Carbon offsetting offers a viable solution for companies that want to compensate for their CO₂ emissions while supporting environmental sustainability. By implementing and adhering to strict standards, offset programs can significantly contribute to mitigating climate change and protecting biodiversity. However, companies should carefully consider whether offsets are a suitable option for them and which form to invest in. Offsets should only be considered when a company has no further means of reducing its carbon footprint. In this article, we provide an overview of different types of offsets, practical tips and recommendations for choosing the right provider, as well as examples of their impact.
Carbon offsetting is a method of compensating for greenhouse gas emissions through specific measures. This is relevant when a company has taken maximum steps to reduce its greenhouse gas emissions, for example, by reducing energy or fuel consumption, and can no longer achieve further reduction. At this point, the company can purchase offset credits and financially participate in an offset program. Offsets can thus represent an extension of the effort to reduce the company’s carbon footprint, or at least its compensation. “Compared to 2015, we have reduced electricity consumption by 14,521 MWh, saved 12,317 MWh of heat, and reduced greenhouse gas emissions by 33 tons. We have thus far reduced ČSOB Group’s operational footprint by more than 71%, but to achieve net carbon neutrality, we have been compensating for direct greenhouse gas emissions that cannot yet be eliminated through carbon offsets since 2021,” explains Tomáš Rucki, Facility Expert at ČSOB. “At the KBC Group level, we invest in projects certified according to the strictest standards. We aim to achieve complete neutrality without carbon offsets by 2040,” adds Rucki.
Offset programs are voluntary, unlike emissions allowances. However, before a company enters into them, it should primarily ask itself whether it has indeed done everything possible to reduce its carbon footprint.
Types of Offset Programs to Choose From
Offset programs often utilize nature-based solutions. These include forest offsets that support proper forest management and optimized planting. Other offset programs involve regenerative agriculture and soil health improvement. There are also offsets focused on CO₂ capture technology research and development, investment offsets oriented toward renewable energy sources, or offsets based on emissions trading.
Trees – the Foundation of Sequestration
Forest offset programs focus on capturing and storing carbon through afforestation, reforestation, and improved forest management. These include planting new trees on previously deforested land, land reclamation, and protecting existing forests from deforestation. Harvested Wood Products (HWP) programs support the use of wood as a sustainable material. Wood used in long-lasting products, such as furniture or construction materials, can sequester carbon over the long term, contributing to reducing atmospheric CO₂ emissions.
How to Track Carbon Capture in Wood Products?
According to HWP methodology, carbon sequestered in wood products can be monitored and quantified using three methods:
- The first is called the “Stock Change” method, which measures the annual change in the carbon stock in products on the market.
- The “Atmospheric Flow” method identifies and quantifies CO₂ flows between the atmosphere and wood products.
- The third method, the “Production Approach,” focuses on the carbon balance at the production site.
Below the Surface: Carbon Sequestration in Soil
Soil offset programs focus on carbon sequestration in soil through regenerative agriculture. Soil is an ideal storage solution due to plants’ and soil microorganisms’ natural ability to absorb CO₂ and store organic carbon. Plants use CO₂ during photosynthesis and convert it into organic matter, which becomes part of the soil through root exudates and the decomposition of organic residues.
Using healthy and biologically diverse soil for carbon sequestration has the potential to capture more than 4% of CO₂ emissions over a century. Optimizing agricultural practices could realistically store more than two gigatons of carbon annually. Soil offset projects thus not only contribute to reducing the carbon footprint but also improve ecosystem stability, soil quality, and fertility, which aligns with the EU’s soil health strategy planned for 2050.
Czech Companies Use Soil Offsets Sparingly, but Good Practice Examples Exist
Czech companies are still cautious about offsetting through soil carbon sequestration, explains Václav Kurel, CEO of Carboneg Group: “Many companies understand the importance of decarbonization but want to ensure they invest in projects that are sustainable and have a real impact. Companies actively supporting these initiatives are usually those progressive ones who understand that without removing carbon from the atmosphere, we won’t achieve climate goals.” According to Kurel, choosing offsets involving soil carbon sequestration makes sense for companies striving for broader ecological benefits, including improving biodiversity and sustainable food production.
