In defence of effective carbon offsetting
By: Emilien Hoet
Tags: Climate Action, Carbon Emissions, Sustainability, Climate Change

Whilst NGOs, journalists and climate activists often criticise offsetting projects and the companies that invest in them, they rarely offer alternatives or at least not practical ones. To my knowledge, none have yet demonstrated how we can limit global warming within the required timeframe by solely reducing our emissions.

In fact, I’ll go as far as saying that it is simply not feasible to fight climate change without projects which avoid, reduce and remove carbon dioxide from the atmosphere. So let’s not ask if we need offsetting but, what kind of offsetting is most effective?

The hierarchy of green investments

But before we get into why offsets must be part of the solution, let’s be clear about the investment hierarchy: Companies should always prioritise investments in reductions above offsets.

Moving over your vehicle fleet to electric, procuring renewable energy, paying more for a low carbon raw material, implementing energy efficiency measures are all examples of investments that you can act on today. If you have limited budgets, these should always be prioritised over carbon offsetting. But if your organisation is fortunate enough to be able to afford to do all of the above then this really shouldn’t be an either/or situation. We are in a climate crisis and when dealing with crises we should mobilise as much money and resources to all the solutions.

However, once you’ve dealt with the low-hanging fruit you’ll probably find that most carbon reduction initiatives are often part of a long-term strategy and hard to invest in immediately. They often include engaging with your supply chain or various other stakeholders, re-thinking your business model with circular economy principles, they might involve nudging your customers to change their behaviour and often require cross-industry collaboration. None of these can be implemented quickly, and few are directly in a company’s direct influence. There is no doubt that we need systemic change but it is an arduous, complicated and lengthy process. Meanwhile, the climate clock is ticking…

Offsetting is therefore quite often the only radical action companies can take today. Our ‘carbon budget’ is likely to be exhausted in less than 7 years, at which point the consequences of global warming may be irreversible. We must act now and need to deploy large-scale financing across multiple solutions without delay.

A communications challenge

If I told you I was investing in a project which has been 3rd party certified to have avoided, reduced or removed greenhouse gases from the atmosphere, with regular audits and to a rigorous standard set up by a consortium of NGOs, scientists and experts, you’d probably say that’s a good thing to do. You might even ask me what the project is about and if you can get involved.

If I however told you that I have ‘offset’ my footprint, you might have a different reaction. ‘Offset instead of reducing? That’s just greenwashing!’ you might say. Offsetting as a term brings up lots of negative connotations because it’s psychologically difficult to accept. We often associate it with the concept of ‘paying for our sins’. If it’s ‘easy’, then it can’t be virtuous.

I’ve heard a similarly worded argument almost every day:

“Carbon offsetting theoretically allows polluting activities to be “carbon neutral”, but many environmental campaigners argue that it offers a front for polluters to continue their business without directly addressing their emissions.”

What seems to irk some NGOs is mainly that companies get to make claims off the back of investments in offsets. But this is precisely the reason why investments can be justified and get sign off in the boardroom in the first place. A lot of this financing may not even see the light of day if marketing claims couldn’t be made. Realistically speaking, if we say that companies can invest but not talk about it, then many would simply not bother. Rationally, one could say this is just a missed opportunity.

I recently spoke to a company that had planned a major offsetting campaign for their deliveries (in addition to providing subsidies for their delivery drivers to transition to electric and low carbon vehicles) but decided to table the investment altogether because of fears of being accused of greenwashing. What ended up happening was that no investment was made at all. If we are too critical of the climate action related claims and announcements made by companies then the much-needed investment may just never happen. And that’s a bad outcome for everyone.

It’s also important to observe that companies who offset almost always also reduce their footprint. If they don’t, they will be accused of greenwashing and will need to act soon enough. Making public statements like being ‘Carbon Neutral’ or selling ‘Carbon Neutral products’ places a lens of accountability on these businesses. It’s those who say nothing who typically do nothing. If you are an organisation at the beginning of your climate action journey, deploying financing in carbon offset projects that are having an impact right now can be a good first step.

The science

The IPCC states that: ‘If global temperature temporarily overshoots 1.5°C, Carbon Dioxide Removal (CDR) would be required to reduce the atmospheric concentration of CO2 to bring the global temperature back down.’

Even if we take optimistic targets and pledges made by governments and companies around the world, we are still on track for way above 2°C presently. We are already at a dangerous 1.1°C of global warming above pre-industrial levels.

This means that without carbon removal, we will not be able to limit global warming to 1.5°C as it currently stands. We need this category of carbon offsetting (carbon removals) scientifically speaking, at the very least, to achieve necessary climatic balance. Companies that finance carbon removal are helping with innovation and ensuring we can all get to Net-Zero.

The Science Based Targets Initiative (SBTi) also states: “Companies that plan to reach net-zero with higher reliance on carbon removal are required to conduct additional carbon removal that supports early development and provides greater accountability”. It’s not a case of waiting until you’ve achieved all of your reductions before you start offsetting.

Although the consultation on a Net Zero standard is still in progress, in late 2020 the SBTi identified the most ambitious pathway to Net-Zero as including a recommendation to compensate for your emissions today as you reduce and eventually neutralise them.

SBTi’s preferred approach to Net Zero makes a distinction between carbon avoidance or reduction (compensation) and removal (neutralisation). Source: SBTi (Sep 2020)

The SBTi makes a distinction between carbon offset projects which avoid or reduce carbon (compensation), and removal (neutralisation). The former category being optional but recommended if financially feasible.

Academics at the University of Oxford who looked into how we should get to Net Zero also recommend offsetting in conjunction with reductions.

They outline an illustrative offsetting portfolio approach that is Net-Zero aligned. This comprises projects which avoid carbon entering the atmosphere (e.g. Forest Protection), reduce carbon (e.g. Clean Cookstoves) and remove carbon entirely (e.g. Afforestation, Direct Air Capture).