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How to align with the Oxford Offsetting Principles
What are the Oxford Offsetting Principles?
The Oxford Offsetting Principles are four principles created to provide a resource for designing and delivering rigorous voluntary net zero commitments by governments, cities, and companies and help to align work on credible offsetting around the world.
First released in 2024, they were revised at the start of 2024 to address critical changes in the market in the last several years: evidence that avoidance schemes are over-crediting, and that the market is far away from the scaling needs especially of durable solutions.
With this reframing in mind, the core principles help companies pursue a net zero future without fears of greenwashing. Companies that align with the principles can genuinely communicate their impact with minimal reputational risk, reaping the benefits of their actions. The 4 Principles are as follows:
- Urgently reduce emissions, ensure integrity, and regularly revise as best practice evolves.
- Shift to removal approaches for any residual emissions.
- Shift to more durable removals with a low risk of reversals.
- Support the development of innovative and integrated approaches to achieving net zero.
In the following, we cover the principles and explain how you can align your business with them to ensure the credibility of your efforts is not questioned.
Why should companies follow the Oxford Offsetting Principles?
Carbon avoidance offsetting has gotten a bad reputation over the last decade–and for good reason. Companies have relied on cheap, low-quality offsets that don't actually remove CO2 emissions from the atmosphere. In combination with over-communication on the impact of offsets, many companies' efforts can be classified as greenwashing. On the other hand, companies fear greenwashing accusations, leading to green-hushing and stagnancy in climate action
However, the science is quite clear: We will only be able to stay within the goals of the Paris Agreement with significant carbon removal. Private companies are a crucial driver of this, and if they cannot compensate for their emissions in a trustworthy manner, we will not be able to scale the technologies needed.
The principles and how to align.
Principle 1
Cut emissions as a priority, ensure the environmental integrity of credits, and regularly revise as best practice evolves.
Principle one is all about ambitiously reducing your own value chain and, where you can't, adapting to the highest possible quality of credits as the market develops.
Key point 1.1
Prioritise reducing your own emissions - Minimise the need for offsets in the first place. Ambitious reductions in tandem with removals–a concept called dual targets–are the most robust approach a company can take.
Key point 1.2
Ensure environmental integrity - Use credits that are verifiable and correctly accounted for and have a low risk of non-additionality, reversal, and creating negative unintended consequences for people and the environment.
Key point 1.3
Maintain transparency—Disclose current emissions, accounting practices, targets to reach net zero, and the type of offsets you employ. Clarity and transparency are essential to effective climate communication, which is why they remain a major focus of our public ledger, certificates, and communications support.
Principle 2
Transition to carbon removal offsetting for any residual emissions (away from emissions avoidance or reduction) by the global net zero target date.
This is a big one, but luckily, it's also easy to achieve if you are willing to go the extra mile. This principle is about moving from projects that avoid emissions entering the atmosphere (such as windmills) to projects that remove carbon from the atmosphere.
Key point 2.1
Today, reduction or avoided emissions projects make up most of the market. Net zero requires scaling removals to multiple giga-tonne capacity. Quality reduction projects are necessary but insufficient to achieve net zero in the long run, whereas carbon removals scrub carbon directly from the atmosphere.
Principle 3
Shift to removals with durable storage and low risk of reversal.
All carbon dioxide needs to be stored, and different methods vary in their length or susceptibility to releasing GHGs back into the atmosphere, i.e., the risk of reversal. Methods of storage vary in durability and reversal risk, leading to a spectrum of nature-based, engineered, or hybrid solutions. All these play a key role in accelerating and reaching net zero.
Key point 3.1
Some short-lived storage methods have a higher risk of being reversed over decades. Other long-lived storage methods can carbon with a low risk of reversal over centuries to millennia, such as storing CO₂ in geological reservoirs or mineralising carbon into stable forms.
Short- and medium-storage solutions with moderate reversal risks still remain critical as they help buy time to reduce emissions and support biodiversity and ecosystem resilience.
Investment and scaling today must recognise the need for improving and accelerating durable technologies. This must begin now, and incorporating these alongside nature-based solutions sends an important market signal. Maximising impact through a portfolio achieves a great balance of these priorities.
Principle 4
Support the development of innovative and integrated approaches to achieving net zero.
