The Carbon Offset Cycle
Learn the life cycle of a carbon offset.
Carbon offsets, like the larger fight against climate change, are an extensive collaboration between many people, involving a long cycle from start to finish.
The Generation & Verification
Once a project developer has reduced or removed a certain amount of emissions, they will work with a registry to verify the reductions. The verification process is essential to ensure that the reductions are real, permanent, and additional. Once verified, the developers receive carbon offsets representing every 1 tonne of avoided emissions.
The Purchase & Purpose
Buyers include everyone from conscious individuals to some of the largest companies in the world.
Buying carbon offsets provides essential financing for this market's continued growth and supply. Once the organization or individual purchases the offsets, project developers use that money to finance more sustainable projects and continue offsetting more carbon, creating a cycle of climate-positive action.
The final step in the cycle is retirement.
Retiring an offset means taking it out of circulation to ensure that only one person (or company) gets credit for reducing the emissions.
Retirement is vital to the integrity of carbon markets because it prevents double-counting of emissions reductions.
There are a few different ways to retire an offset. The most common is to submit it to a retirement platform like the Verra Registry. These platforms keep track of all the information about offsets, including when they were retired and by whom. Another method includes retiring directly through the platform where the offsets are purchased.
Issues within the Existing Model
Creating Uniform Standards:
- Today’s carbon markets lack the liquidity needed for trading because of how unique the offsets are. Each one varies in type, date, and location, among other underlying qualities that can change the offset’s value. Since buyers value additional attributes differently, the inconsistency among products means that matching an individual buyer with a corresponding supplier is inefficient and time-consuming.
Accurate Accounting & Open Doors:
- Another common concern about the carbon markets is how accurately registries and validation bodies are issuing offsets. Most of the trade activity in the space happens behind closed doors, leading to a lessened impact of offset purchasing and dangerous criticism of the concept of offsets.
- Voluntary carbon markets are not growing at the rate we need before the harmful effects of the climate crisis become permanent. They must accommodate for listing and trading high-volume and account for a consistently defined set of additional attributes.
Luckily, there’s a solution to all of these problems.
Carbon offsets go through a long, collaborative process from birth to death.
This process begins with a project developer reducing or removing a certain amount of CO2. After that, an independent third party verifies the reductions. Once verified, the developers are issued one carbon offset representing every tonne of carbon removed from the atmosphere.
Organizations and individuals that want to neutralize their footprint purchase carbon offsets from these projects. The reductions are permanent and tied to the purchaser. The offsets will then be retired so they can no longer be sold or used again.
By retiring offsets, organizations and individuals can finance more sustainable projects and continue offsetting more carbon.