Carbon offsets: what are they and how do they work?

According to NASA, Earth’s average surface temperature has risen about 2 degrees Fahrenheit (1 degree Celsius) since the late 19th century, with most of the warming occurring in the last 40 years.

This rapid rise in temperatures has had a number of negative effects on the environment, including the disruption of ecosystems, shrinking ice sheets in Greenland and Antarctica, rising sea levels, and extreme weather events.

Anthropogenic climate change is now a serious cause of concern for people around the world. But there is still time to take climate action. If global temperature rise remains below 1.5 degrees Celsius, this may allow us to reduce projected losses and limit damage.

Many people and companies are now taking immediate action to combat climate change. One of these measures is purchase of “carbon offsets”.

Below, we’ll explore what carbon offsets are, how they work, and how you can get started with carbon offsetting now. But first, let’s dive into a related concept: your carbon footprint.

Carbon dioxide (CO₂) levels in our atmosphere have increased dramatically since the mid-20th century due to human activity. Carbon dioxide, along with other gases like methane, traps heat near the Earth’s surface. This phenomenon is known as the “greenhouse effect”, and it is one of the main drivers of global warming.

While many industrial processes emit significant amounts of carbon dioxide, so do everyday activities. According to the Human CO₂ Emissions Project, some human sources of carbon dioxide emissions include cement production, deforestation, and the burning of fossil fuels (such as coal, oil, and natural gas).

the total amount of greenhouse gases generated by the actions of a person or organization is called its “carbon footprint”. Some examples of common activities that contribute to your carbon footprint are eating meat, using electricity and heat, and traveling (by plane, train, car, etc.).

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What are carbon offsets?

Carbon offsets are a form of mitigating the environmental impact of your company. A carbon offset involves the commodification of one metric ton (ton) of CO₂e emission reduction. It converts carbon reduction into a credit that can be bought, sold and traded.

The idea is that by purchasing carbon credits (for example, in the form of a donation to an environmental project), you can help with carbon emission reductions or carbon removals, offsetting your initial carbon-producing activity and making it “carbon neutral”.

In general, there are two types of carbon offsets: voluntary and compliance. Voluntary offsets are purchased by choice to help the environment, while compliance offsets are used to meet legal obligations in regions that use cap-and-trade systems and carbon markets (such as the Carbon Emissions Trading System). the European Union).

While carbon offsets are a great way to help the environment, there are many other actions companies can take to meet their carbon reduction goals. Companies can increase the efficiency of their operations by first making greener decisions (for example, recycling and reducing waste to avoid sending it to landfills, choosing renewable energy and improving energy efficiency, and using more efficient transportation options).

However, even after optimizing efficiency, you will still have a residual carbon footprint. Carbon offsets can help mitigate the impact of this footprint.

How does carbon offset work?

First, you’ll need to calculate how many metric tons of carbon dioxide a specific business activity generates.

You will then need to purchase carbon credits: for example, by donating a fixed amount of money to a non-profit environmental project. The amount of your donation must correspond to the amount of carbon emissions created for the initial activity. In this way, you will have “offset” your own emissions to net zero.

Accurately calculating carbon emissions can be difficult. Fortunately, there are software solutions that can make the process easier.

For example, TravelPerk is an all-in-one business travel platform where you can book, manage, and report on business travel. The platform offers built-in features (such as the GreenPerk program and the GreenPerk API tool) to help businesses understand, reduce and offset their carbon emissions.

How does buying carbon offsets work?

When you buy offsets, you will typically pay a fixed amount based on a calculated price for each metric ton of carbon dioxide equivalent you emit. This price may depend on different factors related to the type of carbon offset projects you have chosen.

If you choose TravelPerk and opt into the GreenPerk program, you will be charged for each trip you take at a price of €10 per tonne of CO₂e (or the equivalent in your local currency).

What types of emission reduction projects exist?

The goal of carbon offset projects is offset greenhouse gas emissions — either by reducing future global emissions or by reducing current levels of CO₂e in the atmosphere. Different projects have different methodologies to reduce emissions.

Some popular types of climate solution initiatives include forestry (reforestation and tree planting). [afforestation]), methane capture, renewable energy projects (such as wind farms or hydroelectric plants) and direct carbon capture.

Carbon offset projects can take place anywhere in the world. For example, the projects we have selected for GreenPerk are located in Thailand, Cambodia and Turkey.

How to choose a carbon offset project to support

It’s important to be selective about the carbon offset projects you support. Above all, the offset programs you choose must have a tangible and measurable impact on CO₂e emissions. You should also be careful to choose reliable projects that are properly supervised and efficiently executed.

Not only are all GreenPerk projects VERRA (Verified Carbon Standard) approved, but they are also hand-selected by our sustainability team. We choose projects based on the UN Sustainable Development Goals, and aim for accuracy, permanence, and the social benefit of emissions to local communities. Learn more about the projects.

As companies increasingly focus on achieving net-zero emissions goals, a great place to start is with business travel. However, understanding the impact of business travel can be easier said than done. Companies face many challenges when measuring CO₂e emissions from travel, including the need to develop a consistent methodology and the difficulties of aggregating data from multiple sources.

For this reason, at TravelPerk, we have developed two different solutions to make it easier for our customers to reduce their emissions through data. This is what we built:

GreenPerk

All TravelPerk users and customers can now understand their business travel footprint. They can choose to offset carbon emissions from all their business travel by investing in VERRA-accredited projects focused on biogas capture, forestry and renewable energy.

Green Perk API

An open source external API that companies can integrate directly into their own platforms and workflows. You can use the GreenPerk API to create net-zero strategies through actionable data insights, create a sustainable travel policy and monitor your progress, and see exactly which aspects of your business travel are leaving the biggest carbon footprint. GreenPerk’s API calculations comply with the standards set by the World Resources Institute’s Greenhouse Gas (GHG) Protocol.

So how do these initiatives work in practice? Here are some practical examples:

  • Company X has set a goal to reduce its travel-related carbon footprint.
  • They log into the GreenPerk API dashboard and discover that 10% of their business travel is between London and Paris, and 100% of that travel is by plane. That works out to about ~0.9% of the cost of your entire business trip!
  • Using the GreenPerk API, Company X determines that it can reduce its carbon emissions by almost 75% by implementing a policy that makes its business travelers take the Eurostar train instead of flying.

You can also get more granular than that. For example:

  • Company Y frequently books trips between London and New York.
  • Looking at their dashboard, they discover that travelers who fly with one airline emit more carbon than travelers who fly with another airline.
  • They can now start booking all their travelers on the most carbon efficient airline and reduce their carbon footprint by around 22%.

For more information on how to reduce your carbon footprint, check out TravelPerk’s definitive guide.

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