Your quick guide to carbon offsets

Carbon offsets help fight climate change while boosting regional economies. Here’s how they work.

In Australia and around the world, a growing number of organisations are using carbon offsets to reduce their overall environmental impact. But that’s not the only benefit of carbon offsetting: it also boosts economies in rural and regional Australia by helping fund infrastructure and environmental projects.

When combined with other measures such as energy efficiency work and using green energy, offsetting can dramatically shrink a business’s carbon footprint.

What are carbon offsets?

Put simply, a carbon offset is a reduction in the total emissions of carbon dioxide into the atmosphere. A common way to generate a carbon offset is to plant a tree, because trees absorb carbon dioxide.

Organisations purchase carbon offsets to compensate for emissions they have produced elsewhere. For example, a company might purchase carbon offsets to compensate for the emissions their cars produce. Many airlines purchase carbon offsets to compensate for the impact of emissions generated by flights.

Think of carbon offsets like tokens: the more you have, the larger the reduction of carbon into the atmosphere.

Where are carbon offsets produced?

In Australia, the bulk of carbon offsets are produced in rural and regional areas. Common examples of carbon-offset projects include reforestation of cleared land (i.e., tree planting) and the controlled burning of tropical savannas to prevent larger wildfires (because extensive savanna burning produces greenhouse gases).

Many regional and rural populations are now undertaking carbon offsetting projects to generate income. These projects are independently audited and the carbon offsets are subsequently approved for sale.

What is the economic potential of carbon offsetting?

Locally and internationally, a growing number of organisations and governments are seeking to become carbon neutral by reducing their emissions and purchasing carbon offsets to compensate for the remainder. This provides an economic opportunity for communities that have the ability to generate carbon offsets.

“As countries look to meet their targets set by the Paris Agreement, demand for offsets will increase,” said Nik Midlam, Manager of Carbon Strategy at the City of Sydney. “Australia has all the mechanisms in place to create good-quality offsets. This could provide an increasing revenue stream for projects that plant trees, use sustainable farming practices and so on.”

What are the other benefits of carbon offsetting?

Aside from generating revenue, carbon offset projects can result in “co-benefits” for rural and regional communities. Co-benefits are the direct positive outcomes associated with an offset project in addition to the emissions avoided.

For example, across 80,000 km ² of Arnhem Land, in one of the most remote regions of the Northern Territory of Australia, Aboriginal savanna burning projects produce a range of environmental, cultural social and economic co-benefits. Aboriginal people are supported in returning to and working on their country, biodiversity is protected, traditional knowledge is preserved and transferred to younger generations and Aboriginal languages are maintained.

Using carbon offsets to become carbon neutral

Organisations that wish to become carbon neutral (that is, they don’t want to add to the total amount of carbon in the atmosphere) can use carbon offsets to compensate for the emissions they cannot otherwise eliminate through energy efficiency measures or the use of green energy.

In Australia, businesses can prove they are carbon neutral by achieving certification under the National Carbon Offset Standard, a set of rules and measurements overseen by the federal Department of the Environment and Energy.

In 2011, the City of Sydney was proud to become the first government body in Australia to achieve certification under the standard.