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Carbon Offsets Explained

Carbon Offsets Explained

Reducing global emissions, enhancing livelihoods and protecting the planet.

At South Pole we see climate change as a puzzle, as with any puzzle there are multiple pieces that fit together in order to complete the picture.

Reducing emissions and decarbonising economies is urgently required, however time is running out and the technology to do so is not always available. That's where carbon credits come in.

Companies and individuals can account for their unavoidable emissions by buying carbon credits from certified activities that support community development, protect ecosystems or install efficient technology to reduce or remove emissions from the atmosphere. Read on to find out more!

Frequently asked questions

Why should the levels of carbon and greenhouse gases in the atmosphere be reduced?

Scientists at the IPCC have shown that increased levels of GHG in the atmosphere are warming the planet. This creates extreme weather changes around the world. Currently, burning fossil fuels - coal, oil and gas – is the main driver of increased GHG levels.

Under the banner of the UN and Paris Agreement, the world's countries have come together to declare that urgent action must be taken to lower emissions if we are to maintain a habitable planet that can support the world's population.

The latest research emphasises that urgent action must be taken by everyone in order to safeguard some of the most vulnerable ecosystems and communities on the planet.

Why invest in protecting the climate?

The current pledges and actions are falling short and the window to keep climate change in check is shrinking. We need to increase ambition and mobilise climate finance to lower greenhouse gas emissions drastically to reach internationally ratified targets such as the Paris Agreement and the Sustainable Development Goals (SDGs).

Beyond the moral drivers, it is becoming imperative for businesses to take action in order to continue their operations, for example building resilient supply chains and mitigating financial risks, or maintaining consumer trust. Moving capital towards climate-smart solutions opens doors to many opportunities and can be a long-term growth driver.

What are carbon credits and how do they work?

Carbon credits are measurable, verifiable emission reductions from certified climate action projects.These projects reduce, remove or avoid greenhouse gas (GHG) emissions. But they also bring a whole host of other positive benefits, for example, they empower communities, protect ecosystems, restore forests or reduce reliance on fossil fuels.

Projects must adhere to a rigorous set of criteria to pass verification by third-party agencies and a review by a panel of experts at a leading carbon offset standard like Verra or Gold Standard.

After an organisation or an individual buys a carbon credit, the credit is permanently retired so it can't be reused.


What makes a good climate action project?

The key is in the detail.

High-quality carbon credits adhere to a strict set of standards. You can check this by ensuring the projects you invest in are registered with a third-party internationally-recognised verification standard, such as the Gold Standard, Verra's Verified Carbon Standard (VCS), Social Carbon and Climate, Community and Biodiversity Standards (CCBS), or standards verified by the UNFCCC.

These standards also highlight additional benefits beyond carbon – all South Pole projects contribute to at least 3 of the UN's Sustainable Development Goals. This could be improving health, creating better education opportunities, improving wildlife conservation or even building sustainable communities.

How do I know that the emission reductions are actually happening?

The ICROA-approved verification standards all South Pole-related projects adhere to ensure that the project is real, verified, permanent and additional.

For transparency, carbon credits are assigned serial numbers and are issued, transferred and permanently retired in publicly accessible emission registries.

What does additionality mean?

This can often be the trickiest part of carbon offsetting to understand, but theoretically it's simple.

Additionality means that the reductions in emissions achieved by the project must be “above business as usual". That means they would not have happened unless the project was implemented.

By purchasing carbon credits you are directly funding climate action and sustainable development, today.

Does it matter where in the world the project is located?

Rising CO2 levels is an international problem; there are no borders in the atmosphere. So, it does not matter where the project you are buying carbon credits from is located.

Many of our projects operate in less economically developed countries, as there we are often able to create a bigger impact for the local community thanks to co-benefits and extra activities.

For example, the Kariba project achieves its primary aim of protecting a vast expanse of forest on the shores of Lake Kariba through improving local livelihoods with training opportunities, alternative income streams and access to safe water and healthcare.

What are the different types of climate action projects?

Projects reduce or remove the amount of greenhouse gas in the atmosphere in at least one of three ways.

  • The first avoids greenhouse gas emissions, for example replacing fossil fuel-derived energy with energy from renewable sources.
  • The second removes emissions from the atmosphere, for example, planting more trees, which sequester - or capture - carbon from the atmosphere and store it in liquid or solid form.
  • The third captures and destroys emissions, for example capturing methane–a GHG many times more potent than carbon dioxide–from wastewater.

South Pole has hundreds of different types of climate action projects, which cover the following areas:

Nature-based-solutions

including: reforestation, land restoration, forest protection, sustainable land management and agriculture.

Nature-based-solutions

  • Kariba forest protection, Zimbabwe
  • Mamize nature reserve, China
  • Afognak forest carbon, USA
  • Restoration of degraded lands, Colombia

See our nature-based solutions in action!

Renewable energy

including: Hydropower projects, wind projects, solar power and geothermal.

Renewable energy projects

  • Aura Solar, Mexico
  • Salavatli geothermal energy, Turkey
  • Mytrah wind power, India
  • Musi river hydro, Indonesia

See our renewable energy projects in action!

