Carbon offsetting: a powerful tool if part of an overall strategy

Companies and countries can reduce their carbon footprint by means of carbon offsetting: compensating their emission of carbon dioxide by avoiding or extracting the same amount elsewhere. But critics often compare this to medieval catholic indulgences: by paying indulgences to the church, your sins were forgiven. And you could happily continue your misbehaviour. BrightWolves is of the opinion that carbon offsetting remains a powerful tool in our struggle to preserve the climate, but only if it is part of an overall carbon reduction strategy.

What is carbon offsetting?

Carbon offsetting works like a balance. An offset compensates for a certain amount of emitted carbon dioxide by avoiding or extracting the same amount of carbon dioxide somewhere else. There are many different offsetting options such as instalments of energy-saving technologies, renewable energy sources or reforestation projects. Non-profit organizations such as WWF and newborn organizations act as regulators, checking offsetting projects and calculating the price to be paid per ton of CO2. At the WWF Gold Standard, offsetting your carbon emissions is possible starting from $10 per ton of CO2.

A powerful tool...

Carbon offsetting offers remarkable opportunities. Its impact is limitless, global and it can offer more than environmental benefits:

1. Impact is limitless: Depending on your budget, you can invest in as many offsetting projects as you wish. Hereby, you can compensate for more carbon dioxide than you produce.

2. Impact is global: Offsetting programs can be found all over the world and mostly in developing countries. This means that you can have a global impact without being present in multiple countries.

3. Impact exceeds environmental benefits: Besides reducing carbon emissions, most offsetting projects also improve the living standards of people nearby. (e.g. providing water filters to families in Laos to ensure safe access to clean water and to reduce fossil fuels and wood required to boil water)

These points show that offsetting can be considered a powerful tool. Companies can outrun carbon neutrality and strive for a positive impact on the environment.

...But potentially also a greenwashing scam

Despite the wonderful story of offsetting strategies, many critics believe that carbon offsetting is just another greenwashing scam. Multiple arguments were raised against offsetting programs: their impact is indirect, is often miscalculated and can have reverse effects:

1. Impact is indirect: Offsetting projects don’t provide an immediate impact on our air quality. Compensating a certain amount of CO2 by investing in an offsetting project, does not immediately remove the same amount of CO2 out of our atmosphere due to location and time gaps. Projects can be on the other side of the planet and the beneficial effects of a project are not felt instantly after the investment.

2. Impact is often miscalculated due to risk: Projects are subject to risks which are not calculated in the investment price. For instance, a reforestation project needs many years before reaching its full potential. Many events can occur over time and it can never be guaranteed that a forest will exist for the next decades. This is one of the reasons why some offsetting regulators, such as WWF, do not include reforestation projects in their offset programs.

3. Impact is self-destroying: Investing in projects which improve living standards is undoubtedly good. However, it creates growing populations with an increasing consumption rate and consequently a larger environmental footprint. The challenge remains to change our own behaviour in order to reduce carbon emissions.

4. Impact is negligible and often has reverse effects: Offsetting is often only used for greenwashing and to make your company’s reputation look good. It is relatively easy for companies to spend a small budget on offsetting projects, allowing them to have a good conscience and leave their carbon-emitting processes unchanged.

This is why carbon offsetting is often compared with the indulgences of the medieval Catholic Church. By paying indulgences to the Church, your sins were forgiven, and the gates of Heaven were re-opened. Critics are right when they imply that offsetting programs should be trustworthy, and the impact should be measurable.  Besides, it is needless to say that compensating for our carbon emissions only makes sense if our own underlying behaviour changes in parallel. Reducing our real carbon emissions remains crucial and we should not ignore offsetting programs’ limitations.

The solution: offsetting as part of an overall reduction strategy

We nevertheless believe that offsetting can still be a powerful tool, but only if it is part of an overall and honest carbon reduction strategy. In such a strategy offsetting is one of four steps, more precisely:

1. Avoid carbon emissions from entering our atmosphere. Replace polluting machinery with zero-carbon alternatives if possible.

2. Reduce carbon emissions by assessing and improving the efficiency of carbon-intensive activities.

3. Inset carbon emissions in your own value chain. Install your own carbon compensating programs within your company.

4. Offset carbon emissions. As a last resort, companies can offset their remaining amount of CO2 or more.

The four steps in a carbon emission-eliminating strategy can be taken simultaneously and can vary in degree of importance over time. Offsetting for instance can be useful during the first stages of sustainable transformation. It offers a quick way to have a positive impact on the environment. However, a company’s intentions should be honest and clear. Offsetting alone does not reduce carbon emissions. Avoiding and reducing strategies will always be the real differentiators. We can combine all four strategies and prioritize them based on our resources, competencies and situation. If we truly aspire to solve the puzzle and win the battle against climate change, everything depends on our own integrity and purpose.