What Is a Carbon Offset and Why Do Companies Need It to Achieve Net Zero Carbon Emissions?

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August 5, 2021
What Is a Carbon Offset and Why Do Companies Need It to Achieve Net Zero Carbon Emissions?

There are a lot of questions around what carbon offsetting actually is, what it's achieving in the long run, and if it's really best for the environment. A carbon offset is a compensation for the GHGs that are stored in the atmosphere for carbon emissions that happened elsewhere.

People also want to know how they can accurately track their emissions and offset them via trusted partners. That is simple in a carbon counting platform like Net0, which records, calculates, helps you to reduce, and provides insights for carbon offsets so you can purchase them with carbon credits and take care of your carbon neutrality all in one place. Carbon accounting can be managed simply with the right tools. Companies no longer have to go through agreements with outside partners to research and execute offsets, nor hire expensive consultancies to get accurate numbers. Trying out Net0 will change the way you input and offset your carbon emissions and the calculations are done accurately through its intuitive system so manual inputs aren't difficult for colleagues and vendors.

Companies do need carbon offsets to get them to net zero carbon emissions eventually. There is carbon dioxide in the atmosphere today and it needs to be offset. Using carbon offsets now for the carbon you can't remove immediately is the first step in moving on to future planning for elimination. While the main goal is to reduce emissions which Net0 can help with by giving you a view of the sources in one dashboard to better execute reduction strategies, paying for carbon offsets is still a necessary step in the process.

Here we'll answer some of the most common questions about what carbon offsets actually entail and how to use them best in your company's strategy

What is a carbon offset?

Carbon offsets are compensation for greenhouse gases that are stored in the atmosphere for emissions that happened elsewhere. Most emissions are carbon dioxide, hence the name of the offset. Some say carbon offsets are an excuse to produce more emissions or to elude the eradication of fossil fuels, but that's not the truth. Until we are able to replace all energy sources and other materials with alternatives, we have to offset the emissions that have already been made. Transitioning into a net zero society is a transition and cannot happen overnight realistically. Until then while we reduce the emissions we can we have to offset the rest. Carbon offsetting projects actually bring social, health, environmental benefits, and employment opportunities to international and local communities. Emissions reductions and offsetting projects are both important parts of the strategy.

What's the difference between carbon offsets and offsetting the other GHGs?

A carbon credit represents a carbon emission of one metric tonne of carbon dioxide and other GHG emissions. The ideal standard would be to eliminate carbon emissions but carbon offsets are a way to compensate until further actions can be taken in companies to do so, where they would need longer-term investments like switching to renewables that are becoming more accessible every day. 

Carbon dioxide is the most prevalent GHG emission and the one most affecting global warming. Methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), nitrogen trifluoride (NF3), and sulfur hexafluoride (SF6) are the other GHGs that trap heat within the atmosphere. These which trap heat are annotated as CO2e and measured as such to offset them in an easier way.

Do carbon offsets really help reduce the carbon footprint of business?

Companies can reduce their carbon footprints by mapping them and buying carbon credits to purchase carbon offsets to compensate for them elsewhere in the atmosphere because the carbon emissions are strewn throughout the world. Some companies will reduce carbon emissions and only offset what they can't reduce at the moment, while others continue to emit just as much and then offset it elsewhere, funding tree planting projects or renewable energy farms. This is what is coined carbon neutral. Like taking a business trip and having the company take an employee's calculated emissions from the trip and then paying to offset it.

Some environmentalists argue that carbon offsets are an abuse to the atmosphere. It's true in certain circumstances in which companies have the chance to reduce proactively and they choose to emit, only to pay it off later. Like anything, it can be misused. However, the benefits outweigh the discouragement when companies need to offset something that couldn't be reduced tomorrow without a longer-term plan in place. Achieving net zero takes time and in that time carbon offsets are the answer to combating what cannot be reduced overnight. While net zero is achievable and will create jobs and opportunities shifting to new sectors like renewable energy in place of fossil fuels, it's still a journey. The carbon offsets can carry companies gradually until they reach net zero. 

