Offsetting FAQs

1. What does ‘climate neutrality’ mean?

Climate neutrality means being accountable for our greenhouse gas emissions and taking steps to measure, reduce and offset any emissions we are unable to eliminate entirely. Once an individual or organization has done this for a given timeframe, they can be declared 'climate neutral' for that period.

2. Why is it important?

Scientific consensus says that to avoid dangerous levels of warming we need to reduce global greenhouse gas emissions, particularly carbon dioxide (CO2), by 80% by 2050. A change of 2 degrees might seem small but it can have a big impact. A temperature shift of just 5 degrees was the catalyst for the last ice age. To protect ourselves and other species we need to start working with, not against, the Earth’s natural limits - helping to make sure it remains a home for the next generations.

3. How can offsetting help? 

Offsetting is the process whereby organisations take responsibility for any emissions they can't reduce by purchasing carbon credits from projects that are achieving reductions in greenhouse gas emissions of an equivalent amount. It is the final stage in the climate neutral strategy of 'measure, reduce, offset'

Offsetting is a form of trade, allowing those who are emitting too much carbon dioxide relative to their size to buy ‘credits’ off those who are helping to reduce global emissions. Our society is currently built around carbon dioxide-emitting activities and change takes time, so we will need to continue to emit carbon while we make the transition.

4. How are offsetting credits created?

Credits are issued to an organisation if it can prove that its activities are reducing atmospheric carbon levels, now or in the future, through capturing carbon dioxide today or reducing or replacing the use of fossil fuels in the future. A reduction of 1 tonne of CO2 equals one credit. Importantly, the organisations must demonstrate that the financing of the credits is a vital income stream without which the carbon reduction would not happen. This is known as 'additionality'. 

5. What is meant by ‘reduction’?

Reductions of atmospheric carbon can be achieved in three ways;

  1. Replacing the use of dirty fossil fuels with renewable energy, for example by building a wind farm.
  2. Reducing the use of fossil fuels through energy efficiency, such as the development of an efficient cookstove allowing families to burn less wood while cooking.
  3. Capturing and storing already released carbon in trees and other plants through the cultivation of forests and other carbon sinks.

Each of these methods has a measurable effect on atmospheric carbon levels. 

6. How do I know it’s trustworthy?

The UNFCCC (United Nations Framework Convention on Climate Change) is responsible for certifying offset projects to ensure they meet internationally agreed standards. The UN’s own projects, under the Clean Development Mechanism, are only allowed to issue offsets after emission reductions have been confirmed and verified via a robust verification process of both quality and quantity.  

7. What happens to a credit after it is exchanged, couldn’t someone just sell it again? 

Every credit has a unique number associated with it. The business that buys the credit will give the credit to approved third party registries to be retired. This means the company can then claim that offset against their emissions and the credit cannot be sold on.

8. What’s the incentive, couldn't organizations just ignore them? 

There are many benefits of offsetting emissions using carbon credits. It allows business to demonstrate environmental leadership, differentiate from competitors and improve the image of the company in the eyes of stakeholders. In some countries, carbon taxes and 'cap and trade' systems means that companies are penalised for emitting carbon over an agreed level. It pays to reduce emissions.

9. What does the future look like? 

If we continue to measure, reduce and offset our emissions, we can be on course to avert the worst effects of climate change. It will take huge and co-ordinated effort from governments, organisations and the public with a focus on the reduction targets but it is possible. Ultimately the credit system will be redundant when climate neutrality is reached, but offsetting can play a big role in the transition to a cleaner, more resilient society. 

Offsetting example

A building is powered by a diesel generator and emits 10,000 tons of CO2 per year. Up the valley, a hydropower plant is built and the diesel generator is no longer needed, meaning the 10,000 tons of CO2 per year is no longer being released. The hydropower plant is the reason, earning it 10,000 certified carbon credits every year, which it can then sell on to companies that require them. The extras funds can then be used to develop even more carbon reduction projects.