Luke Hansford


Carbon offsets

🌱 Seedling4 min read

A carbon offset broadly refers to a reduction in GHG emissions – or an increase in carbon storage (e.g., through land restoration or the planting of trees) – that is used to compensate for emissions that occur elsewhere. 1

A carbon offset credit is a transferrable instrument certified by governments or independent certification bodies to represent an emission reduction of one metric tonne of CO2, or an equivalent amount of other GHGs... 1

Companies choose to use offsets when it is cheaper than achieving direct carbon or greenhouse gas emission reductions.

Carbon offset programs

Carbon offset "programs" are types of markets that perform one or more of these functions: "(1) they develop and approve standards that set criteria for the quality of carbon offset credits; (2) they review offset projects against these standards (generally with the help of third-party verifiers); and (3) they operate registry systems that issue, transfer, and retire offset credits."

Early carbon offset programs, such as Clean Development Mechanism and Joint Implementation, emerged out of the 1997 Kyoto Protocols, but they have been heavily criticised as ineffective. In some cases the programs led to more emissions as companies increase production to make offsets available.

Voluntary carbon offset markets

These are unregulated (though sometime using the same regulations as government markets) markets used by corporations to offset carbon usage. Forestry and land usage tends to be the most common type of offset, whereas investment in renewables is the most impactful.



  • "If the whole world needs to be reducing emissions now, does it really make sense that some actors in one part of the world are claiming the right to continue to emit by stopping emissions elsewhere? Ideally, the actors at both ends of these transactions should be reducing emissions and storing carbon simultaneously. The only scientifically consistent net-zero program is...reduce 90 percent of your emissions and then remove and store some carbon permanently on top of that."
  • Additionality. This refers to the idea that the project would not have happened without the offset program payments. With carbon offsets it's never really possible to prove that the offset would've been used. For example an offset that is used to build a wind turbine is actually causing additional emissions if that wind turbine was going to be built regardless of the offset.
  • Permanence. Not all carbon offsets are permanent. For example wildfires might destroy forests used for carbon offsets.
  • Double counting.
    • "While it is hoped that "robust accounting methods" will help solve this problem, in practice, there is no single registry that keeps tabs on every single climate project and claims on resulting carbon credits. In fact, a Bloomberg analysis found that about half of all offsets sold in voluntary markets do not even have a buyer's name attached to them." 1
  • Leakage. If a carbon offset to prevent deforestation in one place leads to deforestation in another place, then it is essentially ineffectual.
  • Overestimation of credits. This often occurs due to the buyer underestimating their emissions.
  • Social and environmental harm.

Best practices


The Oxford Offsetting Principles

Summarise from this document:

  1. Cut emissions, use high quality offsets, and regularly revise offsetting strategy as best practice evolves. This means first, prioritizing mitigation, thereby minimizing the need for offsets in the first place. It also means ensuring environmental integrity and maintaining transparency.
  2. Shift to carbon removal offsetting: True offsets would remove carbon from the atmosphere, so while emission reduction offsets can be important to support various projects, eventually we will need to concentrate on offsets which are truly negative. Over time, offsets should comprise more and more projects which remove rather than just reduce.
  3. Shift to long-lived storage: Ultimately the carbon we remove from the atmosphere needs to remain stored for many years to be effective. Offsets that provide longer or permanent storage will need to be prioritized.
  4. Support the development of net-zero aligned offsetting: Because the market for high quality offsets is immature, it needs support. Various strategies such as long term contracts provide certainty to offset developers, or enable sector-specific alliances. Further, this fourth principle states that a wide range of natural and semi-natural ecosystems should be protected and restored in their own right, not only for carbon sequestration.

Offset providers


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