Climate change is the most pressing consequence of the Industrial Revolution. Unabated, the release of greenhouse gases into the atmosphere will have catastrophic results for our planet and its inhabitants.
While the political debate around climate change has been mired in self-interest, we are seeing corporate leadership with companies making commitments to net zero.
BHP says it will reduce operational greenhouse gas emissions by a third by 2030 and reach net zero by 2050.
Fortescue Metals promises net zero by 2040, and oil and gas producer Cooper Energy has just announced it will be net zero this year, offsetting all its 10,022 tonnes of emissions.
Business is moving ahead of political action to ensure a net zero carbon world by the middle of the century.
For companies, setting and achieving a sustainability target may seem daunting, but once-controversial carbon offsets can be a crucial tool to begin the journey.
Maligned by some as ‘greenwashing’ – a fig leaf delaying real emissions reductions – carbon offsets can—and should—play a significant part in the journey to net zero.
Carbon offsets ensure money is directed to sustainable projects such as reforestation, and they provide an economic incentive to continue reform.
The critical first step in and emission reduction journey is to proclaim sustainability targets.
Once the declaration is made, there can be initial progress by increasing energy efficiency through digitisation and turning to renewable power supplies.
Examples include new electric technology to replace carbon-emitting processes, transport companies introducing electric vehicles and property developers converting their buildings into power generators by installing solar panels.
Most companies however will find that some amount of emissions is unavoidable given current technology, or the time required to implement solutions.
Carbon offsets give companies a critical boost to move toward carbon neutrality sooner.
They also provide a solution to residual emissions in the absence of viable emission elimination options or where, as in the case of Scope 3 emissions, the emission source is not directly in their control.
Despite the debate over offsets, most governments and NGOs, including the World Wildlife Fund, support carbon offsets as a viable and credible means to address emissions when procured as part of a holistic emission reduction strategy.
The respected Science Based Targets Initiative in September 2020 issued updated guidance to corporates reversing their previous negative position on carbon offsets to support their use by companies aiming to achieve net zero outcomes.
With this renewed global interest in carbon offsets The Financial Times has just reported a reinvigoration of the international carbon offset market, citing purchases from major corporates such as BP and French luxury group Kering.
Last month Google also announced it would be carbon free by 2030. And until then, it would offset emissions it cannot eliminate, including historical emissions back to its 1998 founding.
A carbon offset project may include planting or conserving forests, capturing gas from landfills or agriculture, or switching to less harmful fuels.
By purchasing carbon offsets, companies offset their own emissions by paying for projects that have a positive environmental impact – such as eliminating pollutants, improving air quality and conserving natural resources.
Offsets provide economic incentives for projects that reduce greenhouse gas emissions and put a monetary value on the environmental cost of carbon pollution that can be used by organisations incorporating a ‘cost of carbon’ in their decision-making processes.
The steps towards becoming a net zero company are straightforward:
- Set a CO2 emission reduction target.
- Create an inventory of emissions from your business and its activities.
- Reduce emissions by increasing efficiencies, switching to lower emissions fuels or purchasing electricity from renewable sources like wind and solar.
- And for emissions you cannot immediately eliminate, invest in activities outside your organisation that reduce emissions and claim that reduction for yourself via carbon offsets.
In Australia, carbon offsets are known as Australian Carbon Credit Units (ACCUs) with each unit representing 1 tonne of CO2 equivalent abatement. ACCUs can only be created by projects accredited by the Clean Energy Regulator.
Other carbon offset ‘certificate’ programs exist globally, with some international certificates also acceptable for reducing emissions under the Australian Climate Active Carbon Neutral Standard.
When combined with energy efficiency programs and low carbon fuels, carbon offsets provide a cost effective, credible solution for organisations to achieve their emissions reduction goals and therefore have a positive impact on the global fight against climate change.
David Eastwood heads the Energy and Sustainability Services division Schneider Electric, Australia’s leading energy consultant ,advising our largest mining, metals and retail companies.