Carbon Offsets – The effective Way to tackle Climate Change?

There is no denying that we all are experiencing the impacts of climate change. Of late, Changes in weather patterns and extreme weather events like frequent storms, cyclones, forest fires etc., are on the news more frequently. 

Nationally and countries worldwide are taking various initiatives to drastically reduce and offset our greenhouse gas (GHG) emissions to slow climate change. However, are such desperate measures taken on the right path? This blog evaluates if carbon offsets can tackle climate change. 

The earth is warming faster than it ought to, and the world over, stakeholders (through the Paris Agreement) have agreed to a goal of keeping global warming temperature under 1.5° C, a level many scientists consider a dangerous threshold. However, recent reports have stated that we may cross the threshold, but we must do all we can to limit global warming to under 2° C. As a result, many big and small companies across the globe are setting a target of ‘Net-zero Emissions’. Unfortunately, but not surprisingly, many of these companies rely heavily on carbon offsets to achieve their net-zero target.  Achieving the net-zero target means balancing GHG emissions and their removal from the atmosphere. Both reducing emissions and removing existing ones will get the job done.

So, what is a Carbon Offset? 

carbon offset reduces or removes an entity’s CO₂ or other GHG emissions to compensate for emissions made by the entity in other locations. For example, if I take a flight and want to compensate for the footprint, I would invest in a carbon offset project that removes CO₂ from the air equal to the amounts I have emitted. Since climate change is a global issue, we can reduce emissions in any location through carbon offsets, as the impact on the planet is the same. 

Carbon Offsets provide individuals, companies, and governments an excellent opportunity to reduce carbon footprints by investing in projects that help reduce the emission of CO₂ and greenhouse gases from the atmosphere. These could be ecological restoration, afforestation, renewable energy, biomass energy, waste and methane management, agricultural management, water management, and community projects. One carbon offset credit corresponds to one tonne of CO₂ removed or its equivalent in other GHGs. 

The carbon offsets have evolved in the past 20 years. However, Article 12 of the Kyoto Protocol under the Clean Development Mechanism (CDM) defined a first offset provision. The CDM allows developed countries to offset their carbon emissions by funding GHG emission-reduction projects in developing countries. CDM projects earn tradable and saleable Certified Emission Reduction (CER) credits. Industrialised countries can use these credits to meet some of their emission-reduction targets under the Kyoto Protocol.

Is there any defined procedure for a carbon offset project? 

The answer is Yes. Individuals or companies can go for carbon offsetting voluntarily or comply with regulations. 

How does carbon offset work? 

A company or an individual can purchase offsets by contributing financially to projects reducing emissions elsewhere in the world, for instance, tree plantation or renewable energy projects like solar farms. 

Once a carbon offset is purchased, it is retired forever and cannot be re-sold again. Therefore, to ensure emissions reductions are only counted once, a carbon offset project should only be set up under the compliance or voluntary carbon market — not both. 

There are two types of carbon credit markets, the compliance market and the voluntary market. A compliance market is a mandatory market regulated by national, regional, or international carbon reduction authorities. For example, countries that have adhered to the Kyoto Protocol and the UNFCC emission limits must legally offset their emissions through a compliance market. On the other hand, the voluntary market enables companies and individuals to offset GHG emissions voluntarily. Furthermore, voluntary offset markets have adopted a CDM certification system to maintain the quality standards of offset projects.

Certain factors, such as corporate social responsibility (CSR), ethics, etc., in voluntary offset purchases contribute to the decision. Voluntary carbon credits are more flexible than compliance markets because borders between countries, states, or political unions do not constrain them. They also have the potential to be accessed by every sector of the economy instead of a limited number of industries.

What is a good carbon offset project? 

The following are the yardsticks to consider for one:


Additionality is an essential characteristic of carbon offset projects. Carbon offsets must achieve an ‘additional’ reduction to what would have occurred without the project. For example, suppose you pay someone already doing a sanctioned afforestation project (as part of CSR) to create a carbon sink. In that case, you are paying them to execute a project with an approved budget to make that specific amount of carbon sink. Unfortunately, this means that your payment is not resulting in additional GHG reductions. Instead, your purchase enhances the carbon sink with wasteful features. Or, in some cases, the company is conning you. 

Double Counting

Double counting is when two parties claim the same carbon removal or emission reduction. However, the two organisations cannot claim credit for the same carbon offset project. Double counting is highly problematic as the practice of double counting can also discourage countries from taking much-needed climate action. 


Permanence means one cannot reverse the GHG emission reduction that occurred due to a carbon offset project. In other words, one can not reintroduce the carbon removed from the atmosphere through an offset project.  


Leakage means when the implementation of the project causes higher emissions outside the project area or elsewhere. For example, if an ecological restoration project is taking place in the designated protected area but it leads to deforestation in other unprotected areas. 

What are the challenges of Carbon offsetting, and why are carbon offsets controversial? 

Carbon Offsets have gained massive popularity worldwide as a tool to combat climate change. But, of course, reducing direct emissions is expensive as it needs investment in greener technologies, changes in operational processes, supply chain etc. However, on the other hand, a carbon offset is a much easier and cheaper tool to reduce emissions. 

To combat climate change,  Reuters reports that 20% of the world’s 2,000 largest publicly traded corporations have committed to a ‘net-zero’ emissions objective. But many of them rely on carbon offsets to reduce their emissions instead of cutting down the emissions from their operations. Many environmentalists criticise carbon offset as a form of ‘Greenwashing’. 

Another big problem with carbon offsetting projects is that there are not enough high-quality credits to restrain the massive level of emissions that corporates produce. In some cases, carbon offsetting projects overestimate the amount of carbon saved by the project. For instance, capturing CO2 in forests and agricultural soils, for instance, has the ability to offset less than 50% of yearly carbon emissions, according to a June 2020 report by S&P Global Ratings

In conclusion, 

Climate change is real and will affect, in fact, the entire world. If we continue with the current rate of emissions pattern, we will ultimately fuel climate change. So, corporations should focus on real climate action to mitigate the effects of climate change. For instance, entities must reduce direct emissions rather than heavily rely on carbon offsets to achieve their net-zero goals because there aren’t enough carbon sinks to offset our carbon emissions from daily human activities. 

We must understand that a carbon offset is one of the tools that can help combat climate change if used wisely. However, to fight against climate change, behaviour change is a must. Changing our consumption habits is the only natural way to reduce carbon emissions. 

What is Livabl’s Intervention?

Livabl aims to tackle this problem from the root cause: increased carbon emissions. We help companies to measure, reduce and finally offset their remaining footprint. Livabl believes in creating impact and supports local NGOs for ecosystem restoration projects. We work with our clients to enable them to adopt concepts of circularity within their processes and contribute to a better tomorrow. 

Livabl helps empower companies to take climate action. We offer custom services related to carbon footprint management, sustainability reporting and impact assessment. Our vision is to help founders in their sustainability journey! 

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It’s never too late to do the right thing.

Nelson Mandela


The author Rasika Nachankar completed her Master’s in Environmental Science. Currently, she is working part-time as a Sustainability trainee at Livabl. Additionally, she is also working on air pollution and sustainable mobility. As a future career goal, she would like to work in the sustainability and climate change sectors. 

The article was reviewed and edited by Deepa Sai of ecoHQ

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Published by ecoHQ

ecoHQ is a platform advocating for sustainability and conscious consumerism in India. At ecoHQ, we help Indians make educated choices about sustainable practices through awareness, advocacy and accountability. We spread awareness about sustainable development, advocate conscious growth and help brands be accountable for responsible solutions. Our ultimate goal is educating you to make the right choices for our people and planet.

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