glossary

Carbon Offset Projects

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What is carbon offsetting?

Before we jump into the topic of carbon offset projects, let’s have a look at what carbon offsetting actually means.

Carbon offsetting is a way to pursue carbon neutrality. Therefore, emissions from one company / country / industry sector are countered by an emission reduction somewhere else. Examples include investments in renewable energy, energy efficiency and other low-carbon (clean) technologies, restoring forests, or sequestering carbon in soil.

Carbon offsetting offers a solution to compensate a company or individuals unavoidable emissions that cannot be reduced. A company or individual can choose to voluntarily offset their emissions by investing in carbon offset projects which are designed to achieve emissions reductions in atmospheric carbon dioxide levels. Each tonne of CO2 that is avoided or reduced through these projects can be represented by a carbon credit and subsequently purchased by companies or individuals to offset their emissions.

What are carbon offset projects?

Carbon offset projects help companies on their way to achieve net-zero to compensate residual emissions that remain after all reduction measures have been taken. Along the pathway to net-zero emissions, carbon offsetting portfolios can include both emissions reductions or avoidance projects and carbon removal projects.

Emissions reductions or avoidance projects achieve emissions reductions, for example, through the provision of efficient cookstoves or clean water boreholes to regions that do not have access to electricity or freshwater. These technologies reduce the use of burning wood and deforestation of local forests, whilst positively impacting communities through sustainable development. In addition to community projects, the implementation of renewable energy brings access to electricity to regions previously reliant on the burning of fossil fuels.

Neutralisation or carbon removal projects involve the removal of carbon from the atmosphere, whether by sequestering carbon into biomass or through the implementation of carbon removal technologies. So far, nature based solutions such as afforestation and reforestation projects are certified under benchmark standards such as Gold Standard and VCS. Carbon removal technology companies, on the other hand, are currently working with NGOs and benchmark offset standards to formulate methodologies to ensure robust calculation of the generated emissions reductions, to ensure that the emissions reductions can only be counted once and that no negative externalities result in the process.

There is a wide range of climate action projects that help to reduce emissions or absorb them from the atmosphere. Some examples include:
- Forestry & Conservation: Projects that engage in afforestation, the avoidance of deforestation, the action and recultivation of wetlands or sustainable land management.
- Renewable Energy: This category includes solar energy, wind energy, hydro energy and geothermal projects.
- Community Projects: This category includes projects around improved cookstove technology and access to clean water.
- Waste-to-Energy /Industry: Projects around biogas from landfill, industry and biomass.

How do carbon offset projects work?

After a company has taken the first step of conducting a carbon emissions' analysis, they can balance their determined carbon footprint through various climate action projects. This means that every tonne of emissions that their business emits is absorbed from the atmosphere elsewhere by a project that supports climate action. The projects are financially supported by the company and contribute to a long-term reduction of global carbon emissions. In the ideal case, this creates a balance between emitted and compensated emissions.