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    What is Carbon Offsetting and How it Helps in Reducing Carbon Emissions?

    sustainable energy solar and wind turbine farm

    The levels of carbon dioxide in our atmosphere are now higher than ever in human history. The need of the hour is to reduce the amount of greenhouse gases in the atmosphere to control serious issues such as Global Warming and Climate Change.

    In this article, we will discuss one such strategy - Carbon Offsets.

    Team Digit

    What is a Carbon Offset?

    Carbon offset comes from the most basic idea: You give something, you get something or Quid Pro Quo.

    With this idea, if you emit X amount of CO2 into the atmosphere in one location, you can offset it by investing in a carbon-reducing activity in a different location to compensate for part or all your carbon footprint.

    Carbon offsetting is used to compensate for your emissions by funding an equivalent carbon dioxide saving elsewhere.

    An organization takes actions like planting trees, building wind farms, solar power plants, etc., to compensate for their carbon emissions. If they compensate enough to offset their carbon footprint, they effectively become carbon neutral.

    What are the Two Main Kinds of Carbon Offsets?

    Carbon offsets fall under two broad categories:

    1. Carbon Emissions Avoidance

    Carbon emissions avoidance is a technique which results in future emissions being avoided or reduced. Organizations take up some common types of emissions avoidance such as renewable energy projects, forest conservation or management or carbon capture and storage. These methods are further explained below.

    2. Carbon Removal

    Carbon removal projects physically remove existing carbon from the atmosphere. This can be through a natural process or through technological innovations. For e.g., afforestation and reforestation are natural methods of carbon removal.

    Direct air capture (DAC) is a chemical process of removing carbon from the atmosphere directly. Large fans draw air into the DAC plant. Different chemical processes such as Electro swing and Solid/Liquid DAC are used to re-release air into the atmosphere devoid of CO2.

    How Does Carbon Offsetting Work?

    Carbon Offsetting works in 4 major steps:

    • Step 1: An individual or company can pay a broker to remove a portion of carbon from the atmosphere, often in another part of the world.
    • Step 2: The customer calculates their emissions level.
    • Step 3: The broker then charges a fee based on that level.
    • Step 4: The broker will then invest a portion of that money in a project that reduces carbon emissions.

    Organizations and individuals pursue carbon offsetting voluntarily or to comply with regulations.

    Individuals can make donations or purchase an offset credit. This money promotes carbon storage or reduction, such as planting/saving trees, developing wind or solar farms, etc. You can do this to help offset your carbon emissions.

    Carbon Offsets allow businesses that can't immediately reduce their emissions to balance things out by buying emissions reductions somewhere else. Businesses focus on becoming carbon-neutral or achieving net-zero emissions through carbon offsetting.

    What are Some Examples of Carbon Offsetting?

    Some examples of carbon offsetting projects are the following:

    • Forest Regeneration: Tree planting projects restore areas facing deforestation. An organization helps renew forest land natural or artificial means.
    • Supporting Regenerative Farming: Farmers grow crops using technology and techniques to maximize resources and reduce waste. This technique focuses on soil quality and protecting biodiversity.
    • Investing in Climate Projects: Climate projects that focus on researching, developing and marketing sustainable alternatives to everyday problems/products that can help reduce excessive carbon emissions.
    • Building Renewable Energy: These projects replace fossil fuel use with clean, renewable energy, such as that generated from wind or solar farms.
    • Waste and Landfill Management: One major problem with landfills is the significant emission of methane gases. Through waste and landfill management projects, organizations invest in capturing methane gas from such places.
    • Securing Renewable and Sustainable Modes for Operations and Functioning: This project aims to improve the efficiency of existing infrastructure by upgrading building insulation, using cleaner energy, developing and implementing efficient operations, etc.
    • Carbon Sequestration: These projects promote carbon capture and storage to put carbon in places where it's unlikely to be released back into the atmosphere. They take carbon out of the air and store it in soil, swamps, trees and even in rocks.

    What are the Quality Markers for a Successful Carbon Offsetting?

    There are many organizations that monetize carbon removal/reduction techniques through 'carbon credits'. It is important for individuals and corporations who truly want to make a positive impact on the environment to verify these carbon-offsetting institutions.

    This helps in accurate reporting, data tracking and transparency that will not only build credibility, but also help authorities and agencies better their climate actions and plans.

    There are several quality markers to look out for when verifying successful carbon offsetting, such as:

    1. External Checks and Verification

    An independent, trusted third party checks and verifies a project’s approach and methodology from start to end to ensure a well-established carbon offsetting.

    For e.g., emissions avoidance projects are tried and tested. They are high-quality projects that corporations can adopt as a successful carbon offsetting method.

