Editorial comment
Carbon offsetting is a global climate strategy that promises to compensate for carbon dioxide emissions by participation in schemes designed to make equivalent reductions of carbon dioxide in the atmosphere. The question is, can you plant your way to net zero?
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At its core, carbon offsetting is a balancing act wherein if you emit a ton of carbon dioxide, you pay someone else to remove or avoid that ton elsewhere. It doesn’t erase the original emission, but it compensates for it, at least on paper.
Offsets fall into two broad categories. Avoidance (or reduction) offsets prevent emissions that would otherwise have happened, for example, funding a renewable energy project that replaces a coal-fired plant, or protecting a forest from deforestation. Removal offsets go a step further by actively drawing carbon out of the atmosphere, using nature-based methods such as afforestation or soil carbon sequestration, or technical solutions like direct air capture and carbon mineralisation.
In a recent opinion piece, Wood Mackenzie forecasted that the carbon offset market is heading for a boom, set to become a US$150+ billion industry by 2050.1 Analysis from the ‘Carbon Offset Market Outlook’ forecasts that offsets will play an increasingly important role in a ‘slower-than-hoped energy transition’, and that “rising offset quality [will] support growing offset demand which will exceed supply by the 2040s and surge towards 3 billion t of carbon dioxide equivalent (tCO2e) by 2050”.
The report envisages that offset demand will be fuelled by hard-to-abate sectors such as energy. As these sectors struggle to decarbonise, companies will increase offset purchases as an interim solution. Pipelines sit in the middle of an incredibly emissions-intensive value chain and many operators face significant Scope 3 emissions from upstream suppliers and downstream users of transported hydrocarbons. These are notoriously difficult to reduce directly. Carbon offsets therefore offer a practical and, until relatively recently, affordable way to demonstrate climate ambition, balance out residual emissions, and remain competitive in a world increasingly focused on ESG performance. Offsetting buys time, certainly, but how much time (and how credible the purchase) is up for debate.
Wood Mackenzie argues that the carbon offset market is growing and transforming, because developers and buyers are seeking offsets with greater credibility: demanding tighter methodologies, stronger third-party oversight and more robust environmental integrity. Premium, high-quality credits are increasingly in demand. Better monitoring and new compliance regimes are also playing their part in raising standards.
But let’s imagine trying to erase your carbon footprint with trees, only to discover that you’d need a forest larger that North and Central America combined. That’s the message handed to fossil fuel companies in a new study by ESSEC Business School, that casts doubt on carbon offsetting as a cure-all for emissions.2
For many pipeline operators, offsets can act as a bridge while more substantial decarbonisation measures gain traction, but the era of ‘offset and forget’ is over. The credibility of offset strategies is under rising scrutiny from regulators, investors, and from the public, who are increasingly knowledgeable about what real climate action looks like.
A strong carbon strategy for the pipeline sector must go further than offsets. That includes investing in methane leak detection and repair, electrification of pumping stations, optimised route planning, and support and readiness for lower carbon fuels and infrastructure.
- www.woodmac.com/news/opinion/forecasting-carbon-offset-use-to-2050-what-you-need-to-know
- www.newscientist.com/article/2485015-offsetting-global-fossil-fuel-stores-by-planting-trees-is-impossible