Today's market is still in its early stages, and early adopters are necessary to support its growth. This means companies like yours can impact a developing quality market and reap the benefits of being a first-mover.
Key point 4.1
Use long-term agreements that are bankable and investable – so that project developers can have the certainty required to create credits for net zero goals. One element is signing long-term agreements facilitated by Klimate.
Key point 4.2
Form sector-specific alliances—work collaboratively with peers to develop the net zero-aligned offsets market. One key element of this is shifting demand by advocating for stronger industry bodies and standards supported by policy. The other side involves guiding buyers to send demand signals through investments that follow principles 2 and 3.
Key point 4.3
De-risk project finance. Similar to points 4.1-.2, signing long-term agreements, often called advanced market commitments, improves project developers' security and, therefore, scalability. Facilitating and contracting these agreements can be difficult, which is why Klimate has created a single digital contract and platform for tracking and streamlining the procurement process over multiple methods and timelines.
Key point 4.4
Support the restoration and protection of a wide range of natural and semi-natural ecosystems in their own right – not only will this secure the ecosystem goods and services on which humans depend, including resilience to the impacts of climate change, but it will also contribute to carbon storage over the long term. This highlights the portfolio approach and the importance of synergies through co-benefits.
Key point 4.5
Adopting and publicising these Principles and incorporating them into regulation and standard-setting for approaches to offsetting and Net Zero. This key point is self-explanatory: transparent and clearly stating the strategy of your offsetting activity is key to effective climate communication.
Key point 4.6
Invest in additional mitigation beyond the value chain. We've got a long way to go to develop the market for net zero and limit warming to 1.5. This goal isn't possible without investment today in preparation for a net zero future.
Manage future risk with carbon removal.
We didn't come up with the Oxford Principles, but they help inform our science-backed approach to carbon removal. A robust scientific strategy is required to future-proof your business, manage future compliance, avoid regulatory risks, and even boost brand reputation.
In the past, offsetting markets allowed companies to make claims on the back of low quality offsets–which is wasteful at best and greenwashing at worst. We want to empower companies to do better when they do good. By aligning with the Oxford Principles and building a solution with our team of experts, you can invest confidently and accelerate your company climate journey.
Understanding carbon offsets: The difference between avoidance and removal credits
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.
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.”
- Oxford Offsetting Principles
One of the main take-aways from the Oxford Offsetting Principles is that we need to make two transitions simultaneously:
- Moving from avoidance towards removal
- 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.
What is carbon removal?
The difference between avoidance and removal
At the most basic level, carbon offset methods can be split into two groups:
- methods that avoid greenhouse gas emissions
- methods that remove (and sequester) CO₂ which is already in the atmosphere
The most common forms of avoidance are renewable energy projects, like wind and solar developments, as well as energy-saving activities such as providing clean cookstoves or boilers.
The general idea is that if you buy energy-efficient cookstoves for people in developing countries, they will use these instead of burning wood. This results in a net reduction in the amount of CO₂ being emitted in the future (as less wood is harvested from forests and burned to heat the stove). Similarly, renewable energy offsets assume that the energy generated from renewable sources would otherwise have been generated from sources with higher CO₂ emissions like coal, oil, and gas. The difference is then counted as an offset.
Why does Klimate exclusively remove carbon?
The problem with avoidance is that no GHGs are actually removed from the atmosphere. As shown on the graph below, there are no negative emissions taking place, but rather an absence of emissions in a future year. As a result, it is not advisable to use avoidance for any type of compensation, especially if you intend to communicate your efforts to the public.
Furthermore, most renewable energy offsets, particularly wind and solar, struggle with proving additionality. This means that it is highly uncertain whether the investment makes a difference - for many of the avoidance projects, most of the emissions would never have occurred anyway. As such, there is limited additional impact as a result of the investment.
The alternative to avoidance is carbon removal. The advantage of carbon removal is that instead of avoiding future emissions, we actively remove GHGs from the atmosphere. This makes it more appropriate to talk about compensation, as there is a greater equivalence between emitting GHGs and removing them.As shown in the graph, this results in a negative emission, which can be used to make claims around being Net Zero. The relationship is not 1-to-1, and depends on factors such as the permanence, rapidity, additionality, and accounting of the emissions, which we take into account when we evaluate the different carbon removal methods and projects.
