![]() These factors greatly inhibit the scalability of forest carbon offset programs. forest offsets has been difficult for timberland owners because it has required (a) very large tracts of land-thousands of acres at least-to create enough credits to justify the process (b) 50- to 100-year commitments not to harvest and (c) the money to pay significant transaction costs, both to create the credits and for on-the-ground project monitoring over decades. Historically, creating carbon credits through U.S. Yet, while the demand for carbon offsets has never been greater, the supply side faces hurdles in generating enough high-quality timber and agricultural offsets to satisfy demand. Typically, each carbon credit represents one metric ton of CO2 (or its equivalent in other GHGs) kept out of the atmosphere. For a fee, the landowner makes a legally binding commitment to defer or modify its activities for some period of time. To date, timber and agricultural landowners generate most carbon offsets by deferring or modifying the harvest of trees or the disturbance of soil so as to sequester more carbon. ![]() Recent reports suggest that over 450 large companies have pledged to go net zero or carbon neutral by 2050 or earlier, and these companies account for annual revenues of more than US$16 trillion per year. But as private companies take on far-reaching net zero or neutrality commitments, they are likely to become the major driver of demand for offsets. In the early years of voluntary carbon offset markets, demand was driven by public institutions such as the World Bank. What Are Carbon Offsets?Ĭarbon offsets are not new, but have quickly gained popularity (and scrutiny) around the world as the consequences of climate change become more apparent. To that end, voluntary carbon offset transactions are an increasingly popular alternative, allowing a company to indirectly reduce its climate impact. Many energy-intensive industries like airlines, manufacturers, and tech firms have tremendous 24/7 electricity and capacity demands that currently cannot be met with only renewable resources. ![]() But the methods available today cannot eliminate most emissions. Companies looking to reduce their climate impacts and greenhouse gas (GHG) emissions use a variety of tools to do so: buying renewable electricity (especially solar and wind) improving the efficiency of energy-hungry infrastructure and generally trying to lower the "carbon footprint" associated with the goods and services that their employees use each day. ![]()
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