It's important to choose offsets that are actually going to achieve what they claim. Some projects don't actually take out emissions immediately from the environment but are used over time. Like environmentally-friendly stoves in developing countries will be used over time but they aren't capturing emissions now and removing them from the atmosphere. While this is a great project in a different respect, its job isn't to carbon capture and remove emissions, but its job is to reduce them in the future in another place. Both aspects are important but that is not this project's specific function. 

Photo by Markus Spiske on Unsplash

How much do carbon offsets cost?

The best solution to reach net zero carbon emissions would be to reduce the impact of your carbon footprint where possible before carbon offsets are necessary. Most offset credits cost about 8 pounds or 12 USD per tonne of carbon dioxide emissions. The Guardian reports on a lower scale, "At this price, a typical British family would pay around £45 to neutralise a year's worth of gas and electricity use, while a return flight from London to San Francisco would clock in at around £20 per ticket." They also report that some carbon-neutral companies sell specific products that come with carbon offsets included in the price like Land Rovers because of their production and their first 45,000 miles of use.

Sometimes the prices differ in carbon offsetting projects regarding taking a step further to improve the quality of life for communities with clean water projects and more, so carbon credits could vary or the project may cost a bit more in credits than others. The idea is that the pricier ones should have an added value for a more successful project.

When you buy carbon credits in Net0's system, you're able to choose from over 200 offsetting project options, 40 of which are available in one click without any approvals. We offer a wide range of options from $2 per tonne deforestation protection in Colombia to $400 per tonne for BioMass research in San Francisco. 

Who needs carbon tax and why?

A carbon tax is a way for emitters to pay for emitting CO2 but then the government makes money from the taxes unless they are put toward offsetting, still making offsetting necessary. Moreover, when businesses and individuals offset themselves instead of having a tax, they have control over choosing the projects that are more important to them or the ones most important to society at the moment, not mystery projects left in the government's hands. Different countries are seeing different rates of CO2 emissions drop since imposing a tax but that isn't all there is to it. Sweden is going wind power in a way that other countries are not for instance. Their decline in fossil fuels is not just due to an imposed tax.

Rather than the need for a carbon tax as there are already laws in motion or in place to get to net zero, using carbon offsetting software as part of the strategy to reduce and manage your own projects keeps businesses in control of their emissions in lieu of having massive government involvement, complicated tax structures, having to hire expensive accountants so taxes are done properly, and anything that comes along with branching outside of the business to control its procedures. Meeting emissions targets and making it mandatory to report through carbon credit systems in regional markets can be done with offsetting software instead of by imposing a tax, to make sure companies are staying within their quotas.

Is tree planting a reliable carbon offset?

Tree planting is a fantastic way to improve the atmosphere but their carbon offsets can be tricky although very easily purchased. Trees do reduce a significant amount of carbon emissions in the atmosphere but there are things to consider when reducing your carbon emissions from the get-go vs. offsetting. Older trees absorb more carbon from the environment than new ones. But as trees grow they absorb more making it a valid project, however, if the forest is cut down in a few years it just negates what was done so projects like this from offsetting companies need to be viewed more precisely to ensure that the promised achievement will actually be completed in the long-term. However, while trees are growing, global warming will continue as long as people are still burning fossil fuels like coal, gas, and oil. It would take decades for trees to absorb all of the carbon that is put into the atmosphere. 

The Climate Connection reports, "...the typical American produces 14.95 tonnes of CO2 every year. A mature tree captures on average about 22 kilograms of CO2 per year through photosynthesis. Every American would need to plant an incredible 618 seedlings every year to offset their carbon footprint. This is both unfeasible and unrealistic."

Since Net0 offers so many projects in the areas of renewable energy, mineralization, biochar, forestry, oceans, bio-oil, landfill methane capture, REDD+, livestock, industrial process emissions, cookstoves, boreholes, and soils, you can choose from any of the options that work for you to reduce emissions much faster all in one click.

