Short answers to key questions

  • What is carbon offsetting?

    In simple terms, carbon offsetting is a mechanism used to compensate for corporate or individual carbon footprints through the purchase of carbon credits issued by accreditation standards to projects that remove GHG emissions from the atmosphere or avoid generating the emissions in the first place. Each credit is equal to one tonne of CO2 that has not been emitted, often expressed as “tCO2e”. Once purchased, the credit is then retired through an internationally-recognised and publicly-viewable registry.

  • What is the role of carbon offsetting?

    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.

  • What is a carbon offsetting project?

    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.

  • Which types of carbon projects are the best?

    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.

  • Do carbon projects provide additional benefits beyond carbon removal or avoidance?

    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.

  • Does it matter where in the world the project is located?

    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.

  • How can I be sure that the emission reductions are actually happening?

    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.

  • How do I know which carbon credits providers are reliable?

    Only credits from projects accredited by third parties according to internationally recognised standards should be considered. All ICROA’s Accredited organisations (including carbon credits providers) adhere to ICROA’s Code of Best Practice and therefore, the highest environmental integrity and quality in the voluntary carbon market. The ICROA Accreditation Label certifies that the company is compliant with the ICROA Code through an annual cycle of third-party audits.

  • How much does carbon offsetting cost?

    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.

  • Which carbon projects should I choose?

    Choosing credits from a verified carbon offsetting project should guarantee that the credits are high-quality and offer measured emissions reductions, which have been subject to a rigorous auditing process. This also ensures that the projects provide additional and measured value to the communities in which they operate. All ICROA Accredited organisations are vetted in terms of the quality and integrity of their offsetting services.

  • Why do carbon credits prices vary so much?

    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.

  • Are carbon projects a threat to Indigenous peoples?

    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.

  • Are removal credits better than avoidance credits?

    It is imperative that all carbon credit types are valued and promoted. Both removal and avoidance credits have their merits and play an equally important role in addressing climate change. Removal credits, particularly those coming from nature-based solutions, seem to be preferred by corporate buyers due to their compelling narrative, and many co-benefits. However, these projects need significant lead times and will most likely not match the growing credit demand in the coming years. It needs to be noted, however, that the removal of carbon doesn’t address the initial problem of GHGs being released into the atmosphere. Therefore, supporting avoidance projects is also crucial in our fight against climate change.

  • Are there any standards in place to ensure that carbon projects deliver emission reduction or avoidance?

    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.

  • Can any company claim net-zero?

    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.

  • Does carbon offsetting foster global development?

    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.

  • Does offsetting support the 1.5°C targets?

    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.

  • Is offsetting a license to pollute for large companies?

    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.

  • What does carbon credit integrity mean?

    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-approved 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.

  • What happens if a wildfire destroys part of a forest which has been preserved by carbon offsetting?

    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.

  • What is “net-zero emissions”?

    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.

  • What is a corporate net-zero strategy?

    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.

  • What is the “permanence” factor of a carbon project?

    Permanence refers to how long the climate impact of a forest-based offset can last.

  • What is the difference between removal credits and avoidance 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.

  • What is the net-zero mitigation hierarchy?

    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.

  • What is the role of carbon finance?

    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.

  • What’s the role of offsetting in net-zero pathways?

    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.

  • Where can I purchase carbon credits?

    You may purchase carbon credits through any carbon credit provider (so called service provider) or directly from a carbon offset project developer. Carbon offset providers are companies that create portfolios of carbon offset projects and provide resources such as carbon emission calculators. ICROA Accredited organisations deliver high-quality carbon credits. The ICROA Accreditation Label certifies that the company is compliant with the ICROA Code through an annual cycle of third-party audits.

  • Where does money from the sale of carbon credits go?

    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.

  • Why is carbon offsetting sometimes presented as controversial?

    Carbon offsetting is criticised by some NGOs as a form of greenwashing. The narrative of this criticism tends to be quite simplistic and, in many cases, misinformed. Offsets are necessarily complicated, and the reality is nuanced. The ICROA Accreditation Programme defines and promotes best practice in the financing of high-quality emissions reductions and the use of carbon credits as an effective carbon management tool. The ICROA Accreditation 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.

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