The SMEs essential guide to offsetting and becoming Net Zero

What is offsetting? Should I be doing it and if so, how?

 

Our guide to offsetting will give you the low-down and show how even the smallest business can use it to become net zero.

All businesses, whatever their size, which make a pledge to be Net Zero will, with current technologies, have to offset some of their emissions. It is, currently, not possible for a business to not produce any emissions at all.

The emissions to be offset are from a range of Greenhouse Gases (GHGs) which are converted into a Carbon Dioxide Equivalent (CO2e) as Carbon Dioxide is by far the most emitted of these gases. This aggregated number is often expressed as a Carbon Footprint and/or as tonnes of carbon. In the same way, carbon offset schemes are calculated as CO2e so aggregating a range of saved emissions together. This means that all offsetting is done as tonnes of Carbon Dioxide (CO2).

 

Calculating emissions

As a business, you can choose which emissions you want to offset and can declare which ones you have chosen. To be genuinely Net Zero, however, you will have to offset all of the emissions in all three Emission Scope Categories:

  • Scope 1- the emissions from your facilities
  • Scope 2- the emissions from the energy you buy
  • Scope 3 – the emissions embedded in your forward & backward supply chains.

The challenge, especially with Scope 3 emissions, is having a reliable and accurate means of measuring these emissions. Most companies are, currently, focusing on Scope 1&2 emissions but will quickly include Scope 3, where the onus will be on the supply chain to collaborate on both reporting but also mitigation & offsetting.

 

What emissions should you offset?

The minimum amount possible is always best. There is both a cost to offsetting, which is likely to increase dramatically in the future and socially responsible route is to limit emissions, as this makes the best contribution to tackling global warming. Also, reducing emissions by minimising consumption and waste also helps to conserve the planet’s resources.

The focus, therefore, should always be on reducing internal emissions before offsetting. Some long-term targets have suggested that, at maximum efficiency, a business should target only needing to offset c10% of their starting emissions at the point that they reach Net Zero.

 

Are all emissions mitigatable?

In principle, most emissions have some form of mitigation available today. As the primary drivers of emissions are transport & energy, all businesses can take economically available actions, that are available today to reduce emissions from their activities. 

There are a number of industries which are categorised as ‘Hard to Abate’ where emissions are embedded in the core of what they do and which there is, currently, no economically available technology to mitigate these significantly. These industries include cement, air travel, heavy shipping and steel manufacturing. These tend to be large scale industries in which SMEs tend not to hold a significant place in the emissions chain.

 

How do I offset?

There are, simplistically, two ways to offset:

  • Via an officially recognised scheme
  • Via self-declaration, such as planting trees at your facilities

Both are valid ways of targeting a Net Zero, with the former offering third party validation of your businesses’ Net Zero status.

 

What types of offsetting are there?

There are two decisions for you to make when choosing what type of offsetting is right for your business. These are Hard or Soft offsetting, and Local or Global.

 

Hard v Soft

Hard offsetting is where emissions are captured and then stored, i.e. taken away for good. Most commonly, these schemes are called Carbon Capture & Storage (CCS) and the technology supporting them is still in its infancy, and so these schemes tend to be less widely available.

Soft offsetting is where emissions are either substituted from lower emission schemes (bio-fuels) or absorbed, mainly, from the planting of carbon-absorbing organic matter (tree planting). The difference is that there is still a level of emissions associated with these schemes but at a lower level. Therefore, it is the net difference which is available to be offset against.

 

Local v Global

Again, this is an individual choice. It is perfectly valid for a business in the UK to offset its emissions against a qualifying project in Africa. E.g., a project that funds low carbon cooking stoves in Kenya. It lowers carbon emissions in Kenya and produces carbon reduction certificates that can be legitimately used to offset emissions anywhere in the world.

Funding for offsetting schemes in the past has been weighted to schemes in developing countries, and so most the majority of available schemes tend to be in these countries.

There is a growing debate championing the offsetting of emissions as close as possible to the point where they are created. Often referred to as ‘Insetting’ and recognising that this ensures that local climate impacts are more directly managed.

It is, currently, a free choice, although, in the future, customers may start to prioritise certain types of offsetting across their supply chains.

 

Summary

The options available to offset emissions will continue to evolve over time, and we’ll see more choice, especially for options that offset emissions in the UK. 

It’s going to be necessary for all companies to offset at least some emissions. You can offset when you’re ready, and you’ll need to do it every year to remain Net Zero. But you can do it when you’re ready and, as there will be an increased cost to offsetting, your primary focus should always be on reducing emissions as much as possible only having a need to offset the minimum amount of residual emissions

We hope you find this guide useful. If you have any thoughts or questions about how you can start offsetting contact us on team@cbn.expert and we can talk you through it.