Carbon Offsetting

Carbon offsetting is the practice of compensating for greenhouse gas emissions by funding projects that reduce or remove an equivalent amount of CO₂ elsewhere. While offsets can play a role in climate strategy, they are increasingly scrutinised and must be used carefully to avoid greenwashing accusations.

Common types of carbon offset projects include:

Avoidance/reduction projects:

• Renewable energy installations (wind, solar) in developing regions
• Methane capture from landfills or agricultural operations
• Energy efficiency improvements in buildings or industry
• Avoided deforestation (REDD+ projects)

Removal projects:

• Reforestation and afforestation
• Direct air capture (DAC) with geological storage
• Biochar production and soil carbon sequestration
• Enhanced rock weathering

Key quality criteria for carbon offsets:

1. Additionality , the emission reduction would not have occurred without the offset project funding
2. Permanence , the carbon benefit lasts long-term (forests can burn; geological storage is permanent)
3. No leakage , the project doesn’t simply shift emissions elsewhere
4. Verified , independently audited under recognised standards (Verra VCS, Gold Standard, CDM)
5. No double counting , the reduction is only claimed once

Under the SBTi Net-Zero Standard, offsets cannot substitute for direct emission reductions. Companies must first reduce emissions by at least 90% , only the residual ≤10% may be addressed through high-quality permanent removals.

The CSRD requires companies to separately disclose their gross emissions and any offset claims under ESRS E1, preventing offsets from masking actual performance.

Dcycle helps companies prioritise direct reductions in their decarbonisation plans and evaluate offset quality when compensation is appropriate.