As part of their net zero climate strategies, many companies, organisations, cities, regions, and financial institutions are relying on carbon credits (abbreviated to “credits” throughout) to offset their residual emissions. A robust literature and set of voluntary standards continue to identify measures for reducing some of the well-known risks associated with the current use of credits to make climate claims. The Oxford Principles for Net Zero Aligned Carbon Offsetting (the “Oxford Offsetting Principles”) add to this literature by outlining how offsetting needs to be approached to help achieve a net zero society. The four principles are:
1. Cut emissions, ensure the environmental integrity of credits used to achieve net zero, and regularly revise your offsetting strategy as best practice evolves Following best practices developed over the last decade to deal with carbon credits and projects, adherents to the Principles should:
1A Prioritise reducing your direct and indirect emissions – Minimise the need for offsetting. Reducing emissions has multiple co-benefits and there are limits to the availability of highquality credits.
1B Ensure the integrity of carbon credits – Credits must be measured, reported, verified, and correctly accounted for. Credit-generating investments must yield results that are demonstrably additional to what would otherwise have occurred, have a low risk of reversal, and avoid negative impacts on people and the environment. 1C Maintain transparency – Disclose current emissions, accounting and verification practices, targets and transition plans to reach net zero, and the type of credits you employ, as well as your selection process and the verification processes associated with the credits.
2. Transition to carbon removal offsetting for any residual emissions by the global net zero target date Most credits in the voluntary market today are associated with emission reductions or avoided emissions. These can play a key role in the short and medium term to protect the carbon stored in vulnerable ecosystems and accelerate the transition to a low-carbon society, but the scope for further emission reductions will decrease as we approach the net zero target date. Organisations must shift towards carbon removals, which remove carbon from the atmosphere to counterbalance residual emissions and achieve net zero. Those targeting net zero with the use of credits will need to increase the proportion that comes from carbon removal, rather than from emission reductions, aiming to reach 100% carbon removal credits by the global net zero date (2050 at the latest). Other mechanisms besides the use of credits will also be needed to avoid and reduce emissions, both before and after the net zero target date.
3. Shift to removals with durable storage (low risk of reversal) to compensate any residual emissions by the net zero target date All carbon dioxide (CO2 ) removals need to be stored. Different storage methods vary in their susceptibility to releasing GHGs back into the atmosphere (hereafter ‘risk of reversal’). To maintain a net zero balance, storage with low risk of reversal and high durability over the long term (centuries to millennia) is needed, such as storing CO2 in well-selected geological reservoirs or mineralising carbon into a stable form. Some nature-based approaches that restore and protect the carbon stored in well-managed resilient ecosystems could also store carbon for centuries to millennia, provided future generations continue to maintain them and they are not destabilised by future climate change. However, the current deployment level of durable carbon removal and storage approaches is well below what is needed. It is critical that investment in these methods begins early and ramps up rapidly to ensure they are available at the scale needed to meet the demand required to achieve global net zero. Continuing to invest in high-integrity projects with a moderate risk of reversal (such as certain nature-based removals that may be susceptible to climate change) will also play a valuable role in the short to medium term whilst complementary approaches with a lower risk of reversal are developed and deployed. These may also have many other benefits beyond carbon removal and storage.
4. Support the development of innovative and integrated approaches to achieving net zero The market for high-quality removals, whether used to generate credits or for wider offsetting approaches, is immature and in need of early adopters to support its growth. Users of these Principles can develop the market to support net zero by:
4A Using long-term agreements that are bankable and investable to provide certainty to project developers so they can raise capital efficiently;
4B De-risking project finance;
4C Forming sector-specific alliances to work collaboratively with industry peers to develop the market for projects aligned with net zero;
4D Supporting the protection and restoration of a wide range of ecosystems in their own right. Not only will this contribute to reducing emissions and removing CO2 , but it will also further secure the multiple ways society is supported by nature, including adaptation to the impacts of climate change. While high-integrity ecosystem restoration projects usually store carbon, such efforts should also be supported for their social and environmental benefits, not solely for the purpose of compensating for ongoing emissions;
4E Adopting and publicising the Principles and incorporating them into regulation and standard-setting for net zero; and
4F Investing in additional beyond value chain mitigation.