Community projects

including: improved cookstove technology, access to safe water.

Carbon offset

  • Energy efficiency for women empowerment, Nepal
  • Access to Clean Water for Better Health, Cambodia

See our community projects in action!

Waste-to-energy

– including: biogas from landfill and industry and biomass.

Waste-to-energy

  • Everbright Landfill Gas, China
  • Biogas for greener farms, Switzerland

See our waste-to-energy projects in action!

You can see a selection of South Pole's climate protection projects here.

How do carbon removal and avoidance projects differ?

Carbon removal projects, like the name suggests, remove carbon from the atmosphere. Broadly speaking, they are split into 2 categories: natural carbon removals, like tree planting which sequesters carbon as the trees grow, and technological carbon removals, for example, direct air capture. Find out more about our carbon removals solutions here.

Carbon avoidance projects contribute to climate action by preventing carbon that would have been released into the atmosphere. This could be building a wind farm to lower reliance on fossil fuels, repairing boreholes to replace the need for purifying water by boiling it on open fires and preventing deforestation.

Which project type should a company support?

In the short-term, emitting and then removing carbon from the atmosphere creates greater uncertainty and risk than simply avoiding its release in the first place.

Financing avoidance today is crucial in the transition phase towards net zero emissions because it accelerates global reductions, it serves climate justice, it protects our existing carbon sinks such as forests and with them, biodiversity, and it avoids emissions of very potent GHGs such as methane that have short-term.

In short, reducing emissions and supporting projects that avoid emissions from entering the atmosphere must continue full throttle if we are to avoid catastrophic climate change.

In the coming decades, carbon removals will grow in importance as we get closer to both public and private net zero targets. Once we reach net zero, all new residual emissions must be neutralized with carbon removals.

Companies have started investing in carbon removal technologies today so they can be scaled in the future. However, this must not delay or impact urgent efforts to decarbonise nor the systemic changes needed for a future that is socially-just and environmentally sustainable.

Why do prices of carbon credits vary?

There are a number of reasons prices of carbon credits vary, for instance:

  • - the value projects deliver beyond carbon, for example some projects empower women or have direct impacts on people's lives;
  • - varying implementation costs depending on the size and location of a project;
  • - similarly some types of technology are more expensive than others;
  • - carbon pricing regulations can affect prices in the voluntary carbon markets too;
  • - finally, prices are driven to a large extent by supply and demand.

What impact does buying carbon credits have?

South Pole believes that carbon credits play a critical role in achieving global climate goals and supporting a just transition. Compensating unavoidable emissions through carbon projects:

  • catalyses faster climate action,
  • puts a price on carbon,
  • attracts funding to eligible and deserving projects,
  • develops and scales solutions that dramatically reduce emissions and facilitate sustainable development,
  • and allows companies to do something (rather than nothing) on their way to net zero.

Carbon credits certified under ICROA-approved standards ensures that emission reductions achieved by carbon projects adhere to the highest quality principles and processes. This guarantees transparency, accountability, and the impact of carbon finance.

But carbon credits should never prioritise emissions reductions, but be part of a holistic and ambitious climate strategy.

How can carbon credits support a company's overall climate strategy?

Investing in carbon credits is often a necessary step for achieving goals and commitments.

Carbon credits fund vital planet-saving activities and direct finance to areas that most need it and reduce emissions, right now. However, they are not a quick fix or license to continue practices that damage the environment.

Businesses must take a holistic approach and develop a broad sustainability strategy to guide their climate journey and embed it into all parts of their business.

Read about our approach to high-impact climate action.

What is South Pole's role in the carbon market?

For 15 years, South Pole has been engaged in carbon markets. Our expertise spans stakeholder management, advising on emission reduction activities and preparing technical documentation for a project to generate carbon credits under the leading global carbon standards.

Through our global network, we connect certified projects run by our local partners with climate conscious organisations looking to tackle their carbon footprint.

Our project implementation partners include NGOs, Indigenous community groups, landowners and private organisations who need carbon finance to fund their planet-saving activities.

If a client invests into a South Pole project, where does the money go?

Of the final sales revenue, a substantial portion goes directly to the project so it can implement the climate protecting activities.

A smaller portion is paid for the registration and regular auditing process, carbon registry fees, and South Pole's own time and investment. All of these steps are crucial in ensuring the integrity of carbon credits and in helping the project owner access carbon finance.

Our team both develops and retails carbon credits. This means that most of our carbon credits are sourced directly from the project, rather than via brokers. This cuts out the middle-men so the maximum amount of investment goes directly into the project activities.

What impact has South Pole created through climate action projects?

As one of the largest global project developers, we have developed over 700 climate action projects in renewables, forestry, agriculture, industry, households and public institutions, spanning the globe.

With our clients' support we have positively affected over 20 million people around the globe, saved over 100 million tonnes of CO2, enabled the production of more than 140,000 GWh of renewable energy, protected or restored over 55,000 km2 of land and helped create nearly 100,000 jobs in developing countries! Find out more here.

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Carbon Credits

Align climate and sustainability action with brand and business.

Andrea Rumiz, Director Key Accounts
Now you know the score, what climate action are you taking?