Carbon Offsetting (Climate Contribution): A short guide

 

In other words, carbon offsetting is a mechanism through which individuals or organizations can support carbon avoidance or removal projects to compensate for their unavoidable emissions. This action is realized through the purchase of carbon credits, where 1 carbon credit corresponds to 1 tonne of CO2 avoided or removed by the projects.

However, the value of a carbon credit goes beyond carbon. It can also encompass other benefits like ecosystem services, biodiversity protection, social benefits, and UN Sustainable Development Goals contributions.

Here, we refer to “voluntary offsetting”, which includes “all the approaches adopted by players who voluntarily contribute to carbon removal and avoidance projects” and must be distinguished from the regulated carbon market, where regulated companies (mostly heavy polluting sectors) are legally required to respect a carbon emission cap set by during the Kyoto Protocol.

Due to a lack of common definition and a negative connotation associated with unfavorable carbon offsetting actions, the Net Zero Initiative has proposed shifting from the term "carbon offsetting" to "climate contributions" meaning the support to projects does not compensate for any emission but it is seen as an additional, and necessary contribution to the achievement of global carbon neutrality.

Climate contribution must be combined with emission reduction practices and done in parallel to them. The more an organization reduces its own GHG emissions and contributes to carbon removal and avoidance, the more it can contribute to the achievement of global carbon neutrality. Thus, climate contribution is viewed as a critical component in the global transition to net-zero emissions, aligning with science-based targets and contributing to broader environmental and social goals as outlined by the United Nations’ Sustainable Development Goals.

How can organizations contribute to global carbon neutrality?

Organizations can contribute to global carbon neutrality following a path consisting of four steps: measurement, reduction, contribution to carbon projects , and transparent communication. This short guide will detail each of the four steps to better understand the development of an overall strategy for companies to achieve net-zero emissions.

 

 

The first step an organization can take to fight climate change is to measure its carbon footprint. Carbon footprint measurement at an organizational level follows precise rules. Several protocols exist to measure CO2, such as the GHG Protocol, which is the most widely used greenhouse gas accounting standard and is internationally recognized.

 

The GHG Protocol divides greenhouse gas emissions into three scopes (Scope 1, 2, and 3), which account for direct company emissions and indirect company emissions from upstream and downstream activities. All greenhouse gas emissions are expressed in tCO2e, tonnes of carbon dioxide equivalent, which includes other greenhouse gases, methane (CH4), and nitrous oxide (N2O) being the two main ones. A company’s carbon footprint (Scope 1, 2, and 3) should be assessed once a year and is usually included in the sustainability or extra financial report of a company. In Europe, the measurement of GHG emissions is mandatory for companies with more than 500 employees.  

 

 

At an organizational level, measuring the carbon footprint will allow the company to identify the major sources of emissions and design a sustainability strategy to achieve its emission reduction objectives.

The Science Based Targets initiative provides companies with emission reduction guidelines that are in line with the achievement of the Paris Agreement objectives. According to the initiative, Scope 1, 2, and 3 targets must be consistent with a level of decarbonization required to keep global temperature increase well below 2°C compared to pre-industrial temperatures.

 

 

To reach this ambition, organizations should set medium and long-term targets up to 2050. The SBTi recommends using “the most ambitious decarbonization scenarios that lead to the earliest reductions and the least cumulative emissions.” Carbon footprint reduction strategies vary depending on the sector and the type of company activities; however, some general guidelines can be identified.

For example, to reduce Scope 2 emissions, the SBTi recommends companies to source renewable electricity suggesting a target of 80% renewable electricity procurement by 2025 and 100% by 2030 as thresholds. For Scope 3 reductions, supplier engagement is key as well as setting targets to influence the behavior of end-users.

 

 

As a parallel climate action to GHG reduction efforts, an organization should contribute to account for their unavoidable or residual emissions (emissions that persist) by supporting carbon removal and avoidance projects through the purchase of carbon credits from the voluntary carbon market. 

Projects are certified to issue carbon credits and assess the amount of carbon avoided or removed by the project in a specific time period. Following the certification and the issuing of credits, monitoring and reporting activities are conducted to ensure the continuity of the projects. In turn, project activities can be monetized and carbon credits can be distributed and withdrawn by purchasers. 

