Carbon Offsets Explained

Carbon Offsets Explained

Key Takeaways: 

  • Definition: Carbon Offsets are actions by either individuals or businesses that reduce greenhouse gas emissions to compensate for emissions produced somewhere else; Usually, accomplished by purchasing or investing in carbon-reducing activities.

  • The goal of Carbon Offsets is to reduce emissions not neutralize

  • A third-party body, preferably non-for-profit should regulate carbon offset programs to be trustworthy

  • All companies can become carbon neutral within a year, but not all are willing to invest in our planet and future

Fueled by famous advocates like Greta Thunberg, the carbon offset movement has experienced a boom in recent years. Everyone from politicians to airlines to fashion brands are talking about carbon offsets. With the climate crisis now considered the world’s gravest existential threat, carbon offsets have come under intense scrutiny due to their popularity.

If climate change is caused by releasing carbon into the atmosphere, then becoming carbon neutral seems like a good thing, right? Unfortunately, it isn’t that straight forward. In theory, the oil industry, the largest polluter in the world,  can claim to be carbon neutral by only purchasing credits while continuing to produce more greenhouse gasses than any other sector. Furthermore, the carbon credits purchased could be fraudulent and give many companies an excuse to continue harmful behavior instead of reducing.

But done right, carbon offsetting can be a catalyst for change. 

What Is The Goal Of Carbon Offsets? 

Carbon Offsets are actions by either individuals or businesses that reduce greenhouse gas emissions to compensate for emissions produced somewhere else; Usually, accomplished by purchasing or investing in carbon-reducing activities. It simple, if Delta emits 500 kg of CO2 on a flight from New York to  Miami, Delta must buy carbon credits to reduce carbon emissions by 500 kg. This is repeated to offset all carbon emissions from delta operations.  However, the goal of carbon offset programs is to reduce overall carbon emissions, not merely offset emissions. It’s hypocritical for companies to continue or even increase greenhouse gas output and claim to be carbon neutral. 

Carbon Offsetting The Right Way

Image result for Carbon offset cycle
Carbon Neutral cannot be achieved without a verified reduction plan

If done correctly, carbon offsets can have an impact.  Here are the steps businesses should take to become carbon neutral the right way: 

Step 1: Measure

All businesses have both direct and indirect carbon emissions. Direct sources are from operations owned or controlled by the company like the emissions from gas-powered vehicles or heat. Indirect sources are associated with items purchased and consumed by businesses. For example, airlines are responsible for the carbon emissions from all purchases for inflight meals, equipment, and energy used in the production of planes. Measuring emissions should be in partnership with a third-party organization that adheres to the GHG Protocol. Consumers should look for companies that are certified. Unfortunately, most companies measure their carbon emissions, which has its inherent flaws.

Step 2: Reduce

Besides measuring accuracy, third party certifications also regulate a companies commitment to reducing carbon emissions. Accurate measurements will highlight areas where companies can reduce their carbon emissions. Reducing carbon emissions is prioritized over offsetting. Without carbon emission reduction, a company cannot be carbon neutral. 

Source: GoldStandard.org. A recent project to replant forests and increases biodiversity in Panama

Step 3: Offset 

Offsets should be purchased only when companies are unable to reduce their emissions. Many companies get complacent and purchase offsets as a cover-up to hide greenhouse emissions. In addition, offsets need to be bought through verified non-for-profit offset bodies such as,

Examples of projects include,

  • Restoring Degraded Forests
  • Capturing Biogas From Livestock
  • Capturing Methane Gas from Landfills

For-profit companies should be avoided.

Step 4: Communicate and Label

Companies must deliver a clear and credible message about their carbon-reducing efforts and carbon-neutral products. The most effective communication method is labeling programs. My personal favorite is the Climate Neutral label due to its nonprofit status and organizational structure. Unlike most, they work with all companies regardless of size and provides a straight forward protocol that all companies can follow to become carbon neutral. 

No More Excuses

Image result for no more excuses global warming
Source: commondreams.org

All companies can become carbon neutral within a year. Meanwhile, many companies are publically committed to becoming carbon neutral in  5 or 10-years. Long term commitments are just excuses. For example, Delta Airlines committed to becoming carbon neutral within the next decade. In 2018, in a 93-page report, the airline outlined its sustainability initiatives but failed to utilize third-party organizations to regulate. This brings into question their legitimacy and priorities. In fact, Delta Airlines can be carbon neutral in 2020. According to Climate Neutral, offsetting carbon emissions cost approximately .4% of annual revenue.

Even at 1% of annual revenue, it would cost Delta $470 million to offset 2019 emissions. With over $1 billion in net profits, Delta does not need to wait a decade to become carbon neutral. Obviously their intentions are to maximize profits not decrease their carbon footprint. 

Delta is just one of the hundreds of companies that are guilty of using carbon offsets to market exaggerated eco-friendliness. All criticism of the carbon offset movement is justified. Nevertheless, if executed with the right intent and strategy, carbon offsets are a useful tool to decrease our impact on the world. Look out for products certified by non-for-profit organizations and question all companies that are not already carbon neutral. 

Jon K.

Jon Kirsner, MBA, MSBA, is a supply chain professional with a decade of experience in sustainable manufacturing. His industry experience has exposed him to the truth of the sustainable fashion and consumer goods industries. He does not write as a journalist but as an industry expert and passionate advocate.

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