Photo by aiokr chen on Unsplash

How do you know the carbon offsets are valid?

There are Gold Standard credits that are recognized by many countries and organizations but there are companies that buy the credits off of other companies emitting less carbon so they can emit more. Meanwhile, the carbon offsets aren't being done at the moment and are sitting idle while global warming continues. At times, the same companies buying the carbon offsets also chop down trees for other uses so it really depends on what individual companies are doing. Just because they buy a legitimate Gold Standard carbon credit doesn't mean that a specific company is doing what's best for the environment. And on the other hand, some companies are trying.

Many entities ensure that carbon offset projects are verified like the ICROA (International Carbon Reduction and Offset Alliance). It's important to make sure that the carbon offsets you choose are from a reliable source. In Net0's dashboard companies can offset carbon emissions and buy carbon credits in the same place they calculate and track carbon emissions to be able to offset them immediately. All of the offset projects in Net0's platform have been verified by trustworthy partners so you can be confident that your offsets are really carbon capturing and removing them as promised.

What are some other things to consider?

There is another theory that buying more than enough offsets will bring companies to net positive instead of just carbon neutral, so they are sure that the emissions are actually being done and equated, if not falling. This however gets very expensive so most companies aren't willing to go that far as turning a profit while spending four times as much carbon emissions offsets isn't really feasible. Luckily, renewable energy in the long-term and public transportation in many metropolitan cities is cheaper than using fossil fuels and electricity so making advances towards reductions rather than offsets from the beginning really takes care of the costs themselves. 

Photo by Chris Barbalis on Unsplash

What types of carbon offsetting projects are available?

Net0 offers access to offsetting projects in the areas of renewable energy, mineralization, biochar, forestry, oceans, bio-oil, landfill methane capture, REDD+, livestock, industrial process emissions, cookstoves, boreholes, and soils, you can choose from any of the options that work for you to reduce emissions much faster all in one click. Request a demo to try it out for yourself and see how easy it is to achieve your net zero goals with reliable and trusted offsetting projects all in one place.

list of carbon offsetting options in software platform

How can technology help fight emissions?

Since Net0 was built with AI in its core, its intuitive system gives insight into reductions and cuts out the middle men like expensive agencies, partnership research, unnecessary tax systems, and not being able to control where your offsetting money goes. Technology makes it easy to calculate, record, track, analyze, report, and certify emissions that would have been complicated before. 

What are the pros and cons of carbon offsetting?

Carbon offsets have pros and cons depending on how the company chooses to use them. They have tremendous benefits not only for the atmosphere but also for communities that benefit from the projects themselves. However, carbon offsets are one of the answers to a successful carbon-neutral strategy, they are not the eventual solution for eliminating them since they are just an offset. Elimination comes with the proper reductions over time and investments in alternatives to fossil fuels in a proactive way, for a long-term solution. Everything counts in carbon accounting. Only you can build a successful long-term strategy with your team in order to achieve the goals you want in conjunction with government laws and ultimately for the good of the environment, which should be at the core of all companies' ethics and success. Net0 can make the process much lighter for you than hiring expensive consultants. After inputting your data, everything is calculated accurately and you can offset emissions as soon as you want to to get the best results.

To conclude, carbon offsets are necessary for capturing the carbon emissions in the atmosphere as you find your best practices to reduce what you can in your company. As you reduce what you can and continue your net zero journey, the number of carbon offsets you buy will be reduced as well.

Net0 is an insightful platform that produces investor-grade reporting as you plan your strategies to eliminate carbon emissions in your company. Not only can you record, calculate, and track your carbon emissions all in one place, but you can buy carbon credits to offset them immediately to contribute to your part in combating climate change. Sign up today and start inputting data and offsetting your carbon emissions within a few days.

Cover Photo Source: Chenxi Qian and Yeshi Kangrang

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