Back 21.10.2020

Is carbon offsetting a solution? Yes, if you do it right

Every company, public organisation and person generates some greenhouse gas emissions from their activities, and thus has a carbon footprint.

The concept of reaching carbon neutrality by offsetting or compensating for this carbon footprint has gained increasing attention in the recent few years, in the Nordic countries and globally. Many companies and public organisations have set their own voluntary carbon neutrality targets, and are developing roadmaps on how to reduce emissions in a cost-efficient way

At Gaia, we help companies and public organisations in answering the following questions: What is good offsetting? What standards or project types should we choose? Are domestic or international offsets better?

These questions are not straightforward when it comes to offsetting. There are several issues to take into account when considering how to offset your carbon footprint.

What is good compensation/offsetting?

It is important to remember the offsetting hierarchy: reduce your own emissions as much as you can before offsetting the remaining emissions. Offsetting should be seen as the last mile after own emission reductions, and not as a replacement for those actions.

Offsetting projects should generate emission reductions and/or carbon sinks that are additional to “business as usual”. This also means that voluntary offsetting by companies should be on top of nationally and internationally agreed climate policy targets – offset projects should generate more emission reductions or carbon sinks than would be generated by existing policies. Each carbon credit should be used and counted only once, towards one emission reduction or carbon neutrality targetThe emission reductions or carbon sinks should be well measured and calculated, and also preferably verified by an independent third party.

What standards or project types should we choose?

Gaia always recommends organisations to use internationally recognized voluntary offsetting standards, such as Gold Standard, Verified Carbon Standard or other similar standard that has a clear rulebook, specific calculation and monitoring methodologies for different project types, independent auditing of the projects, and clear rules for important offsetting issues such as additionality, permanence, leakage and avoidance of double counting. There are dozens of different project types, and there are good projects in each project type. The type of project suitable for each organisation differs according to their needs and the sector they operate in.

Are domestic offsets better?

Many companies wish to offset their emissions locally, with projects located in their home country. This is an understandable starting point, and local emission reduction actions are of course good. However, as the offsetting market has mostly concentrated on projects located in the developing countries in the past, the availability of standard-compliant offsets from local projects is still quite scarce or even non-existent in many developed countries, such as the Nordics. Nevertheless, the market is changing and expanding rapidly, and there are expected to be good domestic options available soon. National rules for good offsetting would help this market take into account the environmental integrity of their projects, and generate sustainable development benefits beyond climate change.

Carbon Neutrality, Climate Policy, Sustainable Finance, Carbon Markets, Renewable Energy, Sustainable Business, Development Cooperation

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