Glossary term

Offset or Offsetting

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Definition 1

Offset or Offsetting means buying carbon credits from a project that meets all of the following:

(a) that has been verified by [insert name of voluntary standard] or the United Nations Framework Convention on Climate Change (UNFCCC) clean development mechanism (CDM) [or successor UNFCCC mechanism]

(b) where the emissions of GHGs avoided, reduced or removed by the project are additional

(c) [that prioritises removing GHGs from the atmosphere rather than avoiding or reducing third party emissions of GHGs]

(d) that, for GHG removals, uses storage methods with a low risk of reversal over millennia

(e) that takes account of a just transition and addresses wider social and environmental goals.

Drafting notes and guidance

Contract writers may prefer to specify which voluntary or regulated market they want to purchase carbon credits from.

The credits that can be used under the EU Emissions Trading System are specified in articles 58-61 of the Fifth Registries Regulation (Commission Regulation (EU) No 389/2013) and Article 11a(8) of the EU ETS Linking Directive 2004 (Directive 2004/101/EC), which was replaced by the EU ETS Amending Directive 2009 (Directive 2009/29/EC).

Using this option would mean Emission Reduction Units from UNFCCC Joint Implementation projects would be permissible for use as offsets.

For information on how organisations can offset their Residual Emissions from emission reduction or removal projects within their value chain, see TCLP's glossary term Insetting.

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