Insights / What are carbon offsetting certificates?

What are carbon offsetting certificates and why do they matter?

26th July 2022

Carbon offsetting certificates are in greater demand than ever – but what are they, and what environmental projects are behind them?

What are carbon offsetting certificates and why do they matter? - Hero

What are carbon offset certificates?

Carbon offset certificates are a way to show the amount of carbon emissions that have been avoided by any given project. Each individual certificate corresponds to one tonne of emissions that have been offset.

This is achieved by supporting activities that reduce or negate greenhouse gases (GHG). So, if a business released one tonne of CO2, they could buy a carbon offset certificate that supported part of a project which would proactively avoid emitting an equal amount. This would make the original activity ‘carbon neutral’.

The company could do this in one of two ways. It could choose to invest directly in a project that generates a carbon offsetting credit. Or it could buy the carbon credit from the market, or from experienced carbon offsetting partners like Drax, and reduce its carbon footprint accordingly.

Trading volumes have been increasing rapidly over the last few years as demand for credits has risen. Following COP26 and the UK’s legally binding commitment to net zero by 2050, the rise has been even greater.

When should your business buy carbon offset certificates?

Carbon emissions are sorted into three categories: Scope 1, 2 and 3.

  • Scope 1 – direct emissions, such as company vehicles and on-site combustion
  • Scope 2 – indirect emissions from purchased energy (if your business buys 100% renewable energy, your Scope 2 emissions can be calculated as zero)
  • Scope 3 – all other indirect emission across your organisation’s supply chain

For more detail on Scopes 1, 2 and 3, read our full guide.

Scope 1,2,3 chart

Where possible, your organisation should reduce its carbon footprint as much as possible by cutting carbon-intensive operations. Following that, Scope 2 emissions are typically the easiest to reduce – or entirely eradicate – by purchasing 100% renewable energy and/or Energy Attribute Certificates (EACs). Scopes 1 and 3 are usually more complex in nature and need a combination of solutions to eliminate.

Once every effort to cut carbon has been made, many organisations will still have a carbon footprint that can’t yet be eradicated. This is when investing in projects that generate carbon offset certificates can help companies do their bit for the climate crisis.

What projects lie behind carbon offsetting?

The projects behind these certificates cover a huge range of activities, including:

  • Reforestation and afforestation programmes, focussed on planting trees and conserving forests and the wildlife they support.
  • Renewable energy schemes – including solar, wind and hydro-electric power.
  • Community projects that enable communities to reduce their carbon footprint (these also tend to bring other social benefits too, such as increased employment or better health, contributing to achieving the UN’s Sustainable Development goals.).

The Luangwa Community Forests Programme

The winner of the 2021 Environmental Finance award for best individual carbon offsetting project was the Luangwa Community Forests Programme (LCFP) in Zambia.

One of the greatest challenges when it comes to choosing a carbon offsetting project is to establish that it is credible and well managed. There are many organisations that have grown up to make this possible. One of the most respected of these is REDD+ – a framework for forest conservation that has developed with the UN’s Conference of the Parties (COP) programme.

The LCFP is the largest REDD+ project in Africa, protecting more than one million hectares of vital wildlife landscape.

The project helps to reduce carbon emissions, but it brings other benefits too. Bio-Carbon Partners (BCP), the organisation which manages the project, has calculated that it affects 217,000 people directly. This is the result of a conscious decision, as BCP’s CEO Dr Hassan Sachedina explains: “If we're not meaningfully creating value for people at a household level, what incentive do they have to keep that forest intact and to tolerate an increase in wildlife?”

With projects like this, it’s possible for carbon offsetting to benefit the planet, nature, and also humankind too.

The Hifadhi Livelihoods Project

Another carbon offsetting initiative that is having a direct effect on local people’s lives can be found in Kenya. There, the Hifadhi project is helping poor communities around Mount Kenya to reduce their dependence on firewood through highly efficient cooking stoves.

This is reducing the amount of CO2 emitted by cooking, and the good it does also goes much further than that. It’s helping to preserve Kenya’s hard-pressed forests, conserve the wildlife that depends on them. And, most importantly, it’s having a hugely beneficial effect on the health of many local people.

Cooking in the traditional way with an open wood fire’s been estimated by the World Health Organisation to be as bad as smoking two packets of cigarettes a day.

As a result of the Hifadhi project, wood consumption in the area’s been reduced by 60%, 180,000 trees have been planted, and 100% of the community’s now benefiting from cleaner air.

So, as well as helping to reduce emissions, carbon offsetting projects like these are also helping people to live better lives. They’re protecting wildlife and communities as well as the climate.

But we can’t stop there. We need to do more than reduce the amount of carbon emitted.

Can carbon offsetting also include carbon capture?

At the moment, most carbon offsetting projects are mainly involved in what might be called avoiding the release of carbon into the atmosphere. As we work to reach net zero carbon emissions, we’ll need to advance from carbon offsetting to carbon removal.

One example of this in the UK is the pioneering work Drax is doing in the field of bioenergy carbon capture use and storage (BECCS). This is now moving a step closer to implementation at scale, with support from the UK Government and planned investment of £40 million in 2022 alone. When operational, BECCS can remove millions of tonnes of carbon from the atmosphere each year.

Find out more about how your organisation can offset carbon emissions

At Drax, we’re on hand to support your carbon emission reporting needs – from Scope 1, through to Scopes 2 and 3. Get in touch to discuss how we can help you take another sustainability step by purchasing carbon offset certificates.

Confirm your environmental credentials with certificates

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