FAQS

Companies need to be held accountable for their GHG emissions as well as emission reduction targets they set including all decarbonisation-related claims and commitments publicly made. Despite the willingness to reduce all their emissions, there will still be a proportion that is impossible to reduce at the given time. Offsetting the currently unavoidable emissions is legitimate and can be an effective tool to help companies meet those targets in a transparent way.

A carbon offset project is an undertaking to remove or avoid emissions, such as via installing renewable energy capacity, energy efficiency improvements, reforestation initiatives, or forest preservation. The project must meet international standards that are independently verified and result in a measured positive social, environmental and economic impact, helping to stimulate sustainable development.

There are different carbon credit providers and a wide range of project types available. Projects have to meet the registry’s rules and requirements, follow specific third-party approved methodologies, monitor emission reductions and avoidances, and be verified by independent third parties. Anyone seeking to purchase carbon credits must ensure that the credits were issued by a reputable source/registry. The ICROA-endorsed international verification standards ensure that the project is real, verified, permanent and additional and the ICROA Code of Best Practice, which all accredited firms must comply with, ensures all credits offered to clients are of high integrity.

Many carbon projects also provide a variety of so-called co-benefits making a positive environmental, economic, social and cultural impact. Some examples include local biodiversity support, advancing local infrastructure, providing additional jobs and education opportunities for local communities, or fostering gender equality through training programmes and employment opportunities for women. Co-benefits offer additional value to companies by helping them meet their sustainability commitments.

In essence, geographic location of the project does not matter. However, the majority of carbon offsetting projects are located in developing countries which can create a bigger impact for the local communities due to additional social and economic co-benefits.

The ICROA-endorsed international verification standards ensure that the project is real, verified, permanent and additional. For transparency, carbon credits are assigned serial numbers and are transferred and permanently retired in publicly-accessible emission registries.

All ICROA Approved organisations adhere to ICROA’s Code of Best Practice and therefore, the highest environmental integrity and quality in the voluntary carbon market. The ICROA Approval Label certifies that the company is compliant with the ICROA Code through an annual cycle of third-party audits.

Credit providers will have a set price per tonne of CO2 equivalent – and the price can vary depending on factors such as project type, vintage, or location. The volume of credits required is determined by calculating the organisation’s so-called carbon footprint – the level of its emissions. The more it emits, the more it will need to buy to offset its emissions.

Choosing carbon credits from an ICROA-Endorsed carbon crediting  programme should guarantee that the credits are high-quality and offer verified emissions reductions or removals which have been subject to a rigorous third-party auditing process. All ICROA Approved organisations are vetted in terms of the quality and integrity of their compensation services and provide further guidance.

Note: ICROA’s independent assessment of carbon crediting programmes is based on review criteria that apply mainly at the organisational level. It does not include an assessment of the programmes’ methodologies or of the projects that use the methodologies. For buyers seeking assessments of carbon credit methodologies, ICROA recommends reviewing the Category Assessments undertaken by the Integrity Council for the Voluntary Carbon Market (ICVCM). For independent assessments of carbon credit projects, buyers can review the ratings and reports produced by specialised rating agencies including BeZero, Calyx Global, Renoster, MSCI and Sylvera.

The carbon markets have changed dramatically in the past years, and there has been a rapid increase in demand for carbon credits and, consequently, their price. In the end, it is supply and demand that determines the price of carbon credits, not individual project developers or carbon credit brokers. However, the price of a carbon credit must account for the costs of setting up a project, its ongoing monitoring, and the cost of gaining verification. Most importantly, it must ensure its long-term viability. This project could be located anywhere in the world and take a variety of forms and sizes. Therefore, it is natural that these costs will vary significantly.

Many indigenous peoples and local communities depend on wild and protected lands. Well-designed, verified carbon projects can improve livelihoods, create employment, protect traditional cultures and endangered species, and help secure tenure to lands and resources, while still making a key emissions reduction impact. Under the REDD+ initiative, a UN-backed framework for forest-carbon credits, seven types of safeguards (the so-called REDD+ Cancun Safeguards) have been established to address key issues, including Indigenous rights.

The major voluntary carbon offset standards were developed to establish carbon offsetting from emissions reductions as real, additional (meaning that it would not have occurred without the carbon finance), and permanent. Credible standards clearly define the methodology for establishing baseline emissions, terms for project additionality, project type, third party verification and validation, and methodology for selling and retiring the credits. The ICROA-endorsed international verification standards ensure that the project is real, verified, permanent and additional.

Theoretically, yes. Many companies are setting net-zero targets now, but not all have a credible, transparent and science-aligned strategy in place. A good net-zero strategy should have ambitious but realistic milestones and show exactly how a company can meet these targets. Moreover, the progress and relevant milestones should be publicly communicated. A credible strategy should be based on an internationally recognised framework.

Apart from delivering externally verified emission reductions, carbon offset projects drive capital and low-carbon technology to local economies, creating jobs, providing education, and supporting indigenous communities. This flow of finance is urgently needed and should be both recognised and encouraged.

Offsetting is only a tool that can be utilised by companies to reduce their unavoidable GHG emissions. Offsetting unavoidable residual emissions with high-quality carbon credits and in strict adherence to the mitigation hierarchy can certainly help companies meet their 1.5°C science-based targets.

Stopping large corporations from polluting requires a concerted effort from governments to impose relevant regulations and policies, and investors to shift funding to cleaner energy systems. It also requires societal behavioural change. Offsetting is only a tool that can be utilised by companies to reduce their unavoidable GHG emissions. Offsetting unavoidable residual emissions with high-quality carbon credits and in strict adherence to the mitigation hierarchy can certainly help companies meet their 1.5% C science-based targets.

