Carbon Offset

Projects such as forest protection, renewable energy, cookstoves or direct air capture earn credits once an independent body verifies the result. A buyer then claims the credit against its own emissions. Most trading happens in the voluntary carbon market, where firms buy by choice and prices vary widely with the type and quality of the project. Compliance schemes run by governments are separate. The main worry is integrity: would the saving have happened anyway, is the benefit permanent, was the same credit sold twice, and did the project harm local people? Integrity bodies and ratings services now set quality labels for credits. Buyers also face reputation risk if a project is exposed. Reviewers of an offset claim ask what each credit actually represents and whether the cut would have happened anyway.

A manufacturer buys 20,000 credits from a forest protection scheme. A later investigation finds the forest was never under real threat of clearing, so the avoided emissions were overstated. The manufacturer has to reconsider its public claim that it offset its business travel, and its sustainability committee adds credit quality checks to its buying policy.