    2. Single Counting

    A carbon credit that has only been purchased and claimed by one organisation is called single counting. When a carbon credit is 'double-counted,' it indicates that more than one party has claimed it, meaning that the purchase is not having the intended effect.

    For e.g., even if a company buys 100 carbon credits from a carbon offset project, it won't make a difference if those credits are previously sold to another bidder.

    3. Permanence

    Permanence refers to the durability of the carbon benefit from an offset project, considering the risk of reversal. Since there is less chance of the carbon benefit being reversed in projects without storage, permanence is frequently used as a criterion of quality in initiatives that entail storage.

    4. Additionality

    The term ‘additionality’ refers to a project's ability to reduce emissions or remove carbon from the atmosphere above and beyond ‘business as usual.’ It determines if the removal/reduction effort was necessary for those emissions to have a real-world effect.

    5. Avoiding Overestimation of Impact

    "One carbon credit is equivalent to one tonne of CO2" - based on this assumption, most carbon credits are awarded to projects depending on the quantity of carbon emissions prevented or removed.

    To guarantee that claims of emissions avoided or carbon eliminated are genuine, a project’s carbon benefit must be accurately estimated, and continuous measurement and monitoring should ensure such estimates are true.

    Can Carbon Offsetting Solve Climate Change?

    Carbon offsetting is possible because climate change is a non-localized problem. Greenhouse gases mix throughout the atmosphere, so reducing them anywhere contributes to overall climate protection. While in theory carbon offsets seem like a golden idea, their efficiency remains in question.

    Most offsets available on the market don't reliably reduce emissions. A carbon offset requires to have the feature of 'additionality'. The project must accurately measure the amount of CO2 being kept out of the atmosphere. This process requires transparency and well-documented standards and protocols to verify that the project is doing everything it claims.

    Although carbon offsets have appealing benefits, it is difficult to verify their environmental benefits. Yet, they are now the backbone of environmental policies of many of the biggest polluters of the planet.

    Offsets are not the only answer to climate change. It seems like an easy solution but to have actual impact, more real and hard work is required.

    So, what can be done?

    If you really want to make a difference,

    • Start reducing the engagement in carbon-creating activities in the first place that would make more of a difference.
    • Prioritize carbon removal, instead of reduction; projects which offer innovative and permanent storage solutions.
    • Rather than opting for projects that invest your money towards planting more trees or saving forests, opt for clean-energy projects – anything from distributing efficient cooking stoves to capturing methane gas at landfill sites. Energy-based projects such as these are designed to make quicker and more permanent savings along with offering social benefits.

    Carbon offsetting can help reduce carbon emissions and mitigate the effects of climate change, but it can't solve the problem entirely on its own.

    FAQs about Carbon Offsetting

    Why are carbon offsets found in developing countries?

    Many factors such as the cost of carbon credit and resources available are found cheaper and better in developing countries. Apart from this, carbon offset projects also have additional benefits like enhancing the health, education and well-being of societies in developing countries.

    Many factors such as the cost of carbon credit and resources available are found cheaper and better in developing countries. Apart from this, carbon offset projects also have additional benefits like enhancing the health, education and well-being of societies in developing countries.

    What is the biggest problem of carbon offsetting?

    Carbon offsetting relies on vague predictions for emissions reduction. Many of the projects available in the market are not reliable and do not produce efficient results. Carbon offsetting can also lead to greater emissions when carbon is re-released into the atmosphere from temporary stores. Organizations can also use carbon offsetting to mislead consumers and appear more sustainable than they are. Additionally, it doesn't even directly reduce or address the core issue of carbon emissions.

    Carbon offsetting relies on vague predictions for emissions reduction. Many of the projects available in the market are not reliable and do not produce efficient results. Carbon offsetting can also lead to greater emissions when carbon is re-released into the atmosphere from temporary stores.

    Organizations can also use carbon offsetting to mislead consumers and appear more sustainable than they are. Additionally, it doesn't even directly reduce or address the core issue of carbon emissions.

    What are the two best carbon sequestration methods?

    Carbon sequestration can happen in two basic forms: biologically or geologically. Biological carbon sequestration happens when carbon is stored in the natural environment. This includes ‘carbon sinks’, such as forests, grasslands, soil, oceans, etc. Geological carbon sequestration happens when carbon is stored in places such as underground geological formations or rocks. This process is largely artificial representing an effective way of neutralising emissions.

    Carbon sequestration can happen in two basic forms: biologically or geologically. Biological carbon sequestration happens when carbon is stored in the natural environment. This includes ‘carbon sinks’, such as forests, grasslands, soil, oceans, etc.

    Geological carbon sequestration happens when carbon is stored in places such as underground geological formations or rocks. This process is largely artificial representing an effective way of neutralising emissions.

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    Last updated: 08-05-2025

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