Transitioning Company Offsets to Carbon Removal

We don't talk about offsetting much. That's because historically it's been used to justify continued emissions, rather than following the science - and the necessary, though harder - path which requires deep emissions reductions and wide decarbonization.

Many companies are now using offsets of varying efficacy and quality as part of their climate and sustainability programs. While we applaud everyone who is doing this out of a genuine desire to tackle this systemic challenge, it's clear that the present approach is not fit-for-purpose. Unfortunately, while these offsets may have great co-benefits, it's highly likely they're not making a material impact on the amount of planet-heating greenhouse gas emissions that are out there, contributing to climate change. Read more: 95% of offsets are ineffective for carbon.

The science shows that deep decarbonization and emissions reduction is absolutely key - it's 90% of the work we collectively need to do. This is about stopping emitting new greenhouse gases (CO2 + others) from the present ~50 billion tonnes per year level.

At the same time we also need to scale up durable (i.e. permanent) carbon removal to billions of tons a year. This is both for the remaining 10% emissions for net zero and also sequestering some of what's already been released historically. Read more: is reducing emissions better than removing them?

For companies working on net zero or other climate models, the permanence and additionality of the carbon credits they are buying is of increasing importance.

Transitioning Offsets to Carbon Removal

Companies play a huge role in combatting climate change. Shifting your offsetting program to include more durable and additional carbon removal solutions is essential.

Many companies are now using various forms of carbon credit to offset their company and supply chain emissions, or to making claims about their services. Read more: The difference between carbon neutral, net zero and climate positive.

While we applaud this progress, it's not enough to making a meaningful contribution to solving climate change. It's certainly no way near enough to delay deep decarbonization of a businesses carbon and other greenhouse gas emitted from their operations. Read more: why carbon offsetting can be ineffective.

We believe now is the time to transition some - or an appropriate proportion - of company sustainability and climate budgets from traditional offsetting to durable carbon dixoide removal. We are not advocating all of the budgets move quickly away from other high quality projects that impact nature or humans positively, Read more: what are carbon avoidance offsets and not all avoidance offsets are bad.

What we are saying is that a core part of any credible company carbon reduction and removal program must include significant amounts of carbon removal. Ideally the highest permanence and additionality for the $/tonne available.

This is a mindset shift, here's why...

Carbon Removal isn't a tonne-for-tonne offset

Over the last twenty or so years, offsetting has grown in popularity - both as part of genuine efforts to make a positive impact and, in some cases, to attempt to justify claims about a company's environmental credentials. Read more: how much carbon removal is in carbon neutral and net zero claims.

During this time most of the available carbon credits have been avoidance projects or nature-based solutions. Read more: nature-based, tech-enabled, and fully engineered carbon removal.

These offsets have tended to be low cost - usually below $5 per tonne of carbon. Never more than a few tens of dollars per tonne.

It's been clear for quite some time that while some of these projects may have benefits and value we should absolutely invest in - including biodiversity or climate justice - it's not always possible to justify them in terms of carbon dioxide being captured and stored out of the atmosphere.

That, and $5/tonne is not a credible amount to pay to counterbalance a tonne of new emissions released. Genuine carbon dixoide removal (CDR) that collects and locks away CO₂ so it can't contribute to the continued heating of the planet, is not going to cost so little.

The mindset shift we're seeing happening is that companies aiming to follow the science-backed path to combatting climate change means that the idea of offsetting company emissions tonne-for-tonne doesn't work out or add up. The cost of durable carbon removal is going to cost hundreds of dollars per tonne for a while yet, as the industry scales.

For these companies, carbon removal based on the permanence and additionality of how long the carbon has been sequestered becomes more important than exactly matching tonne-for-tonne. However, as these solutions are more expensive it's not always possible to use them to offset all company emissions they couldn't reduce tonne-for-tonne. Read more: why we need to invest in carbon removal now.

We think that's ok.

Of course it means that claims of carbon neutrality need to be rethought, reconsidered and reframed to be more about the company's separate emissions reductions and carbon removal programs, in combination with increasing nuance on the projects they choose to support for their co-benefits rather than the carbon value.

We also like that this shift also further incentivises deep emissions reductions across the board. If you can't legitimately offset for a few dollars per tonne, and the alternative that works costs - at least - a multiple of that, in many scenarios the best course of action is to decarbonize.

In just a few short years we believe that this will become the norm. Acting now gets you in front of the competition as well as being the science-backed path forward. We talk more about this in our free 3-day Climate Companies course.

With this in mind we're asking all the companies we talk to three questions:

- what is the purpose of your offsetting program and how do you align it closer to the science?
- are the carbon credits you're buying to offset like-for-like, in terms of permanence and removal timeframe, with the emissions you want to compensate for?
- going forward, what proportion of your budgets can you allocate to carbon credits that are highly additional and remove carbon for hundreds to thousands of years?

For further detail on our thinking on this, please read: Moving from a Compensation to Contribution Mindset.