Carbon removal offsets as part of your net zero strategy

The IEA and the IPCC consistently highlight the need for immediate action to address the climate crisis within the next decade. Existing climate policies are projected to lead to a global temperature increase of at least 2.7°C by 2100, far exceeding the Paris Agreement target of 1.5°C. That’s why we must move toward net zero carbon dioxide (CO₂) emissions by mid-century, and corporate net zero strategies are essential tools in this effort. 

So, how can you ensure your net zero strategy contributes to real, impactful change? As informed by the experts, businesses will need to utilize a portfolio of measures to ensure that net zero goals are being met. According to the SBTi framework, a credible, science-based net zero strategy must combine emissions reductions and the active removal of unavoidable CO₂ emissions — via carbon removal offsets. 

But there’s still more to do, and with such rapid change, it can be difficult for businesses to understand the options available to them or how best to make a difference. For example, what’s the difference between conventional avoidance carbon offsets vs. carbon removal offsets?

In this article, we’ll explain carbon offsets in simple, straightforward terms so you can build your net zero strategy effectively.

Carbon offset definition

Before tackling the difference between carbon avoidance offsets vs. carbon removal offsets, let’s return to the basics. Any business in operation releases some quantity of greenhouse gas into the atmosphere. These emissions cover three scopes, which you can remember using the phrase: burn, buy, beyond. Scope 1, “burn,” covers direct greenhouse gas emissions such as those released from burning fossil fuels. Scope 2, “buy,” covers indirect greenhouse gas emissions from purchasing electricity or heat. Scope 3, “beyond,” covers those greenhouse gas emissions that are often beyond an entity’s control — for example, sourcing and transporting of goods, employee commuting, or disposal of company produce. 

As part of a credible net-zero strategy, a business will need to invest in carbon offsets (on top of reductions) to reduce their impact across these three scopes and do their part to help mitigate climate change. Carbon offsets facilitate this in two ways: by removing carbon from the atmosphere, i.e., carbon removal offsets, or by avoiding emissions to begin with, i.e., conventional avoidance carbon offsets. Keep reading, and we’ll explore these two types of carbon offsetting more deeply.

Conventional avoidance carbon offsets 

Perhaps the more well-known of the two options, conventional avoidance carbon offsets counteract further CO₂ from being released into the atmosphere. To do this, a business might pay another entity to choose operational practices with a lower carbon footprint or avoid an activity that would increase emissions. This could include preserving forests to keep naturally sequestered carbon from being re-released into the atmosphere. Alternatively, it might involve incentivizing farmers to practice regenerative agricultural techniques that help store carbon dioxide in the soil. Both choices act as avoidance carbon offsets and award a business with “carbon credits,” which can then be used to counteract their greenhouse gas emissions. Every carbon credit amounts to one ton of carbon avoided, collected so a company can keep their carbon balance sheet neutral as they emit via business activities — while 1 ton is emitted, 1 ton is avoided.

But while there’s some merit here, conventional avoidance carbon offsets face specific criticisms when used alone within net-zero strategies. Because the purchase of carbon credits effectively functions as a license to emit, the difficulty with measuring how much CO₂ has been avoided has come under some scrutiny. With many avoidance offsets, you’re measuring a hypothetical situation that never actually occurred — i.e., would the forest have been cut down without the company’s intervention? Alternatively, how much carbon dioxide would have been released if a forest were logged? The answers can only ever be guesses or estimations, which begs whether a company purchasing avoidance carbon credits has neutralized its emissions. As Jonathan Goldberg, CEO of Carbon Direct, says, “The carbon avoidance in these offsets is counterfactual math. Maybe someone else can figure it out, but I can’t” (Source). 

Luckily, the market constantly evolves with increased guidance from entities such as The Voluntary Carbon Markets Integrity Initiative (VCMI). Additionally, at the end of 2021, The Taskforce on Scaling Voluntary Markets (TSVM) proposed adding new criteria to registered carbon credits that would help bring more transparency to the market, allowing buyers a clearer view of the impact of their chosen projects. Early participation in voluntary carbon offsets is essential to further developing this and growing the market.