbon-offsets

3. https://www.cbc.ca/news/technology/faq-carbon-offsets-1.5008339

4. https://www.investopedia.com/terms/c/carbon_credit.asp#:~:text=A%20carbon%20credit%20is%20a,%2Dand%2Dtrade%22%20program.

5. https://www.bullfrogpower.com/?utm_source=google&utm_medium=cpc&utm_campaign=googlecampaign&gclid=CjwKCAjwtNf6BRAwEiwAkt6UQhRlMVCyS8xtaNnm52TwuepUAP5-cs-MSgGBj6bp-pcbr4I2tXgw2RoCyM8QAvD_BwE

6. https://www.less.ca/en-ca/

7. https://www.less.ca/en-ca/

8. https://www.less.ca/en-ca/

9. https://www.cbc.ca/news/technology/faq-carbon-offsets-1.5008339

10. https://www.less.ca/en-ca/projects.cfm

11. https://www.goldstandard.org/about-us/vision-and-mission

12. https://www.less.ca/en-ca/projects.cfm

13. https://blogs.microsoft.com/blog/2020/01/16/microsoft-will-be-carbon-negative-by-2030/

14. https://blogs.microsoft.com/blog/2020/01/16/microsoft-will-be-carbon-negative-by-2030/

15. https://www.microsoft.com/en-us/corporate-responsibility/sustainability/climate-innovation-fund

16. https://www.fastcompany.com/90536290/this-new-app-offsets-your-carbon-footprint-then-helps-you-shrink-it

17. https://www.carbonfootprint.com/minimisecfp.html

18. https://www.carbonfootprint.com/minimisecfp.html

19. https://www.conserve-energy-future.com/what-are-carbon-offsets.php

20. https://www.conserve-energy-future.com/what-are-carbon-offsets.php

21. https://www.cbc.ca/news/technology/faq-carbon-offsets-1.5008339

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