What are carbon offsets, carbon neutral, and net zero?
Since we’re diving into clean energy this month at OneDey, we thought it might be helpful to dive into the large-scale corporate offsetting industry for a minute. It can be difficult to grasp all of the concepts, but it’s a great look into all the good that can be done ToDey for our environment if we all act together!
This article is reposted from Clearloop, check out their website for the original article here.
Now that we’ve talked about measuring a corporate carbon footprint, we’ll dive into the “so what”?
There are lots of claims out there that are meant to describe what an organization is doing to reduce their carbon footprint– but what do they mean and how are they different?
Once you measure the carbon footprint of something, you should always work to reduce it directly. However, after you’ve done everything you can–from efficiencies to using more sustainable, local products–you may have to look elsewhere to offset your entire carbon footprint. Offsetting one’s carbon footprint means to compensate for one’s emissions by funding a carbon-saving method somewhere else. In order to truly offset those emissions, a carbon offset must be additional, meaning that the carbon wouldn’t be avoided otherwise. Essentially, the money spent must go toward a project that would not be built and operated without the sale of offsets.
Carbon offsetting is a popular goal for many companies, yet while it sounds easy, the truth is that there are limited options for companies.
One way to offset your corporate carbon footprint is through planting trees. It’s visual, easy to understand, and chances are the average person has planted something in their life. Unfortunately, sometimes the carbon captured by trees can be hard to measure and ensure it is a permanent way to ensure the carbon doesn’t go back into the atmosphere.
Another way to offset carbon is through capturing and destroying a greenhouse gas that would otherwise escape into the atmosphere, such as funding a methane capture project at a landfill. Although burning the methane gas turns it into a less harmful greenhouse gas for the environment, this process still results in carbon dioxide being released into the air.
A company can also offset their carbon footprint by investing in other power sources, such as wind and solar energy. The idea is to decarbonize the grid so that we are not burning fossil fuels anymore, so that we are not creating the carbon emissions in the first place. While a company might still be using coal for their energy consumption, because of their investment in offsetting through solar and wind, those emissions are being avoided from the production of electricity.
Carbon Neutral or NetZero Carbon Emissions
Carbon neutrality is the idea that we need to have a complete balance between carbon emitted and carbon reduced.
Carbon offsets are one of the many tools companies can use to achieve a carbon neutral status. Whatever emissions you’re putting into the world, you’re taking an actionable step to “remove” all of them.
Companies that set out to be carbon neutral or have net-zero carbon emissions mean that they are accounting for the emissions they produce minus the emissions they extract directly from their own processes, as well as indirectly from another area not in their operational control (i.e. the carbon a tree absorbs or the carbon a clean energy project avoids).The ultimate goal is to have net-zero carbon emissions. If we do that, then we’ve reached neutrality.
These days, some major companies are committing to being carbon negative– meaning that they will go beyond taking responsibility for the footprint they create day to day–either by going back to offset all the emissions they’ve created since their founding (like in Microsoft’s case) or just taking responsibility for a greater amount–because these companies understand that we need to accelerate action to defeat climate change.
100% Renewable Energy
Another widely-used term, the idea behind 100% renewable energy is that everything a company does that requires electricity uses renewable energy sources. We still burn fossil fuels to generate electricity every day, so depending on where a company operates it may be easier or harder to plug into a clean energy source.
When it comes to renewable energy, the acronyms PPA and REC will often come up. PPAs (Power Purchase Agreements) and RECs (Renewable Energy Certificates) are the way in which a company can claim that it is using clean energy for it’s operations even if it is not directly plugging into a renewable energy project to power its business.
A PPA is a financial agreement between a large corporation and a solar power developer (such as our friends at Silicon Ranch), who will then handle all aspects of the project, from financing to actual installation. The developer sells the power generated to the host customer at a lower fixed rate than the local utility’s retail rate, offsetting the corporation’s purchase of electricity from the grid. These agreements usually get plenty of buzz because wealthy companies, such as Amazon, Google, or Facebook, can both afford the cost and have a strong enough credit rating to be able to sign a contract that promises to purchase that clean energy for the next 10 to 20 years.
Most recently, some smaller companies have been working with these large corporations to sign these long term contracts and be able to purchase clean power this way. Unfortunately for the vast majority of companies that can’t agree to purchase clean power for a set period of time, there are few other options that are as directly linked to the construction of a new project.
For example, a company can purchase “unbundled” RECs, which are generated from existing clean energy projects every time a megawatt hour of energy is produced as a way for a business to certify they are using clean energy. RECs were originally created as a market signal to show demand for renewable energy from companies. However, they don’t have a carbon reduction value attached to them. That means that a company consuming a megawatt hour of electricity in West Virginia may not be fully making up for its environmental impact if it’s buying a REC from a clean energy project creating that megawatt hour in Vermont, because the grid is not equally dirty across the country.
Although RECs provide important verification that a company is using clean energy from somewhere else to make up for its own electricity consumption, unbundled RECs may miss the goal of reducing the actual carbon emissions that a company’s electricity is generating.
It is well-understood that money used to purchase unbundled RECs doesn’t build new projects – instead they use renewable energy that is created through existing infrastructure.
If we aren’t building new renewable energy at scale, we can’t reach our goals to reduce the carbon footprint of the U.S. electric grid. That’s where Clearloop fits in as a tool to build more clean energy capacity in the places that need it the most to help more companies reduce their carbon footprint.
Bringing it All Together
Businesses of all sizes are finding new ways to reduce their carbon footprint every day. However, the increasing number of buzzwords and acronyms can make it hard to keep up and the efforts get confusing. When companies (or individuals) want to make a change and commit to a goal around their carbon footprint, it’s important to know the details and always ask HOW. We’re happy to do our part to dispel myths and make it easy to understand all these terms. After all, it will take all of us working together to slash greenhouse gases and defeat climate change.
Want to learn more about how to offset your carbon footprint and expand access to clean energy with Clearloop? Drop us a note at firstname.lastname@example.org or contact us here.