What are carbon offsets and how do they work?
The carbon market can be a confusing place. There is an ongoing debate about the effectiveness of certain project types, how credits should be sold, and whether or not carbon offsetting delivers the climate benefits we desperately need to reach our global net zero targets.
Reducing emissions at the source is the number one priority with any decarbonisation strategy. However, some emissions sources are more difficult to reduce or eliminate than others. Emissions that remain after an organisation has taken reasonable steps to reduce them are known as residual emissions.
Carbon offsetting can be used to address these residual emissions by purchasing and retiring verified carbon credits from climate projects. These projects can avoid or reduce emissions, for example through renewable energy or improved energy efficiency, or remove carbon dioxide from the atmosphere through solutions such as reforestation or direct air capture.
What types of carbon offset projects are available?
The carbon offset market is constantly developing to bring new technologies and methods for emissions avoidance and carbon sequestration. Whilst a complete list would have a range of additional solutions included, Furthr has developed relationships with developers and has vetted projects for quality assurance in the following categories:
Nature-based projects
Nature-based projects use or restore natural ecosystems to protect carbon stores or remove CO₂ from the atmosphere.
Examples include:
Afforestation, reforestation and revegetation (ARR): Establishing or restoring vegetation and forests to remove CO₂ from the atmosphere, while potentially supporting biodiversity and local communities.
Examples: Loch Ness Forest, CO2OL Biodiverse Forests, Smallholder Agroforestry Uganda
Forest conservation: Protecting existing forests from deforestation and degradation, helping preserve the carbon already stored in them.
Examples: Washburn County Forestry, Darkwoods Forest Carbon Project
Mangrove restoration and blue carbon: Restoring coastal ecosystems such as mangroves and kelp forests, which can store carbon while supporting marine and coastal biodiversity.
Example: Mangrove Restoration Pakistan
Soil carbon and regenerative agriculture: Supporting farming practices that improve soil health and increase the amount of carbon stored in soils, such as reduced tillage, cover cropping and diversified crop rotations.
Example: Project AgroEcology, Italy
Avoidance and community projects
These projects prevent emissions that would otherwise occur, often while delivering direct benefits to communities.
Some of the project types in this category include:
Clean cooking: Providing efficient cookstoves that reduce fuel consumption, emissions and indoor air pollution.
Example: Improved Cookstoves Rwanda
Safe water: Improving access to clean water, reducing the need to boil water using carbon-intensive fuels.
Examples: Safe Water Zimbabwe, Lango Safe Water Uganda
Energy efficiency: Improving the efficiency of buildings, appliances or industrial processes to reduce energy use and associated emissions.
Example: Social Housing Decarbonisation UK
Methane capture: Capturing methane from sources such as landfills, wastewater or agricultural waste before it reaches the atmosphere.
Example: CTL Landfill Gas Brazil
Waste-to-energy: Capturing energy from waste that would otherwise generate emissions through decomposition or disposal.
Examples: Methane Recovery and Power Generation India
Tech-based carbon removal projects
Carbon removal projects actively take CO₂ from the atmosphere and store it for an extended period. These are different from avoidance projects because they address carbon that is already in the atmosphere.
Projects in this category can take a range of different approaches, including:
Biochar: Converting biomass into a stable form of carbon that can be stored in soils.
Examples: Biochar Smallholder Farmer Project India, Freres Biochar US, Biochar from Sustainable Wood Congo
CO₂ utilisation and storage: Capturing CO₂ and incorporating it into products or storing it to prevent its release back into the atmosphere.
Examples: CO₂ Utilisation in Concrete US & Canada
Direct air capture: Using technology to remove CO₂ directly from the air, typically with permanent geological storage.
Finding the right project for your organisation
With so many options available to organisations looking to offset their emissions, deciding where to allocate funds can be difficult. Organisations should consider their strategic objectives and values, then identify projects that align with them.
For some organisations, the priority may be supporting projects that protect biodiversity or restore ecosystems. Others may want to improve access to clean energy, support local communities or help scale newer carbon removal technologies. Location can also play a role, with some organisations choosing to fund projects in regions where they have significant operations or impact.
Quality should come before price or quantity. Understanding the impact a project delivers beyond carbon, how that impact is measured and verified, and whether it meets key criteria such as additionality and permanence can help businesses identify high-quality, high-integrity projects and reduce the risk of investing in projects that fail to deliver their intended impact.
Once high-quality projects have been identified, building a portfolio can help organisations diversify their impact across different climate, social and environmental outcomes. A portfolio can combine emissions avoidance and removal projects, balancing near-term climate action with investment in longer-term carbon removal solutions.
Need help choosing the right carbon offset project for your business?
We know that buying carbon credits can be a confusing process, especially when it comes to ensuring quality and minimising risk.
Furthr’s team of experts can help you to navigate the process and build a carbon offset portfolio that is high quality and aligned to both your budget and wider business objectives.
Carbon offsetting FAQs
What’s the difference between carbon offsets and carbon credits?
Investing in a project provides funding that supports the development or operation of a climate initiative, such as reforestation, renewable energy or carbon removal. Purchasing carbon credits means acquiring verified units representing one tonne of CO₂e avoided, reduced or removed by a project. These credits are then retired to compensate for emissions.
How do you know if a carbon offset project is credible?
The quality of carbon credits can vary significantly between projects. Businesses should consider factors such as how emissions reductions or removals are quantified, whether the project is independently verified, whether the impact is additional and how the project manages risks such as reversal or double counting. Read our guide to choosing high-integrity carbon offset projects for a more detailed explanation.
What's durable carbon removal?
Durable carbon removal, referred to in the standard as durable removal, stores carbon for centuries to millennia. Direct air capture with geological storage is the clearest example. The distinction matters because only durable removal counts toward a company's net zero obligations at the point they reach their target year.