Almost all of our daily energy needs- domestic, industrial, power, transport, etc., involve the use and combustion of some form of fossil fuels. The exorbitant use and dependence on combustible fossil fuels as our primary source of energy, had resulted in a rapid increase in the greenhouse gases in our global atmosphere, especially Carbon Dioxide (CO2). While helpful and necessary to ensure human survival on this planet, the unprecedented rise in atmospheric CO2 can have a devastating impact on human survival on this planet.

Carbon Offsetting is a process that ‘offsets’ or negates the exact amount of carbon emissions released by a unit or entity into the atmosphere. This is facilitated, either through direct investments, that is, by supporting R&D or other mechanisms like renewable energy projects such as solar or hydroelectric power. The aim is to provide for a compensatory benefit against GHG emissions emitted by an individual, company, etc. In essence, an offset facilitates ownership of “emission reduction” that can be used to balance out an entity’s corresponding GHG emission. The key criteria for an offset is that this GHG emissions would not have happened anyway, that it is “additional” to business-as-usual activity.

Offsets can be traced back to the US Clean Air Act, 1990 wherein the US government for the first time in history sought to address the cost of externalities to the industrial process, namely environmental pollution. This Act was meant to allow power plants that had successfully reduced their sulphur dioxide emission to below federally mandated limits, to sell them off to industries and businesses that failed to meet those standards. Offsetting involves a three part-process: measuring the amount of GHG emissions, reducing the GHG emissions as much as possible, and finally offsetting the residual GHG emissions to achieve carbon neutrality. Offsetting should ideally be considered as the third or the last option, after solutions that either allow for greater efficiency or reduced emissions have been exhausted.

Offsetting can be undertaken by any entity that partakes in production of GHGs and thus includes individuals, states, companies or just about any organizations For individuals, the total carbon footprint can be calculated based on their lifestyles and consumption patterns, such as use of non-biodegradable products, mode of transport, use of fossil fuels for daily activities, etc. Once a net carbon emission has been calculated, the individual can offset this by purchasing offsets or supporting sustainable development projects, either through investments or otherwise. One area where individuals can significantly reduce their net emissions is modes of travel, especially by reducing air travel, which has a massive carbon emission.

For industries and businesses, the net emissions would be calculated based on the businesses overall operations. If companies fail at improving efficiency or reducing emission by inventing or investing in newer and more efficient technologies, indirect measures like carbon offset could help. Currently, carbon offset projects exist in many different forms across industries, sectors and countries. For eg. clean energy options in cooling and lighting; sustainable transportation options such as hybrid and electric vehicles; increased operational efficiency in businesses; upstream GHG reductions from suppliers such as green procurement policies, and customer end use waste and energy management. These are a few examples of what are considered ‘clean technology projects and energy efficiency improvement projects’ that typically aim towards fossil-fuel free energy sources.

While Offsets are one way to somewhat reduce the GHG emissions, it does nothing to actually meet the urgent requirement to eliminate or drastically reduce GHG emissions. Moreover, there are some quiet visible issues with the offset markets, especially the voluntary ones. Firstly, only certain industries currently form part of the regulated carbon markets such as the power industry, fossil fuel industry and those involving metals and metallurgy. Beyond these, other industries partake in the voluntary market, which lacks regulators and robust verification mechanisms. This means that the market is filled with many low quality, low yield, low value and sometimes outright fraudulent offsets which might provide little to no climate protection benefits. Secondly, only the UNFCCC based carbon credit mechanism has a legally binding agreement, while the rest of the offset markets lack any single, accepted standard. Some non-profits such as Gold Standard which maintains the Gold Standard for offsets and Verified Carbon Standards by Verra have created strict rules, high standards and maintain registries to track trades had emerged in recent years, however, these aren’t government regulators and have limited reach.

Thirdly, offsets are often purchased by organizations not because of the sole purpose of climate benefits, rather for their social reputation, which is why certain categories of offsets such as those being widely marketed receive preference over other more crucial ones. Finally, offsets are often viewed as an easy way of complying with the GHG emission requirements, and as a way for companies with large resources to weasel out of their obligations. Businesses might continue with high GHG emissions, and simply compensate for it by investing part of their profits in offsets, instead of actually doing something about reducing emissions. In my opinion, offsets are an extremely temporary stop-gap and need to be viewed as such, and should only be seen as a means to allow companies more time to reduce their emissions and find ways to eliminate them altogether.

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