Charles Dubouix

Carbon Offsetting or Contribution Carbon offsetting or contribution toward a global net zero

As companies are no longer striving for an immediate carbon-neutral state, but rather seeking to transform their businesses and industries to align with the global Carbon Neutrality objective, it raises the question of the role of offsetting. How does offsetting fit into this new approach?

Carbone finance has a huge role to play in the global carbone neutrality

Carbon finance has proved to be a robust and efficient tool in stimulating financial flows towards impactful projects. It is a key device in filling both:

• the "finance gap", which refers to missing climate investments needed to meet our global objectives.
• This financing contributes to the development of worldwide carbon sinks, particularly through financing sequestration projects with carbon credits.
• It also facilitates carbon emission reduction by fostering innovation for less emitting sources of energy.
• the "North-South divide", which unfortunately refers to the fact the people who suffer and will suffer from the climate crisis are often the ones who emit the least…

Yet, carbon credits are not fully equivalent to the same amount of carbon reduction

First: what is a Carbon Credit?

4 criteria are usually needed in order to certify a carbon credit :

1. Additionality: the project would not take place without the financing of the sale of carbon credits
2. Measurability: the amount of CO2 avoided or sequestered can be calculated using a recognized methodology.
3. Auditability: the avoidance or sequestration of GHG emissions must be verifiable or accounted
4. Permanence: avoidance or sequestration must take place over a certain duration

There are three core differences between reducing emissions and carbon credits.

⚖️ Not the same scalability

Emissions can continue as long as there are fossil fuel reserves.

However, the availability of carbon natural sinks is limited due to the limited availability of land, and technological sinks are not yet sufficiently mature.

⏰ Not the same temporality

Emissions occur instantaneously and carbon accumulates for centuries in the atmosphere.

While it takes decades for a tree to grow and store carbon.

🎲 Not the same probability

Emissions are a certainty.

While carbon credits are based on an alleged permanence that is at risk, such as when a forest burns.

🥇Then, our priority should be to focus on reduction.

Why do we prefer the term contribution rather than offsetting?

Since, the label “carbon neutral” and the term “offsetting”, can create confusion and appear counterproductive, we rather use a clearer vocabulary.

We believe that there is no scientific equivalence between a company's emission reduction and the purchase of carbon credits.

However, the term “offsetting” implicitly conveys the (unscientific) idea of "cancelling out" emissions through project financing.

This alleged equivalence fuels a psychological bias among credit buyers: the belief that the climate challenge can be fixed at little cost, preventing them from taking more ambitious actions.

The challenge we face is huge and urgent. Therefore, we need accurate semantics to guide our actions virtuously!

Is Ovrsea flying solo with this approach?

Not at all!

Our positioning is primarily inspired by the Net Zero Initiative, a climate framework developed by Carbone 4 that encourages ambitious corporate climate strategies.

It's important to note that all international frameworks, such as UNFCCC, Science Based Targets Initiative, Bilan Carbone, ISO 14064, and GHG Protocol, do not allow companies to subtract a carbon credit from the same amount of emissions reported in their GHG report.