Emissions offsetting

Emissions offsetting is the practice of balancing the greenhouse gas (GHG) emissions generated by an activity by funding projects that reduce or remove an equivalent amount of emissions elsewhere. It is a key, but secondary, tool in the management of the carbon footprint: it should complement, never replace, direct reductions.

What is emissions offsetting?

If an organisation emits one tonne of carbon dioxide and cannot yet eliminate it, it can fund a project that avoids or removes one tonne elsewhere, for example reforestation, renewable energy or energy efficiency in underserved communities. This is increasingly complemented by durable carbon removals. Each tonne is represented by a carbon credit.

How emissions offsetting works

1. Calculate the carbon footprint: measure emissions across Scope 1, Scope 2 and Scope 3, usually following the GHG Protocol.
2. Reduce first: prioritise real emission cuts before offsetting any residual.
3. Select credible projects: choose projects certified under recognised standards such as the Verified Carbon Standard (VCS) or the Gold Standard.
4. Verification and monitoring: independent auditing ensures reductions are real, additional, measurable and permanent, and that they are not double counted.
5. Retire carbon credits: each credit represents one tonne of CO2 equivalent and is retired once used.

Integrity of the voluntary carbon market

The voluntary carbon market has faced strong criticism over the real impact of some projects. To address this, the Integrity Council for the Voluntary Carbon Market (ICVCM) published the Core Carbon Principles (CCPs) in 2024, a set of ten science-based principles that define high-integrity carbon credits and have become the de facto quality benchmark. Buyers increasingly require CCP-labelled credits, prioritise removals over avoidance, and demand transparency on additionality and permanence.

Why offsetting matters in climate action

Offsetting plays a role in the transition to a low-carbon economy. Reaching the goals of the Paris Agreement, limiting warming to well below 2 degrees Celsius and pursuing 1.5 degrees Celsius, requires deep emission cuts plus the neutralisation of residual emissions that cannot yet be eliminated. Article 6 of the Paris Agreement provides the framework for international cooperation and the transfer of mitigation outcomes between countries. Well-designed projects can also channel finance and co-benefits to communities that lack resources for climate solutions.

Standards and frameworks

• Kyoto Protocol: introduced the Clean Development Mechanism for emission reduction projects in developing countries.
• Paris Agreement (Article 6): enables cooperative approaches and market mechanisms.
• Voluntary standards: the Gold Standard and VCS, increasingly aligned with the ICVCM Core Carbon Principles.

In Spain, MITECO operates a registry of carbon footprint, offsetting and CO2 removal projects that gives companies official recognition for their offset actions.

Challenges and criticism

• Greenwashing: offsetting must not become a substitute for cutting emissions. The EU Empowering Consumers Directive (Directive (EU) 2024/825), applicable from 27 September 2026, restricts generic 'climate neutral' claims based solely on offsetting.
• Quality and transparency: not all projects deliver real, additional and permanent reductions, which is what the Core Carbon Principles aim to fix.
• Over-reliance: offsetting should complement decarbonization, supporting goals such as carbon neutrality and net zero.

Used responsibly, emissions offsetting is a useful complement to a credible reduction strategy. At Manglai we help companies measure their carbon footprint, prioritise real reductions and prepare their sustainability reporting. Discover how Manglai can help you.