How to Integrate Carbon Credits Into A Net Zero Strategy
The voluntary carbon credit (aka. offset) market emerged around 2005. It has grown rapidly as companies have looked to claim carbon neutrality and/or included them in their Net Zero strategies. A carbon credit is a certificate confirming the removal or avoidance of a tonne of carbon dioxide (CO2e).
In recent years, carbon credits and offsets have been highly criticised for not removing or preventing the amount of emissions advertised (here’s just one example). But they have an important part to play if we are to keep global warming to a minimum. Carbon credits are a way for organisations (who are working to reduce their carbon footprint) to take positive action to remove or prevent emissions elsewhere.
We want to be clear that carbon credits are not a ‘permission slip’ for a company to carry on emitting CO2 as usual. This is because we cannot offset our way out of the climate crisis. We are producing way too many emissions for that. This ‘Cheat Neutral’ video provides a light-hearted take on the idea of offsetting.
In this article we will cover the different types of carbon credit, how to integrate them into your Net Zero plan, how to choose projects and how to communicate your use of credits to your stakeholders without greenwashing.
Types of carbon credit
If you are looking to make positive climate contributions, whilst decarbonising your business, here are the types of projects available to you:
Projects that avoid emissions (£) such as replacing traditional cookstoves with more efficient ones that require less wood or schemes that protect areas of rainforest from deforestation.
Short lived carbon storage projects (££) such as planting trees to establish a forest on land that has had no recent tree cover.
Long term carbon storage projects (£££) which include direct air capture of emissions (stored in rock form) or ocean carbon removal where carbon is ‘stored’ in underwater kelp farms.
There are challenges surrounding the purchase of all these types of credits. Firstly, it is difficult to understand if they do what they say they do. Secondly, carbon credits are an ever-changing landscape. Views on which type is best are changing all the time because they are complicated. As an example, tree planting can be seen as positive action but there could be competition for the same land for food production. Thirdly, there are supply constraints to consider since experts anticipate demand will quickly outpace supply as more companies look to purchase. There is also a limit to the volume of nature-based solutions due how much land is available.
How to integrate carbon credits into a Net Zero plan
The first step is to measure and reduce your carbon footprint. Then, consider the type of claim you wish to make. Once you know what your remaining emissions are (i.e. how much CO2e your organisation emitted that year after its decarbonisation efforts) you can either buy credits:
to contribute in part for your carbon footprint
to match your entire carbon footprint (in order to claim carbon neutrality)
to make a contribution over and above your carbon footprint (sometimes called being carbon negative although we wouldn’t advise using this term as it tends to cause confusion)
OR, there is a fourth option - you could choose not to buy credits, but invest the money you would have spent in a carbon action fund to finance reduction actions that require upfront capital. Find out more about how carbon action funds work here.
Don’t forget that purchasing credits does not mean you are immediately (or completely) balancing the carbon your organisation has emitted into the atmosphere. The emissions your business has created will remain in the atmosphere for many years to come and it takes time for carbon projects to remove those emissions.
Choose the type of credits
If you’ve chosen a carbon credit strategy, it’s time to choose your projects. There are a few things to consider here. Generally experts recommend making purchases that are relevant to your business and customers. For example if you are a shipping company, you may want to prioritise ocean-related projects.
Specialists may also recommend you buy a portfolio of credits. Like a portfolio of financial investments, a variety of carbon credits can help organisations meet their climate goals and spread risk. It allows companies to mix nature-based with technology-based credits, removal projects with avoidance projects and longer with shorter term credits too. In short, a mixture of 1, 2 & 3 above .
How to communicate the use of carbon credits in your strategy
Using carbon credits in your Net Zero strategy doesn’t need to give rise to fears of greenwashing if you follow this guidance.
When using carbon credits, establish that the focus of your action is on emissions reduction first and foremost and make this clear in your communications. Ensure you are transparent about your action to reduce emissions and back this up with facts and figures.
Then you can bring credits into your communication. Be clear about which projects you are financing and why, and what impact you expect them to have. Don’t use terminology like ‘offsetting’ or ‘compensating’, use the term ‘contribution’ instead.
If you have chosen to go down the carbon action fund route, provide transparency in your communications about the amount of money the company is setting aside each year, what it will be used for and by when.
Importantly, keep your audience up to date. If anything changes, if the carbon credits didn’t perform as expected, and/or if you’re changing projects or strategy etc. Honesty and transparency are key and will go a long way to reassuring your audience.
Help is available
If you are looking to measure and reduce your carbon footprint or would like to chat through any of the above with us, simply hit the button below, drop us a line and we’ll get back to you.
