What is carbon offsetting? How does it work?

May 1, 2019

Carbon offsetting is an internationally recognised mechanism to manage unavoidable carbon emissions. A tonne of carbon is said to be “offset” when its emitter has provided sine qua non support to the capture, storage or avoidance of emission of one tonne of carbon, generally by financing an external program which creates / maintains carbon sinks or avoids carbon emissions that would otherwise have been.
By supporting such initiatives, businesses and organisations can offset the carbon footprint they haven’t managed to avoid — offsetting shall come along with an ambitious, effective and continuous reduction plan.
The carbon offset market has now an almost 20 years-long history since its inception under the framework of the United Nations Framework Convention on Climate Change (UNFCCC) with the aim to help the northern countries in reaching their Kyoto Protocol target by funding greenhouse gases (GHG) emissions reduction actions in southern countries, in a win-win vision based on the research of the cheapest technologies and places to cut carbon emissions.
At its early stage, a lot of carbon credits (named Clean Development Mechanism, CDM by the UNFCCC) have been issued mainly by Asian countries by mere destruction of industrial gases with high global warming potential and sold to some northern countries which faced difficulties to reach their reduction objective only with domestic actions. Renewable power infrastructure in emerging countries has been the other key driver of the UNFCCC carbon offset market.
Later on, in completion to countries action under the UNFCCC umbrella, the voluntary market took off with aim to address carbon emitters in any part of the economy: cities, businesses, individuals, that would reach carbon neutrality by funding smaller carbon reduction or carbon storage programs managed by private organisations with side benefits to the communities and the biodiversity — somehow anticipating the Sustainable Development Goals that the UN would issue some years after in 2015.
A large range of technologies may capture or store carbon, or avoid GHG emissions, and hence deliver “carbon credits” that will be used to offset the carbon footprint, with aim to reach full or partial “carbon neutrality”. Among the various offers available on the carbon offset market, following technologies should be highlighted:
  • renewable power infrastructures that contribute to decarbonize the local power grid and thus avoid GHG emissions;
  • energy efficiency and fuel switching action;
  • landfill projects that will be designed to capture the methane issued by the waste disposal and provide it to the communities in substitution to fossil fuels;
  • local renewable lighting systems that prevent from using a high-carbon power to get light in remote areas;
  • alternative low carbon transportation infrastructure (like bicycling);
  • efficient cookstoves, or individual biogas producers using cattle manure, which will significantly reduce wood consumption for daily cooking in rural communities, and hence prevent deforestation that generates carbon emissions;
  • supply of water filters to households in rural communities, which will remove the need to boil water on open fires and hence cut carbon emissions;
  • in transparent and win-win partnership with local communities, protection of existing forest areas that are clearly threatened by local human activities, in order to maintain carbon storage along with benefits for biodiversity; and afforestation in new regions, in order to develop new carbon sinks;
  • climate-friendly practices in agriculture that maintain carbon in the soils while increasing their fertility, restore biodiversity and develop new sources of income for smallholders.
All these offsetting programs and providers are expected to be compliant with international calculation methodologies under rigorous control of competent third-party officers within internationally recognised frameworks as the Reduced Emissions from Deforestation and Forest Degradation (REDD+), the Clean Development Mechanism (CDM) and the Joint Implementation (JI) under the Kyoto Protocol; and internationally recognised labels as American Carbon Registry (ACR), Climate Action Reserve (CAR), Gold Standard, Plan Vivo, and Verified Carbon Standard (VCS) for the voluntary carbon offset market. Other standards have been added in order to certify other dimensions as social benefits or biodiversity conservation.
In 2017, issuances (62.7 MtCO2e) and retirements (42.8 MtCO2e) reached record-highs in the carbon offsets voluntary market.

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