What are they?
Carbon offsets are carbon emission sinks or carbon sequestration activities executed in addition to carbon emissions abatement activities. A carbon offset unit represents one tonne of CO2e stored or avoided by a project, and can be purchased by a company to reduce its net carbon emissions.
Offsets may be viewed as a ‘get out of jail free card’ by organisations who are yet to develop a transition strategy. However, mounting shareholder pressure is likely to result in offset strategies being restricted to supplementing emission reductions as part of a comprehensive transition strategy.
Carbon offsets can be purchased when emissions abatement opportunities cease to become a cost-effective means to deliver on a company’s carbon emissions targets. A project’s marginal cost of emissions abatement, and the cost of carbon offsets, will therefore determine the optimal use of carbon offsets.
We recommend carbon offset purchases be based on accurate emissions forecasts and supplemental to an effective emissions abatement strategy.
Carbon Farming Partners