Understanding Carbon Offsets

When going for Net Zero, the most important activity is to reduce emissions as much as possible. Secondly, companies must find ways to compensate for their unavoidable emissions. To do this, we need to have an understanding of different types of Carbon Offsets, and which ones can actually be used to make claims about Net-zero.

Taxonomy of Carbon Offsets

The first thing to understand about carbon offsets is whether Greenhouse Gas is removed from the atmosphere, or if it is an avoided emission, which we covered 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.

On the left is a simplified version of The Oxford Offsetting Principles. It allows us to very roughly put all types of compensation into three buckets: Avoidance, short-term Removal, and long-term removal.

Generally, there is a significant increase in cost when moving from left to right: CO Credits from renewables can be as low as a few Euros per ton, tree-based solutions vary from €5 to €30, while permanent removal like Direct Air Capture can cost as much as €900 per ton.

“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:

  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 transition immediately.

01

Moving from avoidance towards removal

02

Moving from short-term to long-term removal