How Carbon Offsets Work

October 12, 2012, 1:06 pm Climate Friendly Yahoo7

The kind folks at Climate Friendly explain how carbon offsetting can work for your business.

How Carbon Offsets Work

Congratulations to our KBB carbon experts Climate Friendly, Sydney Business Awards' Business of the Year 2012!

As a business owner you would naturally outsource an activity that you cannot cost effectively perform in-house. At the moment, there are only a limited number of energy efficiency measures that you can feasibly take.

For almost all of us, no matter how hard we try, it is impossible to achieve zero carbon through energy efficiency alone. That’s where offsets come in.

How does offsetting work?

Offsetting works through the carbon offset market, an established market where carbon credits are listed and sold. They are traded locally and internationally on platforms as secure as those used to trade shares.

One credit equals one tonne of carbon emissions prevented.

How are the credits generated?

Carbon credits are typically generated by projects which produce renewable energy – through wind, solar, hydro or renewable biomass – which take the place of fossil fuel power generation.

To create a carbon credit, project owners must prove that without their project happening, carbon emissions would have been created. This is all strictly audited and overseen by independent bodies to ensure it is true.

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Credits are verified and then listed for sale to business and organisations that wish to offset their carbon footprint.

How do the credits help our environment?

The funds received from the sale of carbon credits essentially balance out the higher cost of renewable energy production, making these projects cost-competitive. Without the sale of carbon credits, these projects would not exist.

By buying carbon offsets, you are effectively supporting the development of technologies that provide long term solutions to global warming, and are helping to accelerate the transition to a clean energy future.

Tasmanian Forestry Project

Many businesses have benefitted greatly from carbon offsets:

"For me, becoming a Carbon Neutral company, through a combination of internal emissions reductions and purchasing high quality offsets, was a perfect fit and extension of the ethics that we stand for and that drive my company, Republica.

"We want to be leaders in what we do, so by becoming the first certified Carbon Neutral Food Brand in Australia we're paving the way for others to follow, and demonstrating that it's not difficult a process, in fact it's a stamp of approval that you are a company of the future." – Jacqueline Arias, Republica Coffee Founder

So how do I go about offsetting?

These tips will explain what you need to know:

1. To offset, you first need to calculate your emissions

There are a number of simple to use and free calculators on the web. Pick a reputable carbon offset provider and you will quickly be able to determine your business footprint. The largest contributors to most business’ emissions are electricity, plane travel and fleet.

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If you are time poor, there are also precalculated offset packages that provide guidance on what an average Australian business emits.

2. Choose an offset project by considering the technology and location that appeals to you

You should choose a project that fits with your business values and objectives. For example, an IT business that is power hungry may wish to support renewable energy projects. If your business would prefer to focus on biodiversity and the natural environment, a forestry protection project in Tasmania may be for you.

Real examples of these are the Alize Camseki Wind Project in Turkey & the Tasmanian Forestry Project.

Alize Camseki Wind Project

3. Choose a well-regarded offset provider

It’s important to ensure the offsets you buy are genuine and eligible under the Australian government’s National Carbon Offset Standard.

Your offset provider should be able to provide you with a project fact sheet and confirmation that their credits are eligible under the Australian government standard. Ideally your offset provider should also be audited by a third party.

A list of offset providers from industry body International Carbon Reduction and Offset Alliance is available here.

Carbon offsets are used by business of all sizes. They offer a simple, immediate and cost-effective way to reduce your emissions.

If you choose a project that aligns with your business and select a reputable supplier, you can have an immediate and meaningful environmental impact. Many businesses are taking steps to becoming carbon neutral with the help of offsets and supporting a speedier transition to a low carbon future for us all.

How do you see offsets as forming part of your carbon management? We’d love to hear your experiences since the introduction of the carbon price. Join in the conversation today on Facebook, Twitter and LinkedIn or email us at