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Carbon Offsetting

What Does Carbon Offsetting Mean?

Carbon offsetting is a system in which companies that generate carbon dioxide (CO2) emissions from their operations can compensate for those emissions by investing in projects that work toward reducing the levels of CO2 in the atmosphere.

These investments are known as carbon credits or carbon offsets, which are financial instruments certified either by government agencies or by independent certification bodies. Each credit is meant to represent one metric ton of carbon dioxide equivalent (CO2e). This means that a company that produces 1,000 metric tons of carbon dioxide per year and wishes to offset their entire carbon output can do so by purchasing 1,000 carbon credits.

Carbon offsets can be used to fund various types of projects, including planting trees, producing solar power, and building wind farms.

Safeopedia Explains Carbon Offsetting

Increased environmental scrutiny has made it difficult for companies to generate pollution without repercussions. Carbon offsetting is designed to ease these pressures, allowing organizations to comply with environmental demands and participate in green initiatives without having to drastically reduce the carbon emissions produced by their facilities and operations.

In other words, carbon offsetting allows companies to externalize the work of reducing greenhouse gas (GHG) emissions while taking on part of the financial responsibility.

Companies that participate in a carbon offsetting scheme are charged a fee based on their carbon emission levels, and a portion of that fee goes toward reducing emissions. The cost of carbon credits is currently around $3 to $5 per ton of emissions, although it is likely to increase significantly in the future.

Generating Carbon Offsets

The other side of the carbon offsetting coin are the projects that reduce the amount of GHG in the atmosphere. Some of the more prominent approaches to this include:

  • Capture and Destroy: Capturing emissions and destroying them before they can disperse into the atmosphere (e.g. methane gas capture at landfills)
  • Capture and Store: Increasing the natural carbon sequestration process, in which CO2 is captured and processed through natural means (e.g. planting trees that will then absorb and process CO2)
  • Clean Energy: Increasing the production of electricity and other types of power from sustainable sources (e.g. solar energy, wind farms, biofuels)

Companies that engage in activities that reduce carbon emissions create carbon offsets that can then be purchased by companies that produce emissions.

Carbon Offsetting Challenges

While carbon offsetting has been celebrated by many, it does pose some challenges and has attracted controversy.

For instance, many companies might opt to purchase carbon offsets rather than overhaul their production methods or replace the equipment and machinery they currently use. These offsets give them a convenient way to meet enviornmental targets and comply with regulations without taking steps to actually reduce their GHG emissions.

Carbon offsetting allows industries to buy offsets from other countries, which could result in geographical imbalances where only some parts of the world enjoy the benefits of reduced air pollution.

Studies have also uncovered cases of over-crediting or selling offsets that do not deliver the level of carbon reduction they promised. This has cast doubt on whether carbon offsetting can truly have a significant positive impact on the environment.


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