Approved work: Carbon offsetting and carbon payback

Carbon offsetting broadly refers to a reduction in GHG emissions, or an increase in carbon storage (such as through peatland or saltmarsh restoration or the planting of trees), which is used to compensate for emissions that occur elsewhere. A carbon offset credit is a transferrable instrument certified by governments or independent bodies to represent an emission reduction of one metric tonne of CO₂ that the purchaser can claim as a reduction towards their own GHG reduction requirements.  A project should demonstrate additionality to generate carbon credits. To qualify as an offset, GHG reductions achieved by a project should be in addition to what would have happened if the project had not been carried out.

Recent studies have suggested that most nature-based offsets fail to deliver emission reductions within required timeframes. Under Phase 4 of the EU Emissions Trading Scheme that started in 2021, the use of international offsets to mitigate emissions was banned within the scheme. The Climate Change Committee have recommended the Government put in place stronger guidance, regulation, and standards to ensure purchase of carbon credits is not used as a substitute for direct business emissions reduction, and to improve the integrity and transparency of carbon credits. Without this, they note there is a risk that voluntary carbon markets slow progress towards Net Zero or damage other priorities such as climate adaptation and biodiversity.

This POSTnote will summarise the challenges that have emerged around setting standards for international offsetting and what monitoring is needed to ensure effective mitigation.

Work on this briefing will commence in mid-September 2023

Photo by Jamie Hagan on Unsplash