Carbon offsetting is a process by which funds are directed towards projects that aid in reducing global emissions. Businesses or individuals often purchase carbon offsets rather than cutting their carbon footprints when emissions appear unavoidable, or sometimes they can both do so to make their efforts to reduce emissions go further.
Carbon offset projects can include effective stoves for cooking in villages and bio-gas generation from organic material, and a myriad of initiatives aimed at reducing deforestation and regenerating forests that have been damaged.
The process of certifying an initiative as eligible for carbon offsets isn’t easy. Carbonbay is involved in shepherding project through the Byzantine maze of regulations that have been put into to the U.N.’s Clean Development Mechanism (CDM) to ensure that not only the emissions reductions are valid, but that there is an existing source of funding available for a project like this. This usually means that they’re not routine and have no chance to be successful without credits. Credits for emission reduction allow companies to earn compensation for every metric tonne of carbon dioxide emissions that are avoided. They are able to be certified by CDM or other standards that are respected such as The Gold Standard, and the Verified Carbon Standard (VCS).
“Carbon offset … helps environmental projects who aren’t able to obtain funding on their own.”
What are the Pros of Carbon Offsetting
Carbon offsetting has benefits on both sides of the process. It helps environmental projects that can’t secure funding on their own, and it also provides businesses with a better chance to decrease the carbon emissions of their operations.
Many businesses aren’t able reduce their carbon footprints as they’d like to. In some cases, this is due to the fact that their footprint is relatively small (e.g. software companies), but they want to expand. Other industries, like heavy equipment as well as ocean transport, don’t have low-carbon options available to meet their needs currently. By helping to fund environmental projects that lower emission, businesses can make some up for the carbon they aren’t able to eliminate themselves.
While the majority of offset purchases are not required, there are some jurisdictions in which they are necessary to meet local standards and regulations and avoid penalties. This is an additional benefit of an offset program for carbon. It provides regulators with a means to enforce environmental laws.
Other companies use offsets to prove that the majority or all of their operations are “carbon negative” or even “carbon positive.” This also gives an opportunity for these businesses to keep track of their own carbon footprint. Many people today prefer doing business with companies that use offsets.
Carbon offsetting provides valuable resources to projects that usually sequester carbon, through forest growth and other mechanisms or eliminate emissions, like renewable energy generation, or using clean energy appliances. Through focusing on projects that are less likely to receive other kinds of funding, such as a first-of-its-kind within a specific region They can be a great alternative to traditional finance mechanisms.
Once a successful project is completed through offsetting and has proven to be viable it’s usually easier for similar, follow-on projects to be able to draw funding from other sources.
Offsetting has been proven by reliable studies to be an effective way to reduce greenhouse gases.
Cons and Cons of Carbon Offsetting
Many criticisms have been directed at carbon offsets too. Some are philosophical in nature and oppose the notion that wealthy businesses can buy their way out of the carbon market, instead of taking on greater responsibility for their carbon credit exchange. Others say that they undermine the push for more aggressive actions, such as a carbon tax. Are offsets letting polluters free of the burden too easily?
Others focus on more practical issues:
Certain forests that were protected through offsets have later been found to have burned or cleared of wood. It could or might not be intentional on the part of those receiving offsets.
Are they really required, are they really necessary, or would the task be completed without the credit?
Are carbon measurement accuracy reliable, and can the entities that keep track of their accuracy be trusted to do proper accounting?
What is the problem with fraud?
Is global warming taking place too fast to allow carbon offsets to be helpful?
There are some legitimate questions here. Although no system is perfect, many of these concerns were recognized and addressed when both carbon standards and practices evolve.
Carbon offsets are not intended to be a substitute for direct action, but rather as a supplement or, in certain situations, as the only choice. For instance, the airline industry, for example, uses a lot of offsets, as there is no way that commercial aircraft can fly without the use of fossil fuels. Under an international scheme called CORSIA that will see them stop the emission levels for 2019/2020 and have pledged to offset any growth in emissions from 2021 onwards.
As to the question of forests disappearing after qualifying for offsets, this can be addressed with the newest VCS standard. The standard only allows for payment to be made to forest carbon sequestration that has already happened in the past decade. To limit further risk, a proportion of the credits paid are put aside to be used in “pooled buffers” to help cover unexpected losses, much like the insurance policies.
The measurement process is also changing. Renewable energy projects are easiest to gauge, as it is only necessary to take a look at the meters. Forestry and other land-use projects may be more challenging however, models are getting better and new technologies such as GPS and satellite imagery and drones have proven useful in providing a clearer image of the amount of carbon that is remaining stored.
How You Can Retract and Offset Your carbon footprint
Carbon offsets are common across businesses. However, banks are working with tech companies to engage consumers in. For instance, Swedish fintech startup Doconomy, has partnered together with Finnish Aland Bank to help regular consumers understand the environmental impact of the majority of purchases.
The Aland Index calculates the carbon footprint of any item being purchased by consumers by analyzing more than 200 variables. Paula DiPerna, who was instrumental in establishing the world’s first trading system for cap-and trade in the year 2003 describes the index “a game changer” that synthesizes intangible values into the form of a dollar. The consumer can then utilize that dollar value to offset the carbon emissions produced by an item , thereby making purchases carbon neutral.
“The index was invented … in order to provide the world with a voice in every wallet and at every point-of-sale.”
Helena Mueller, the head of Aland Index Solutions and co-founder of Doconomy
As per Helena Mueller, head of Aland Index Solutions and co-founder of Doconomy, “the index was created to establish a mutual language that addresses climate change for all personal financial management, setting a credible global standard and also to give the planet a voice in every purchase and in every point-of-sale.”
Customers can access the index via the DO application. It’s currently only available in Sweden, but Bank of the West teamed along with Doconomy for the purpose of bringing it into the US to be part of the 1% for accounts. Planet account. Through the mobile banking application you can use the Aland Index is applied to transactions to calculate automatically the carbon footprint of transactions made with the 1% for the Planet debit card.
“The carbon footprint of a product is presented in pounds and/or kilo carbon generated as well as its social impact, i.e. the “real cost” of a product or a service, once the negative impact of climate change is accounted in,” states Mueller. “The bank, in this case, Bank of the West, can then assist their customers in understanding the carbon footprint by transaction by the week, day month, and year.”
Armed with this information, individual consumers can take charge on their own carbon footprint. After all, you cannot alter what you cannot measure.
