Carbon Offsets Explained

Voluntary Carbon Credits

Carbon credits were introduced in 1997 as part of the UN Kyoto Protocol, the first international agreement to reduce carbon emissions. Credits are awarded to projects that can scientifically prove they have removed or avoided harmful greenhouse gas emissions being released into the atmosphere. One credit represents one tonne of carbon equivalent gases that have been prevented or removed.

Purchasing a carbon credit and retiring that unit on behalf of your organisation enables you to offset your residual emissions to achieve net carbon zero, hence becoming a carbon offset.

There are numerous different projects worldwide that result in carbon offsetting credits being issued, which can vary in price. The type of project, location, costs incurred, social, community and biodiversity involved in the different projects can all influence the price of a particular unit.

There are two types of carbon credit

Removal

Carbon removal credits are produced by projects that remove greenhouse gas emissions from the atmosphere and then permanently store (sequester) them. These projects should be encouraged as they reduce and remove harmful emissions, which can help significantly on the path to net zero.

There is an increasing focus on these projects, and the volume of carbon removal developments must continue to rise in order to achieve net zero.

There are two types of removal projects: natural and technological. Natural projects include afforestation and reforestation, soil carbon sequestration and biochar. Technology based projects include direct air carbon capture and storage.

Due to the nature of the projects that remove emissions from the atmosphere, it can enable organisations to theoretically become carbon negative.

Avoidance

Carbon avoidance credits are produced by projects which prevent harmful emissions entering the atmosphere. This is achieved by providing alternate energy sources and projects to those that would ordinarily generate emissions in their processes and uses. For example, creating renewable energy assets removes the need for fossil fuel power generation.

Credits are assigned when projects can scientifically demonstrate emissions would have otherwise occurred without the installation, and that there is a requirement for the project.

Avoidance credits make up the majority of credits in the voluntary market and are regularly used by large corporations to achieve carbon neutrality.

There are several types of avoidance projects available in addition to renewable energy projects, such as: Biomass and biogas, cookstove improvements, waste management and recycling, forest preservation, and energy efficiency.