Taxonomy of Carbon Offsets

The first thing to understand about carbon offsets is whether a greenhouse gas is removed from the atmosphere, or if it is an avoided emission, which we cover in detail here.

The second thing to understand is whether emissions that have been removed from the atmosphere are out of the atmosphere in the short term or in the long term. We will cover this further in the “permanence” section in this article, but for now, just know that we are grouping carbon removal methods in these two buckets.

The chart below presents a simplified version of the carbon credit categories outlined in the Oxford Offsetting Principles. This allows us to very roughly put all types of compensation into three buckets:

• Avoidance
• Short-term removal
• Long-term removal

Generally, there is a significant increase in cost when moving down the scale: CO₂ credits from renewable energy projects can be bought for as little as a few euros per ton, forest-based solutions vary from €5 to €30, while permanent removal like Direct Air Capture can cost as much as €900 per ton.

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Why we need to shift towards permanent carbon removal solutions

“An immediate transition to 100% carbon removals is not necessary, nor is it currently feasible, but organisations must commit to gradually increase the percentage of carbon removal offsets they procure with a view to exclusively sourcing [Permanent] carbon removals by mid-century.”
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- Oxford Offsetting Principles

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One of the main take-aways from the Oxford Offsetting Principles is that we need to make two transitions simultaneously:

1. Moving from avoidance towards removal
2. Moving from short-term to long-term removal

This transition is not easy, and it’s not feasible to achieve a complete switch immediately. Carbon disclosure regulations are gradually coming into force around the globe to incentivise corporate climate action. At the same time, carbon removal solutions must be rapidly scaled to ensure that there is sufficient capacity for permanent carbon removal in the next few decades. Reaching Net Zero by 2050 - in line with the targets set out in the Paris Agreement - relies on building integrity and reliable supply in the voluntary carbon market.

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