The 2015 Paris Agreement sets out a global action plan to put the world on track to limit global warming to below 2°C, and pursue efforts to limit the temperature increase to 1.5°C.
The agreement also calls for a balance to be achieved in the second half of the century, between the emission and the removal of greenhouse gases (GHGs) caused by human activity – a so-called ‘net zero’.
This will require an energy transition of exceptional scope, depth and speed.
That means not only governments will have to step up their game, but business and individuals will have to lead the change, particularly in the near term.
For most businesses cutting emissions will usually be a long-term programme with ‘hard to get at’ emissions reductions taking time to tackle. This means that it’s likely there will be a portion of the footprint that can’t be reduced with current technology/investment or where a bridging approach might be required over a transition period.
This is where voluntary carbon offsetting can make a contribution. It provides an immediate opportunity for companies to take action, tackling both carbon reduction and making a contribution to sustainable development.
Carbon offsetting is a market instrument that allows companies and individuals to mitigate (‘offset’) the impact of their ‘too difficult to tackle right now’ emissions, by investing in GHG emission reduction projects.
In addition to the emissions reduction benefit, investment in carbon offset projects can deliver significant socio-economic impacts in the communities where they take place. According to research conducted by Imperial College London1, for every tonne of carbon emission reduction, some projects can deliver additional added value to society of up to $664. The benefits to communities can be far–ranging – often including the development of infrastructure and employment, and improvements to health and education.
A key challenge for offsetting is that it doesn’t reduce emissions at source. What isn’t well known is that most international standards for carbon neutrality will require that offsets are used in support of verified emissions reduction targets. In research conducted last year, Ecosystem Marketplace found that companies that purchase carbon credits are actually more likely to have internal reduction targets2.
For companies investing in voluntary carbon offsetting, it is important that they do it in a way that safeguards their business reputation.
At BP Target Neutral, we have 10 years’ experience in the voluntary carbon offset market and have learnt a number of techniques to help businesses get the most out of offsetting:
- 1. Not all carbon offsets are the same. Aim to procure carbon offsets that support a clear business case and align with the objectives of the business it is supporting. Consider the geographies, technologies and Sustainable Development Goals that are most important to the business and its customers
- 2. Develop a robust procurement process. Only invest in offsets that conform with internationally recognised principles that are demonstrably real, measurable, permanent, additional, independently verified, and unique
- 3. Take responsibility. Visit the project and perform your own assessment to ensure you’re comfortable with the way emissions reductions are monitored, reported and audited under internationally recognised standards
- 4. Short-list the projects and rank them. Adopt a quantitative approach to ensure the accuracy of any sustainability impact claims made by the projects
- 5. Ensure integrity of final project selection. The projects you choose to invest in reflect on your business and you will want to stand by the decisions you made. At BP Target Neutral, final project selection is made by an independent forum of NGOs
The big picture for moving to a lower carbon world during the 21st century is now framed by the 2015 Paris Agreement and its ramifications will have important impacts on the way business is conducted and how the energy transition unfolds in the coming decades. At BPTN we believe, carbon offsetting, done the right way, has an important role to play as it offers individual businesses an opportunity to have an impact on carbon emissions and make a contribution to sustainable business and development.
- Kountouris, Y., Makuch, Z., Tan Loh, E.F. (2014) ‘Quantification and Evaluation of the Voluntary Carbon Market’s Co-benefits’, Imperial College London University, June 2014.
- Ecosystem Marketplace report, “Buying in: Taking stock of the role of offsets in corporate carbon strategies,” 2016.