What are the different types of removals?
Carbon removal can happen either through nature-based solutions, like planting trees, or through engineered solutions that use technology to capture and store CO₂. There are also several hybrid solutions that combine nature-based solutions with engineering.
For instance, some methods rely on nature to capture CO₂ in biological material, but then use engineering solutions to convert the biomass into products or materials that retain carbon much longer than biological material.
Nature-based solutions
Nature-based solutions (NBS) are carbon-removal solutions inspired and supported by nature. They rely on natural processes for cost-effective carbon removal, provide environmental, social and economic benefits, and support various ecosystem services. Nature-based solutions include projects such as land-based forest restoration, agroforestry, mangrove forests, and marine biomass, such as kelp forests and seaweed.
Example: Forestation, Enhanced Weathering
Technological solutions
Technological solutions rely on engineering to capture and bind CO₂, and subsequently store the carbon. The most prominent and promising technologies are Direct Air Capture solutions that directly suck CO₂ from the atmosphere using giant fans and use various processes to store the carbon, usually in underground geological formations.
Example: Direct Air Capture
Hybrid solutions
Hybrid solutions combine nature-based and technological aspects. They rely on nature for part of the carbon removal process - usually to bind carbon in biomass through photosynthesis - and then use technology to modify and store the biomass. For example, many hybrid solutions use various types of pyrolysis to generate inactive carbon, which can be stored in soil or underground reservoirs.
Example: Biochar, Soil sequestration, Bio-oil
COP27: A short summary and reflections
A long overdue recognition of climate damages
The most important outcome overall was the establishment of a fund for so-called “Loss and Damage,” a tool to help low-income countries to deal with the impacts of climate change. This issue has been neglected by rich countries for decades and progress was long overdue. Robert Stavin’s blog post deals excellently with this topic, which has been controversial as countries have not been able to agree on who should pay for such loss and damage. Poorer countries have suggested that those most responsible for climate change, that is the countries with the largest accumulated (historical + current) emissions of GHGs – the United States, EU, and other large, wealthy countries, plus, importantly, China. Countries have not agreed on all the details of this fund and it remains to be seen whether it is merely an empty shell or whether it will help move us towards a more equitable system for compensating for loss and damage caused by global climate change.
Carbon removal - much talk, little action…
At COP27, carbon removal was more central than at previous COPs. At the conference participants agreed to “elaborate and further develop recommendations on activities involving removals, including appropriate monitoring, reporting, accounting for removals and crediting periods, addressing reversals, avoidance of leakage, and avoidance of other negative environmental and social impact.” However, in plain language, it was a bit disappointing, as no clear definition for carbon removal was achieved, while countries could not agree on a transparent mechanism to implement Article 6. The slow pace of progress on this is concerning. Though a complex matter, failure to gain clarity could create uncertainty in the voluntary carbon market. Therefore, it’s quite important that momentum is built before next year’s meeting, particularly around the technical working groups, to ensure that COP28 can deliver on carbon removal and address the outstanding questions around MRV, implementation and the link between the voluntary market and the Paris Agreement mechanisms.
COP28 - the carbon removal COP?
Although carbon removal is central to achieving net-zero and mitigating climate change, the carbon removal space still operates somewhat separately from the broader climate change agenda. Significant work is thus required - both within the carbon removal industry and within the climate change community - to mainstream CDR into the broader mitigation discussions at the COP. The decision text adopted at COP (the so-called Article 6.4) provides guidance and gives the Scientific Body - the experts working on this topic within UNFCCC - the time and mandate to “elaborate and further develop” the work on carbon removal in the lead-up to COP28. Eve Tamme’s blog post is successfully diving further into this topic. Next year’s COP, hosted by the United Arab Emirates, is expected to include a greater focus on CCUS, including carbon removal. Significant progress is thus expected within the carbon removal industry in 2023 - both in the technical negotiations leading up to COP28 and as a result of the upcoming EU certification framework for carbon removals. More on the latter in the next post.
Feedback and comments are essential. Shout out to Eve Tamme, Robert Stavins, and other climate change and carbon removal experts including the Klimate team for further insights.
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