Last updated:
May 9, 2024

Carbon Offset

What is a Carbon Offset?

A carbon offset represents a reduction in greenhouse gas emissions (GHGs), achieved either through carbon avoidance or carbon removal. Carbon avoidance refers to preventing emissions from entering the atmosphere, like investing in renewable energy or forest conservation. Carbon removal, on the other hand, involves actively removing CO2 from the atmosphere, such as through reforestation or direct air capture technologies.

The Difference Between a Carbon Offset and a Carbon Credit

While often used interchangeably, there's a key distinction between carbon offsets and carbon credits. A carbon credit represents one tonne of CO2 or CO2e that has been removed or avoided. Carbon credits can only be considered a carbon offset when purchased with the sole intention of compensating for emissions.

Why Offsets Do Not Fit Into a Net Zero Strategy

Since offsets can include both removal projects and avoidance projects, it is critical to make a clear distinction between the two. Offsets originating from carbon avoidance projects do not inherently contribute towards a net zero strategy. A net zero approach requires an actual decrease in atmospheric carbon levels, meaning that the prevention of future emissions is insufficient to achieve this. This is why it is crucial to incorporate removal credits into a net zero strategy.

The mitigation hierarchy showing the order of avoiding emissions, reducing emissions, and neutralising emissions
A good decarbonisation strategy should prioritise avoidance and reduction first, with offsetting reserved for unavoidable emissions.

Importance of Focusing on Removals

The Oxford Principles for Net Zero Aligned Carbon Offsetting highlights the importance of cutting emissions and using high quality offsets (which includes avoidance/reduction projects), with a focus on transitioning towards carbon removals in order to stay in-line with the Paris Agreement goals.

Removal projects provide a direct route towards Net Zero, as they actively contribute towards the reduction of atmospheric CO2 levels. This is not to say that carbon avoidance should be neglected; it remains an integral part of a comprehensive social and climate strategy. However, the balance must shift towards removals to genuinely move towards a sustainable and carbon-neutral future.

Sign up for a 5-day net zero crash course

Receive information about the climate market as well as actionable steps for your company's sustainable journey, directly to your inbox.

Thanks for signing up!
Oops! Something went wrong while submitting the form.