Purely Czech projects are still few, possibly due to the relatively challenging certification process. “Besides our Carboneg program, which supports farmers transitioning to regenerative practices, I can mention Biouhel.cz and the MicroCHAR project led by Jan Káňa. The application of microchar in soil provides ‘eternal carbon’ and also develops the soil microbiome, thus helping to retain water and further accumulate carbon in the soil,” explains Kurel.
There are also examples of successful Czech-Slovak practices: In 2021, fifteen farmers joined a selected soil offset project, capturing 49,213 tons of carbon dioxide in soil over twelve months, equivalent to the annual emissions of a small town!
Regenerative agriculture projects work in close collaboration with farmers who apply regenerative practices in farming and are financially supported by offset credits.
Offsets Can Support Local Communities and Renewable Energy
Some offset programs support social projects aimed at improving the living conditions of local communities. These often include tree planting, biodiversity protection, and job creation. The advantage of these programs is not only the reduction of the carbon footprint but also a positive impact on the local economy and quality of life in the area.
Another major category of offset programs supports the use of renewable energy sources. These may include solar panel installations, wind farm construction, or the use of hydropower. Supporting these can help reduce CO₂ emissions and contribute to the transition to more sustainable energy systems.
7 Steps to Effective Offsetting
A functional and transparent offset program requires the maintenance of existing projects, optimized planting, and the integration of regenerative and sustainable practices. If you want to sponsor or join an offset program, we recommend obtaining detailed information from the program provider.
To register and validate an offset program, you should follow these steps. A company that has met the listed requirements can generally be considered transparent and compliant.
- Discussion of intent and offset type.
- Selection of the appropriate methodology (e.g., Golden Standard or Harvested Wood Products).
- Determination of the price per credit.
- Validation of the program by a third party to ensure long-term relevance and credibility.
- Offset registration by an independent authority (usually takes months and can be conducted in a hybrid online or in-person format).
- Long-term monitoring (at least 10–30 years for forests; carried out by both the offset program provider and the authorization entity).
- Periodic, repeated third-party verification (e.g., annually).
Impact of Carbon Offsets
Be sure to understand the benefits of the selected program! The calculation of the amount of CO₂ sequestered through offset programs varies depending on the type of project. In the case of tree planting, benefit estimates are based on the ability of trees to absorb carbon dioxide during photosynthesis. When implementing sustainable forest management, mathematical models estimate an increased CO₂ sequestration potential. For soil improvement projects, the sequestration rate is estimated based on increased soil organic matter content.
A well-managed offset program should ensure additionality, permanence, and exclusivity while avoiding significant social or environmental issues.
For example, one tree can sequester about 25 kg of CO₂ annually. Planting 230 trees per hectare can sequester more than 5 tons of CO₂ per year. However, if such a project deprives local residents of a significant portion of agricultural land that supports them, it will have a negative social impact. Likewise, the natural ecosystem may be disrupted. For example, intensive afforestation of areas historically without forests, where the offset program was poorly designed at the outset, does not respect local conditions and only pursues the benefit of carbon sequestration.
Commitment to Standards
Methodological inconsistencies, implementation issues, and socio-economic questions are current challenges that offset programs face despite their benefits. The goal of standardization efforts, such as ISO 14064, is to address these issues by providing methodology and guidelines for agricultural and forestry practices. “ISO 14064 sets rules for determining carbon footprint, ISO 14064-1 contains rules for determining organizational carbon footprint, ISO 14064-2 contains rules for determining product carbon footprint, and ISO 14064-3 sets rules for verification. It is thus relevant for companies interested in determining their own carbon footprint or that of their products. Related standards also include ISO 14040 and 14044,” explains Pavel Hrubý, lead auditor and inspector at TÜV SÜD Czech s.r.o. “To obtain certification, companies must submit their own carbon footprint calculation conducted according to the specified standard and have it verified, including input data, such as energy and fuel consumption, waste production, and emission factors used,” adds Hrubý.
Lea Svobodová
Author of the Article