Carbon credits are usually issued every year. Third-party auditors verify the number of emissions absorbed or avoided by the project compared to a base-line, following methodologies established by international or national standards. Carbon credits are issued in public registries to avoid the risk of double-counting, which occurs when two or more organizations monetize and claim the same credit.

When contributing, companies should ensure they are supporting high-quality projects. Thus, the first element to consider is the project certification, that is if the project is certified by an international standard such as Gold Standard, VCS, Plan Vivo, or Climate Action Reserve or a national standard such as Label Bas Carbone in France. Once the project has been certified, it is verified periodically by a third party, so the standard can issue the relevant amount of carbon credits the project has absorbed or avoided for that period. For the standards to issue carbon credits, the projects must follow specific rules and procedures. Specifically, the project must be real, measurable, permanent, additional, independently verified, and unique. 

To ensure that a project is of the highest quality, ClimateSeed performs additional audits, which include banking due diligence and the review and validation from our internal Sustainability Committee.

At ClimateSeed, our Projects Team is dedicated to ensuring that the carbon credits purchased by our clients result in verifiable impact, safeguarding the integrity of their climate actions. A project must undergo certification by an internationally or nationally recognized standard. We partner with standards that uphold the highest levels of rigor, certifying that the project is real, measurable, permanent, additional, independently verified, and unique. Additionally, ClimateSeed performs additional audits, including banking due diligence, and reviews rigorously projects based on an internal evaluation framework. 

There are different types of emission reduction projects that generate carbon credits, such as: 

• Forestry and Land Use: projects encompass a range of initiatives focused on sustainable management and utilization of forests and land resources.
  
  
• Renewable Energy: energy that is natural and self-replenishing. These are energies that are alternatives to fossil fuel electricity and heat production.
  
  
• Household and Community Devices: centers around benefiting local communities, using their knowledge, and having them involved in the decision-making processes.
  
  
• Blue Carbon: refers to Wetlands Restoration and Conservation (WRC) projects dedicated to protecting, rehabilitating, and conserving wetland ecosystems, including marshes, swamps,  peatlands, and other ocean and coastal ecosystems. 

• Waste Management: projects focus on how we handle waste to minimize its impact on the environment and on human health. Instead of treating waste as the last part of the production chain, these projects are working with the waste to create sources of energy, reduce pollution, and reduce carbon emissions. These projects adopt a more circular approach to climate solutions.
  
  
• Agricultural Land Management: involves removing carbon from the atmosphere and sequestering it in the soil. Plants and crops make up part of the carbon cycle as they use CO2 from the air during photosynthesis. When the plants and crops decompose, some of the CO2 is stored in the ground and some is released back into the atmosphere.

When contributing, companies should ensure they are supporting high-quality projects. Thus, the first element to consider is the project certification, that is if the project is certified by an international standard such as Gold Standard, VCS, Plan Vivo, or Climate Action Reserve or a national standard such as Label Bas Carbone in France. Once the project has been certified, it is verified periodically by a third party, so the standard can issue the relevant amount of carbon credits the project has absorbed or avoided for that period. For the standards to issue carbon credits, the projects must follow specific rules and procedures. Specifically, the project must be real, measurable, permanent, additional, independently verified, and unique. 

 

To ensure that a project is of the highest quality, ClimateSeed performs additional audits, which include banking due diligence and the review and validation from our internal Sustainability Committee.

 

Communicate your climate action to your stakeholders

These are some recommendations to select projects that are not only high-quality emission reduction projects, but also meet your organizations’ needs and objectives. In particular, the WWF has outlined several characteristics for carbon credits to be considered high-quality: 

 

 

Supporting emission reduction projects can allow companies and individuals to achieve a truly positive impact on the environment and society. Please download the full contribution guide: "From Carbon Offsetting to Climate Contribution" for more information. 

 

We hope that this short guide on climate contribution has helped you to better understand the importance of supporting emission reduction projects and has provided you with relevant information to reach net-zero emissions and join the fight against climate change.