Your Guide to Understanding Carbon Market Offset Project Types
Climate Protection & Air Quality

Your Guide to Understanding Carbon Market Offset Project Types

The voluntary carbon market (VCM) can be difficult to understand. Explained simply, it allows canceling out units of carbon emissions by funding a variety of green projects around the world.

These projects are specifically designed to reduce greenhouse gas (GHG) emissions. They are funded by purchasing units called “carbon offsets” that represent one metric ton of CO2 emissions. In theory, if you bought 10 carbon offsets, you would be removing 10 metric tons of CO2 from the atmosphere.

Before buying offsets, it is important to make certain you select ones offered by reputable organizations that exercise due diligence and properly verify the impact of projects.

The most well-known of these organizations include Gold Standard, Verra, Natural Capital Partners, and Plan Vivo Foundation among others.

For a complete explanation of the voluntary carbon market, check out our previous article.

Read: How businesses and individuals can offset their carbon footprint through the voluntary carbon market.

In this article, we’ll take a look at the different types of carbon offset projects. We will also go over some real-life examples.

To keep things simple, there are two main types of carbon offset projects:

  • Projects aimed at avoiding emissions.
  • Projects aimed at removing emissions.
carbon offsets avoid emissions

Avoiding emissions

Projects under this category reduce GHG emissions through resource management and the use of clean energy sources. Here are some examples.

Renewable energy projects

Generally, these projects generate energy with solar, wind, or hydro sites. Investing in them increases renewable energy on electric grids and decreases reliance on fossil fuels.

One project from Gold Standard sells offsets that fund a wind farm project in Madhya Pradesh, India. The wind farm consists of 67 wind turbine generators and produces 180 GWh of clean electricity annually. This output is equivalent to powering 42,000 households every year, according to their website.

Another Gold Standard certified renewable energy offset comes from a mini-hydro power plant in Sri Lanka that generates up to 20,000 MWh of clean electricity annually, resulting in 13,500 tons of CO2 emissions reductions.

Community projects

These help communities with sustainability and introduce energy-efficient solutions and technology.

My Climate funds electric and hybrid buses in Switzerland that it claims to reduce CO2 emissions by 1,500 tons annually. The project focuses on replacing diesel buses, which remain the first choice in the local market. They note that switching to cleaner public transportation solutions is difficult due to high investment costs and a lack of experience with alternative technologies.

In Eritrea, a project supported by Ecologi, distributed about 8,000 fuel-efficient stoves to households in rural areas, which traditionally relied on burning wood and charcoal. Traditional cooking methods account for 2 to 5 percent of annual GHG emissions worldwide. The stoves also reduce the demand for wood, thereby reducing local deforestation.

Waste to energy conversion

In Chile, a project listed in Gold Standard’s registry involves collecting and utilizing landfill gas (LFG) from a landfill near Santiago city to generate electricity that serves more than 1.2 million people in the area.

“The implementation of this project will both prevent environmentally damaging methane from being released into the atmosphere, and export renewable electricity to the grid, displacing electricity generated primarily from fossil fuels,” according to Ecologi.

carbon offset programs that remove emissions

Removing emissions

Projects falling under this category remove GHG through reforestation and tree planting, or by carbon capture and storage (CCS) and direct air capture (DAC). Here are some examples.

Forestry and conservation

Mangroves have long been known as one of the most carbon-dense forest ecosystems that sequester large amounts of CO2 from the atmosphere. An award-winning offset project listed in Plan Vivo’s registry involves mangrove conservation, restoration, and reforestation in Kenya’s Gazi Bay.

The Rarakau project in New Zealand protects 738 hectares of indigenous rainforest. It focuses on helping the local community to “change forest land-use from logging to ecosystem-protection.” Through improved land management and agricultural techniques, the project aims to remove CO2 from the atmosphere and improve biodiversity.

Carbon capture and storage/direct air capture

Switzerland-based Climeworks engages in carbon capture activities and offers carbon offsets in the VCM through their facility in Iceland. While the money they collect goes towards operational costs associated with their projects, they are a for-profit company.

“After capturing CO2, Climeworks injects the CO2 deep underground into geological formations where the CO2 reacts with the minerals around it and forms solid materials,” non-profit Giving Green notes on their website. “This is considered the safest way to store CO2 as it is extremely unlikely to leak back into the atmosphere.”

How can I buy carbon offsets?

Some certification organizations allow you to invest in offset programs directly through their websites. Those interested in funding other projects can usually find direct-purchase methods via project providers or other certification bodies.

However, a much more common way for consumers to purchase offsets is when bundled with another product or service. An example of this is airlines that offer purchasing carbon offsets as part of a flight package. Some retailers even offer offsets when check-out during online shopping.

What is the impact of offset programs?

The effects of carbon offsets depend highly on the trustworthiness of the programs. Selecting a properly vetted program from a reputable certification organization is critical to achieving the desired CO2 mitigation.

To quantify the reduction of GHG emissions, a baseline should be determined to represent what would have happened if that project had not existed. Conducting due diligence before investing is the best way to assure the offset you choose is meaningful.

What do you think of carbon offsets?

While carbon offsets are growing in popularity, some believe it is not a direct substitute for cutting emissions and distracts from real solutions for protecting against climate change. Furthermore, some companies purchase carbon offsets to cover for their unsustainable behavior in a practice known as greenwashing.

However, others advocate that offset projects are generating an increasing flow of funds for sustainability around the globe and are creating greater awareness of personal carbon footprints.

Would you pay more for a flight to offset the emissions generated by your trip? Do you think funding certified programs effectively addresses global warming?

We at FUSO GreenLab want to know what you think! We  are keenly looking into carbon offset solutions for the automotive industry. Drop us a comment below ⬇️


Share your thoughts

Comments (2)

  1. Maddie Schulz

    Jun 11, 2022 at 22:47

    This was very informative. I finally understand carbon offsets. Thanks!

  2. Maddie Schulz

    Jun 11, 2022 at 22:48

    This was very informative. I finally understand carbon offsets. Thanks!


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