Making the right calls on carbon offsets

Offsetting can play an important role as industries and economies transition to net-zero, but we must continue to prioritise decarbonisation and all investments need to be chosen wisely, writes Mimi Zimmer.

Carbon offsetting, sequestration and removal feature to a greater or lesser extent in many corporate strategies for achieving net-zero and carbon neutrality. Yet it is an area that comes with challenge and risk. How can we be sure that the schemes and interventions funded in the name of offsetting genuinely make a difference – and will continue to do so?

Let’s be clear: offsetting does not in any way relieve us of the imperative to reduce emissions. It should not be used to conceal their existence or to avoid making solid commitments to reduce them as far as technically possible. Emissions reduction should be the top priority. However, all organisations that are on a decarbonisation journey will have unabated emissions in any given year. While this is the case, they should do what they can to address this by funding positive initiatives elsewhere and accelerate the wider transition to a lower-carbon economy. Offsetting, sequestration and removal are all tools for doing that.

The voluntary carbon market is growing very fast. For clients who are looking to support positive outcomes through offsetting, there are a few things to bear in mind.

• The first is the source of the offset: does the initiative involve the removal of carbon from the atmosphere, or the reduction of existing and future emissions? While initiatives in either category are valuable, carbon reductions are best placed earlier in the transition as we support mitigation beyond our organisations; while in the longer-term, removals will be the only type compatible with net-zero.
• Second, if the offset does involve carbon removal, how permanent is this removal? If it is possible that the gain that has been made is later reversed (for example, planting trees that may later burn down) then this is less desirable than more permanent forms of carbon storage. Offsetting standards have safeguards in place to manage this risk. Nevertheless, the Oxford Principles (published in 2020) define net-zero aligned offsetting as transitioning to carbon removal with long-lived storage.
• Third, has the offset been certified to a reputable standard? One complication here is that the market for removals with long-lived storage is at early stage, with guidance and standards having not yet been crystallised.
• Finally, in addition to the effect on emissions, do the chosen offsetting projects provide any societal benefits, or improve resilience?

Answering these questions, and taking the best decision based on the answers, is not straightforward. When purchasing credits in the marketplace, such as Voluntary Emission Reductions (VERs) and Certified Emission Reductions (CERs) it is not easy to distinguish those that derive from removals as opposed to reductions. And while carbon removals will become more and more important over the coming decades, initiatives that focus on reduction may be just as valuable for the transition in the here and now, particularly those that protect and restore nature. If you think of climate change as a blocked bathtub filling with water, we need to turn off the taps at the same time as trying to unclog the drain. However, it’s important that reductions follow the principle of additionality: the projects funded need to go above and beyond business as usual.

At Mott MacDonald, we are certified carbon neutral, which means we are reducing our emissions, and have purchased credible offsets for our unabated emissions. We are not yet net-zero, which (as per the Science Based Target Initiative’s (SBTi) Net Zero Standard) requires a 90% reduction and for the residual emissions to be balanced by permanent carbon removal, although we are developing our strategy in order to achieve this by 2040. We are in the process of updating and seeking validation of our near and long-term science-based targets to ensure that our decarbonisation trajectory is in line with our net-zero commitment.

Our advice to others who are navigating decisions in this field is to fully investigate the projects that you are planning to fund; to keep up to date with the latest guidance and engage with other stakeholders who are making similar decisions; and, where you choose to offset, to invest in credits that are certified to a high industry standard of integrity.

Ultimately, organisations cannot afford to be reliant on offsetting for their net-zero strategies. But in the transition that we will all be going through over the next few decades, finance from voluntary corporate offsetting has a valuable role to play in wider decarbonisation initiatives. It’s therefore important to exercise due diligence in your decisions and maximise the benefits that such funding can produce for the planet.

This article is part of a series to celebrate Carbon Crunch, our event for infrastructure stakeholders focusing on carbon management and resilience.