Carbon Off-setting

CIWM‘s view
There is no doubt that reducing greenhouse gas emissions (GHG) to zero will be challenging for many reasons, including the cost of change, the upheaval associated with changing our lifestyles and scepticism about climate change and global warming. It is therefore more probable than possible that some residual GHG emissions will remain after a decarbonisation strategy is implemented.

In short, CIWM believes that to achieve Net Zero, with current knowledge and technology, some residual GHG emissions will need to be off-set as a positive mechanism to support wider global emissions-reduction strategies, but that this is only acceptable after the total emissions across all scopes has been reduced by at least 90% as per a long-term Science Based Target. 

When considering an off-setting strategy CIWM believes that the Oxford Principles should be adopted as part of an overall Net Zero plan or decarbonisation strategy.

What is it?
Carbon off-setting, through ‘carbon-trading’ is a broad term used to describe a range of mitigation measures that either compensate/reduce or neutralise/remove GHG emissions and which are either mandatory or voluntary. 

Voluntary off-setting programmes, which are outside of the Kyoto protocol, are being established (including schemes that meet the Gold Standard) and allow corporations and individuals to mitigate their own operational emissions. However, it is these voluntary schemes that have come in for criticism, with concern over whether they are creating additional savings. 

A carbon off-set is a reduction or removal of emissions of carbon dioxide (CO2) or other GHGs made in order to compensate for emissions made elsewhere. It is a transferrable instrument certified by governments or independent certification bodies to represent an emission reduction of one tonne of CO2 or an equivalent amount of other GHGs (CO2e). 

Carbon in-setting is essentially about doing more good than harm in your own supply chain, they are usually nature-based and often have social benefits as a result (e.g. reforestation, agroforestry and regenerative agriculture). 

Nature-based solutions are defined by the European Commission as: “Solutions that are inspired and supported by nature, which are cost-effective, simultaneously provide environmental, social and economic benefits and help build resilience”. Such solutions bring more diverse, nature and natural features and processes into cities, landscapes and seascapes, through locally adapted, resource-efficient and systemic interventions.

The issues
Some of off-setting’s critics have been particularly vocal, describing the practice as paying lip service to action, because the process allows industrialised countries to benefit whilst giving nothing up in return. Some have even called into question the UN Clean Development Mechanism saying that the majority of projects covered by the Certified Emissions Reduction scheme have a low likelihood that emission reductions are additional and are not over-estimated.

Despite this, carbon off-setting is likely to play a role as part of wider global emissions-reduction strategies. However, ensuring it works will call for smart solutions to make off-setting projects more transparent and effective, while still encouraging people and organisations in the developed world to tread lightly and reduce their carbon footprints.

The background
The concept of carbon trading (or off-setting) was first introduced under the Kyoto Protocol, and in a world where very little was being done at the time to address climate change, provided a means for countries and organisations to develop low-cost measures to mitigate or off-set their GHG emissions. The Kyoto Protocol provided three cost-effective and flexible mechanisms; one of these was the Clean Development Mechanism (CDM), under which countries or operators in industrialised nations could acquire carbon credits to reduce their GHG emissions.

The mechanism most closely associated with carbon off-setting was the mandatory CDM, defined under Art.12 of the Kyoto Protocol. This was a UN run carbon off-set scheme, which allowed countries to fund GHG emissions reducing projects in other countries and claim the saved emissions as part of their own efforts to meet international emissions targets. 

The CDM had two objectives to assist: 
1. developing countries to achieve sustainable development and reduce their carbon footprints, and 
2. industrialised countries in achieving compliance with their emissions reduction commitments. 

It achieved these two objectives by allowing industrialised countries to buy approved Certified Emission Reduction (CER) units from CDM emission reduction projects in developing countries in order to meet part of their emission reduction commitments.

Both the projects and the issue of CER units were subject to approval by the CDM Executive Board (supervised by the UN Framework Convention on Climate Change), to ensure the emission reductions were real and additional. 

However, the flaw under the Kyoto Protocol was that it allowed industrialised countries to benefit from such an exchange, because they faced no obligations themselves and gave nothing up in return, the emission reductions were just transferred.
Under the Paris Agreement the role of off-setting changed, because nearly every country in the world was obligated to identify explicit actions (known as defined national contributions) they agreed to make to reduce GHG emissions, and adapt to climate change. This was a major departure from the approach adopted under the Kyoto Protocol, where only industrialised countries committed to reducing emissions and where off-setting was an explicit and prominent strategy.

However, this does not mean the end of carbon off-setting. In fact, Article 6 of the Paris Agreement explicitly recognises the possibility for international cooperation, through the transfer of emission reductions. If a country allows an emission reduction to be claimed by another, it will no longer be able to count the reduction towards its own GHG target. Through robust accounting methods, any double-counting issues should therefore be averted, and any transfers will need to be balanced using a form of GHG emissions double-entry bookkeeping.

After COP21 in Paris, there was still much to be settled by international negotiations and at COP26 in Glasgow, it was agreed to define off-sets and credits issued under Article 6 of the Paris Agreement as mitigation contributions, as a means of discouraging carbon neutrality claims by buyers. 

Voluntary off-setting can be utilised in corporate Net Zero Strategies and can in principle offer an easy, cost-effective and practical way to compensate for an organisation’s remaining GHG emissions, in lieu of reducing those emissions directly and achieving Net Zero. This is because the total elimination of GHG emissions by internal measures alone is almost impossible for most organisations. However, off-setting should be used sparingly and for organisations who have signed up to the Pledge to Net Zero off-setting is only accepted once a signatory has reduced its total emissions across all scopes by at least 90% as per a long-term Science Based Target. 

Carbon off-setting is still a new and dynamic area. Any organisation intending to use it should aim to keep an eye on the latest science and go beyond the minimum requirements wherever possible, including adopting and following the Oxford Principles for Net Zero Aligned Carbon Off-setting, which in simple terms are:   
1. Cut emissions, use high quality offsets, and regularly revise offsetting strategies as best practice evolves. Key to this is prioritising the reduction in an organisations GHG emissions before considering off-setting. 
2. Shift to carbon removal off-setting. This mainly involves using off-sets that extract GHG directly from the atmosphere. 
3. Shift to long-lived storage. There are many ways of storing CO2 extracted from the atmosphere and consideration should be given to those that lock CO2 up over millennia, such as geological storage.
4. Support the development of Net Zero aligned off-setting. These are likely to be long-term agreements and those that support restoration of habitats and/ or ecosystems.

Nature Based Off-Setting
Off-sets that remove/ neutralise carbon from the atmosphere directly impact emissions within an organisation’s value chain. Examples include nature-based solutions removal (accredited or unaccredited) and man-made negative emission technologies (NETs). 

Nature-based solutions can make an important contribution to reaching Net Zero emissions, if combined with dramatic cuts in GHG emissions and companies that are serious about Net Zero should consider doing both off-setting and in-setting; examples of such schemes are: 
The Woodland Carbon Code is a quality assurance standard for woodland creation projects in the UK and generates independently verified carbon units that can be purchased to help organisations plan for Net Zero pathways through biodiversity projects. 
The Peatland Code is a voluntary standard for UK peatland projects wishing to market the climate benefit of restoration and provides assurance and clarity for business and other investors in peatland restoration projects through independent validation and verification. It works on the basis that during restoration, carbon savings are made through rapid emissions reductions.


CIWM Position Statements represent the Institution’s views at a particular point in time.  They remain under constant review, in the light of new experience and research.


06 March 2024