The role of carbon offsetting in 2021
25 February 2021: As efforts to reduce carbon ramps up globally, offsetting has become a necessary element of corporations’ drive to net zero.
Carbon offsetting doesn’t work without avoidance and reduction measures. Without that understanding, it’s little more than greenwashing, which has been a criticism levelled at carbon offsetting in the past. But according to one industry expert with 20 years’ experience in green energy and climate action, in the short to medium-term it’s necessary if corporations are to meet emissions reduction targets.
“Offsetting is more or less an indispensable instrument, because 2050 is right around the corner and we’re far from meeting the Paris targets,” says Dr Sascha Lafeld, head of carbon offset and green energy services at Climate Partner, a carbon offsetting firm. “We need offsetting today in order to get engaged, but it's not the ultimate solution.”
Lafeld hopes the work he currently does won’t be necessary in 20 years, but for now, it’s something corporations must engage in. The spotlight is on the activities companies are undertaking to reduce their impacts, with investors in particular piling on the pressure.
There are four basic categories of carbon offset projects. The first is renewable energy. These projects have to follow certain standards and only work in certain geographic locations where the technologies are still deemed to be additional measures.
The second includes forest protection and reforestation, agricultural soil treatments and planting projects that sequester carbon. “These are very simple measures, as easy as changing your tillering methods. It's sometimes really astonishing how easy it can be to keep carbon in the ground.”
The third category includes social impact projects, such as drinking water schemes providing water filters to families. “These projects usually have a huge social impact. They're really development projects and carbon is just the trigger; that's what you can easily measure.”
The fourth is not strictly an offsetting project as it would count as ‘double counting’ carbon reduction, but corporates also have the option of contributing to national carbon reduction or reforestation schemes. “If they still want to claim they are carbon neutral, they obviously cannot.”
The process is very transparent and adheres to strict guidelines. Credibility is at the forefront of everything, which is why offsetting is becoming more and more successful, says Lafeld.
The first question that Lafeld always asks his client is: what message do you want to convey? That forms the basis of a goal that the carbon offsetting project aims to meet.
“It's an iterative process,” Lafeld explains. “It's usually a carbon offsetting strategy that fits the nature of the company itself. For example, when you work with somebody like Nestle, you should have something in the agricultural space, because that's where 97% of Nestle's footprint is.”
Lafeld also outlines that a lot of what he and his team do is about trying to make offsetting and insetting work together – bringing the projects into the supply chain to reduce emissions there as well.
Corporate emissions are divided into three scopes. Scope one is direct emissions: CO2 emitted from direct processes. Scope two includes indirect emissions such as energy use within its facilities – this accounts for around 50% of the operational emissions of service companies.
Scope three includes things such as business travel by employees – another big one for service companies. Scope three for food and beverage companies includes their entire supply chain. “This is the hardest to assess, but there are guidelines for how you can do this. The Gold Standard has been working on this. The Greenhouse Gas Protocol is the overarching ‘roof’ for how to calculate this, but it also depends on the industry we're talking about. It can be really complex.”
You have to work through every single detail, says Lafeld, and calculate all the logistics behind creating and shipping every component of a product. “It takes time, it's super cumbersome. But at the end of the day, it's common sense. There's a lot of data and resources available. Most of them do contradict themselves all the time, so you really have to make sure that you're using a credible value and that you compare the various sources.”
That’s why Lefeld believes it’s helpful to bring in outside help when initially designing your strategy for carbon reduction and offsetting, because it can be overwhelming. “As soon as people open their minds and have a look at what's really behind it, they understand how much complexity and quality is involved. That's the reason why so many big brands are getting engaged in this.”