Definition
The process of compensating for greenhouse gas (GHG) emissions by funding projects that remove or prevent an equivalent amount of CO₂ from being released into the atmosphere. Carbon offsetting helps individuals, businesses, and governments achieve Net ZeroEmissions or reduce their overall climate impact.
Why It Matters
- Enables companies and individuals to balance unavoidable emissions while transitioning to low-carbon operations.
- Supports the development of renewable energy, reforestation, and carbon removal technologies, accelerating global decarbonization.
- Plays a role in regulatory compliance, as governments and carbon markets increasingly require companies to offset their emissions.
Types of Carbon Offsets
- Nature-Based Offsets: Investments in forestry, mangrove restoration, or soil carbon sequestration that absorb CO₂ from the atmosphere.
- Technology-Based Offsets: Support for direct air capture (DAC) and carbon capture and storage (CCS) technologies.
- Renewable Energy Offsets: Funding for solar, wind, and hydropower projects that replace fossil fuel energy sources.
How Carbon Offsetting Works
- Measure Emissions: Calculate carbon footprint using Scope 1, 2, and 3 emissions data.
- Reduce Emissions Where Possible: Implement energy efficiency, clean energy adoption, and low-carbon supply chains.
- Offset Remaining Emissions: Purchase carbon credits from verified offset projects to compensate for unavoidable emissions.
Example: Singapore’s International Carbon Credit Framework
Singapore has established eligibility criteria for international carbon credits under its carbon tax regime, allowing businesses to offset up to 5% of their taxable emissions using high-quality international carbon credits. The framework aims to:
- Ensure credibility by allowing only credits from Paris Agreement-compliant projects.
- Encourage corporate participation in high-integrity carbon markets.
- Support Singapore’s Net Zero goal by 2050 through a structured offset system.
Read More: NEA Singapore – International Carbon Credit Framework
Further Reading
