Carbon offsetting
Carbon offsetting is a widespread tool in efforts to achieve net zero emissions. It involves payment to receive credit for a certified unit of emission reduction or removal carried out by another actor. Current approaches to offsetting are unlikely to deliver the volume and type of mitigation needed to achieve global climate goals. Many net zero pledges from companies and countries rely on offsetting to meet their commitments, yet concerningly hardly any offsetting strategies today are net zero aligned by failing to account for the needed balance between an actor’s residual emissions and removals.
What type of strategies are aligned with pathways to net zero? The Oxford Principles for Net Zero Aligned Carbon Offsetting (revised 2024) provide guidelines to help ensure offsetting strategies take us closer to rather than further away from a net zero society. Explore the Principles below.
Net ZERO-AliGNED OFFSETTING PRINCIPLES
1 — Cut emissions, use high quality offsets, and regularly revise offsetting strategy as best practice evolves
A host of carbon offsetting best practices have been developed over the past decades. Adherents to these principles must first observe these best practices, which can be grouped as:
Prioritise reducing your own emissions. Minimise the need for offsets in the first place.
Ensure environmental integrity. Use offsets that are verifiable and correctly accounted for and have a low risk of non-additionality, reversal, and creating negative unintended consequences for people and the environment.
Maintain transparency. Disclose current emissions, accounting practices, targets to reach net zero, and the type of offsets you employ.
2 — Shift offsetting towards carbon removal
Most offsets available today are emission reductions, which are necessary but not sufficient to achieve net zero in the long run. Carbon removals scrub carbon directly from the atmosphere.
Users of offsets should increase the portion of their offsets that come from carbon removals, rather than from emission reductions, ultimately reaching 100% carbon removals by midcentury to ensure compatibility with the Paris Agreement goals. Creating demand for carbon removal offsets today will send the necessary market signal to increase supply.
3 — Shift offsetting towards long-lived storage
The transition from emission reductions to carbon removals as outlined in Principle 2 above is critical for achieving net zero, but doesn’t address the question of how carbon is stored. Short-lived storage involves methods that have a higher risk of being reversed over decades. Long-lived storage refers to methods of storing carbon that have a low risk of reversal over centuries to millennia, such as storing CO2 in geological reservoirs or mineralising carbon into stable forms.
Short-lived storage offsets help buy time to reduce emissions and invest in long-lived storage, but they are not a long-term solution for achieving balance between sinks and sources. It is therefore critical that investment in scaling and improving the technologies that enable long-lived storage begins now. Creating demand for long-lived offsets today sends a signal to the market to grow the supply of such offsets.
4 — Support the development of net zero aligned offsetting
The market for the high-quality offsets needed to meet Principles 2 and 3 is immature and in need of early-adopters to support its evolution. Users of these principles can develop the market for net zero aligned offsetting by:
Using long-term agreements. Give the certainty required by offset project developers to create net zero offsets.
Forming sector-specific alliances. Work collaboratively with peers to develop the market for net zero aligned offsets.
Supporting the restoration and protection of a wide range of natural and semi-natural ecosystems in their own right. Not only will this secure the ecosystem goods and services on which humans depend, including resilience to the impacts of climate change, but will contribute to carbon storage over the long term. While carbon offsetting can help to fund some of this work, such efforts should fundamentally be supported for the benefits and values they create, not purely for the purpose of carbon offsetting.
Adopting and publicising these Principles, and incorporating them into regulation and standard-setting for approaches to offsetting and net zero.
Looking for tools to help you follow these steps?
Research summary
Our research aims to improve the integrity of the ‘net’ in net zero. Part of this is identifying governance and policy solutions to ensure the environmental and social integrity of carbon offsets.
Our work includes the development of The Oxford Principles for Net Zero Aligned Carbon Offsetting (revised 2024), which outline how offsetting needs to be approached to ensure it helps achieve a net zero society.
Our work on carbon offsetting is complemented by research on emissions reduction, Carbon Dioxide Removal and Nature-based Solutions.
Recent publications
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- Axelsson, K., Wagner, A., Johnstone, I., Allen, M., Caldecott, B., Eyre, N., Fankhauser, S., Hale, T., Hepburn, C., Hickey, C., Khosla, R., Lezak, S., Mitchell-Larson, E., Malhi, Y., Seddon, N., Smith, A. and Smith, S.M. 2024. Oxford Principles for Net Zero Aligned Carbon Offsetting (revised 2024). Oxford: Smith School of Enterprise and the Environment, University of Oxford.
- Axelsson, K., Brophy, A., Pierard Manzano, E. (2022). Net zero business or business for net zero: A report on corporate climate leadership practices. Skoll Centre for Social Enterprise
- Fankhauser, S., Smith, S.M., Allen, M. et al. (2022). The meaning of net zero and how to get it right. Nat. Clim. Chang. 12, 15–21
- Allen, M. et al (2021). Ensuring that offsets and other internationally transferred mitigation outcomes contribute effectively to limiting global warming. Environ. Res. Lett.
- Allen, M., Axelsson, K., Caldecott, B., Hepburn, C., & Smith, S. (2020). The Oxford Principles for Net Zero Aligned Carbon Offsetting
OTHER RESEARCH THEMES
What is net zero?
the urgency of zero
Carbon Dioxide Removal
