Carbon Offset Sources

Carbon offsets are grouped into these categories (ref:

1. Renewable Energy

Renewable energy offsets commonly include wind, solar, hydroelectric, ground-source heat pumps, geothermal, and biofuel. Some of these offsets are used to reduce the cost differential between renewable and conventional energy production, increasing the commercial viability of a choice to use renewable energy sources.

2. Methane Collection and Combustion

Some offset projects consist of the combustion or containment of methane generated by farm animals (by use of an anaerobic digester), landfills, or other industrial waste. Methane has a Global Warming Potential (GWP) 23 times that of CO2. When combusted, each molecule of methane is converted to one molecule of CO2, thus reducing the global warming effect by 96%. In 2000, the largest pork company in Chile initiated a voluntary process of advanced waste management systems (anaerobic and aerobic digestion of hog manure) to reduce greenhouse gas (GHG) emissions.

3. Energy Efficiency

While carbon offsets which fund renewable energy projects help lower the carbon intensity of energy supply, energy conservation reduces the overall demand for energy. Carbon offsets in this category fund cogeneration plants (generate electricity and heat from the same power source); fuel efficiency projects (replace a combustion device with one using less fuel per unit of energy provided); and energy-efficient buildings (reduce energy wasted through efficient heating, cooling or lighting).

4. Destruction of Industrial Pollutants

Industrial pollutants such as hydrofluorocarbons (HFCs) and perfluorocarbons (PFCs) have a GWP thousands of times greater than CO2. Since these pollutants are easily captured and destroyed at their source, they present a large and low-cost source of carbon offsets.  HFCs, PFCs, and N2O reductions represent 71% of offsets issued under the Clean Development Mechanism (CDM).

5. Land Use Change and Forestry

Land use, land-use change and forestry projects focus on natural carbon sinks such as forests and soil. Deforestation accounts for about 20% of GHG emissions. Deforestation can be avoided by providing substitutes for forest-based products. Carbon offsets provide a mechanism for funding from developed nations to help protect native forests in developing nations. However, offset projects that rely on storing carbon like tree planting or agricultural sequestration can release their stored carbon back into the atmosphere if the trees are killed by fire, disease or logging, thereby cancelling the climate benefit associated with the offset and rendering it worthless. Although the potential climate benefits of land use change and forestry are significant, they are difficult to certify as carbon offsets.

6. Fuel Switching

Fuel switching projects involve substituting a cleaner fuel that emits less CO2 for another fuel, such as substituting natural gas for coal to generate electricity, or using biomass for heating. This category typically applies to large scale power generation, industrial and commercial processes.