A carbon credit is said to be of high integrity if the reductions it represents are real (ie, in addition to business-as-usual), measurable, and verifiable. ICROA Endorsed standards ensure that emission reductions achieved by carbon projects adhere to the highest quality principles and processes. This guarantees transparency, accountability, and the impact of carbon finance.

There are two main “insurance policies” in place to protect the permanence of forest-carbon offset programmes: safeguards and buffers. Safeguards are measures intended to promote benefits and minimise harm. Under the UN-backed REDD+ initiative seven types of safeguards, the “REDD+ Cancun Safeguards”, have been established to address issues such as land tenure, Indigenous rights, and the risk that a protected forest could be damaged or destroyed. The other insurance policy is called a Buffer Mechanism. According to independent voluntary market standard Verra, buffers work by requiring land-based projects to set aside a risk-adjusted percentage of the emission reductions and removals achieved, which are then placed into a pool. These “buffer credits” are managed separately (not by the project owner) and can be cancelled in cases where reversals occur. Buffer pools work much as insurance does. In the case of REDD+, the project owner pays a “premium” in the form of emission reductions that are deposited into a buffer account, which, in turn, is managed by an independent standards body (the “insurer”). If and as reversals occur in any single project in the system, the carbon losses are covered through the cancellation of an equivalent number of buffer credits from the buffer pool. Link.

Net-zero emissions means that all GHGs emitted by humans and their activities must be removed from the atmosphere through reduction measures – the “net” means those residual emissions which cannot be reduced can be “offset” with carbon credits. According to the Intergovernmental Panel on Climate Change (IPCC) scientists, net GHG emissions must be reduced to zero to stabilise global temperatures. Any scenario that does not involve the reduction of emissions to zero will not halt climate change.

The net-zero strategy is a concrete decarbonisation pathway that is in line with science and follows a recognisable international framework (eg, such as the Net-Zero Standard) which is a blueprint for corporate emissions reduction. A company can claim to be net-zero when its emissions have been reduced by an average of 90% against the base year, with residual (unavoidable) emissions being offset through carbon credits.

Removal credits stem from activities that absorb, or pull, carbon out of the atmosphere, such as many nature-based solutions (eg, reforestation, peatland restoration, mangrove restoration) as well as engineered methods such as direct air capture and accelerated mineral weathering.

Avoidance credits come from projects that reduce emissions by preventing their release into the atmosphere in the first place. These projects reduce emissions compared with the most likely scenario, ie the baseline. For example, REDD+ projects reduce forestry loss and preserve existing forests. New renewable energy projects also generate avoidance credits, when installed in a grid/region where fossil fuel-based energy dominates. Here, future emissions are reduced by using better alternatives, while existing CO2 is left untouched.

A well-designed net-zero pathway must follow a hierarchy of actions, selected to achieve a low-carbon future as efficiently as possible. According to the mitigation hierarchy, companies should set both near- and long-term science-based targets to address GHG emissions within their value chain and implement strategies to meet these targets as a priority, followed by other activities to mitigate emissions outside their value chains. It is also recommended that companies should invest in other mitigation measures beyond their value chains. The mitigation hierarchy also states that only unavoidable emissions should be offset.

Carbon finance through the voluntary carbon market (VCM) helps governments and the private sector achieve greater climate ambition and therefore accelerates the transition to net-zero globally, as required by the 1.5°C goal of the Paris Agreement.

While carbon offsetting is seen as essential, all net-zero frameworks are clear that it must be used as a last resort. Several independent initiatives help companies set science-based climate targets in a transparent, rigorous, and accountable way. None of them specifies using carbon credits as the only tool to meet those targets, or indeed using offsets to achieve science-based interim targets. In fact, companies are urged to use carbon credits – over and above a 1.5°C-aligned decarbonisation pathway – to tackle unavoidable emissions. However, it is also clear that much more needs to be done to improve the accountability, credibility, and ambition of climate action by companies.

You may purchase carbon credits through any ICROA Approved organisation as listed on the ICROA website or directly from a carbon offset project developer. ICROA approved organisations can provide you with the necessary guidance to select high quality credits and create portfolios of carbon projects that meet your criteria as well as provide resources such as carbon emission calculators. The ICROA Approved Label certifies that the company is compliant with the ICROA Code through an annual cycle of third-party audits.

Only a fraction of the revenue from carbon credits is actual profit, and many times, that profit is re-invested to develop new projects or used to support local communities. Money from the sale of the credits also enables the suppliers to keep project verification and monitoring to the highest standards and ensure that the market can grow and deliver positive climate impacts in an effective and transparent manner. The money from carbon credits is also spent on research and innovation to constantly improve operations.

Carbon compensation is criticised by some as a form of greenwashing. The narrative of this criticism tends to be quite simplistic and, in many cases, misinformed. The voluntary carbon market is a tool to channel critical finance to emission reduction and removal activities and the purchase of carbon credits requires due diligence to ensure good quality credits are purchased. Your ICROA Approved organisation can support you in this process. The ICROA Programme defines and promotes best practice in the financing of high-quality emissions reductions and removals and the use of carbon credits as an effective carbon management tool. The ICROA Approval Label represents adherence to ICROA’s Code of Best Practice and therefore, the highest environmental integrity and quality in the voluntary market. The label certifies that the company is compliant with the ICROA Code through an annual cycle of third-party audits.