Carbon offset projects, also known as climate projects, demonstrably reduce, avoid or remove greenhouse gas emissions from the atmosphere. This is achieved, for example, by generating renewable energy, by afforestation and by conserving and protecting forests, or by using new technologies such as direct air capture.
To receive a certificate for a carbon offset project, projects must be registered in accordance with international standards and must meet clear criteria and requirements. In addition, a set methodology must be followed depending on the project's technology. This is defined and administered by the relevant standard, such as the Gold Standard (GS) or the Verified Carbon Standard (VCS).
What requirements must certified carbon offset projects meet?
Carbon offset projects must meet four main criteria, as well as follow a set methodology:
- Ecological and financial additionality: the additionality criterion requires that a carbon offset project produce lower emissions than would be the case if the project were not carried out. Project developers must also demonstrate that the project depends on further funding raised through the sale of verified emission reductions (VERs), and that it could not otherwise be implemented.
- Exclusion of double counting: it must be ensured that a VER is issued only once.
- Permanence: the permanence criterion ensures that the emission reduction takes place over a longer period, not just in the short term. This is done to secure a long-term positive effect on the climate and to guarantee that VERs can be used in good faith to balance emissions.
- Regular independent audits: carbon offset projects must be approved by recognised validation and verification bodies (VVBs) and must be assessed regularly against all of the above criteria. VVBs check compliance with the relevant methodology and verify ex post the actual volume of emissions reduced.
Why are carbon offset projects worth carrying out?
Carbon offset projects not only help to reduce or avoid greenhouse gas emissions, they also promote sustainable development across the world. In various ways, they contribute to achieving the United Nations' 17 Sustainable Development Goals (SDGs ).
Because carbon offset projects demonstrably reduce carbon emissions, they generally contribute to Sustainable Development Goal 13 (Climate Action). The volume of VERs issued depends on the project's technology, duration and scale – that is, on how the project is designed. It is important that the volume of VERs issued is transparent and verified.
Depending on the project's design, goals other than Sustainable Development Goal 13 may also be supported. For example, a wind energy project in De Aar, South Africa, helps to improve health (SDG 3) and the quality of education (SDG 4). Standards such as the Gold Standard or the Verified Carbon Standard require carbon offset projects to contribute to at least three of the 17 Sustainable Development Goals.
Carbon offset projects are therefore worthwhile, because they visibly reduce emissions and promote sustainable development in the project's host country.
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How are carbon offset projects funded?
Developing a carbon offset project often involves high financial risk. The planned sale of VERs on the voluntary carbon market (VCM) reduces this risk for investors and makes projects easier to run in their first years.
A project's activities are usually funded by selling VERs. Project developers must demonstrate that the project's implementation depends on this funding (financial additionality). VERs therefore cover both the initial and the ongoing costs of a project, which is why carbon offset projects are accordingly not funded by donations.
Are there carbon offset projects all over the world?
Carbon offset projects exist all over the world. ClimatePartner, for example, offers carbon offset projects on six continents, although most of these projects are in developing countries. Certified carbon offset projects are often located in countries of the global South, because these countries are already severely affected by the consequences of climate change, yet frequently lack the financial resources, expertise and infrastructure to make the necessary climate investments without outside support.
Industrialised countries, on the other hand, have historically been among the largest emitters of greenhouse gases and therefore bear a particular responsibility for mitigating climate change. Carbon offset projects help to tap the great potential for climate investment in developing countries and to close the funding gap.
Examples of carbon offset projects: international and regional
Carbon offset projects involve a wide range of technologies, from afforestation and clean drinking water projects through to microloans for energy-efficient products. Project technologies can be divided into four categories:
- nature-based solutions, such as forest protection
- renewable energy
- social impact, such as improved cookstoves.
- technical removal, such as direct air capture.
Most certified carbon offset projects are carried out in the global South, in order to promote new technologies, foster sustainable development and protect valuable tropical forests.
ClimatePartner also offers combined projects, pairing funding for international carbon offset projects with additional support for regional nature conservation projects. In this case, companies make a financial contribution to a certified carbon offset project, and for every tonne of CO₂ saved with that funding, a nature conservation project — in Europe, for example — is supported. Combined projects thus help to protect those parts of the world that are not covered by certified carbon offset projects.