Oxford researchers launch updated carbon offsetting principles

The vast majority of current offsetting approaches are not getting us any closer to net zero emissions, and trust in the concept of “offsetting” has been so badly damaged that some organisations are moving away from using the term at all, This update clarifies the core Principles and provides much-needed guidance for companies, cities, and other non-state actors to develop offsetting strategies that are genuinely aligned with achieving net zero by 2050 or sooner.

 

Injy Johnstone, Research Associate at the Oxford Sustainable Finance Group in the Smith School of Enterprise and the Environment.

The revised ‘Oxford Offsetting Principles’ provide clarifications to the original text based on the latest science, call for a major course-correction in carbon markets and offsetting practices, and outline how offsetting needs to be approached to help achieve a net zero society.

Co-author Professor Nick Eyre from Zero-carbon Energy Research Oxford (ZERO) says: 'The revised Principles emphasise the importance of reducing emissions, consistent with recent global agreements to scale up the use of renewable energy and energy efficiency in the transition away from fossil fuels. For organisations seeking to meet a net zero standard, this should be their priority.'

The Principles are:  

1. Cut emissions as a priority, ensure the environmental integrity of credits, and regularly revise as best practice evolves  
2. Transition to carbon removal offsetting for any residual emissions (away from emissions avoidance or reduction) by the global net zero target date
3. Shift to removals with durable storage and low risk of reversal    
4. Support the development of innovative and integrated approaches to achieving net zero 

The updates further highlight the urgency of emission reductions and the need to scale up carbon removal, as well as the critical role of nature-based solutions. They also clarify durability risks and offer insights into the co-benefits and challenges of different carbon removal approaches, and call for mitigation efforts beyond organisational net zero targets.

The offset market has gone from boom to bust, and to boom to bust again. The next phase, starting now, needs to be more sustainable and sensible. Offset markets will be vital to reaching net zero, especially in the final stages. Offsets must not merely let polluters off the hook; these updated principles help clarify what is required.

 

Co-author Cameron Hepburn, Battcock Professor of Environmental Economics, Smith School of Enterprise and the Environment.

‘The revised Principles are designed to correct some critical carbon market failures,’ says Kaya Axelsson, co-author and Head of Policy and Partnerships at Oxford Net Zero. ‘One little-known fact is that hardly any of the carbon market removes and stores carbon at all. Currently, the majority of carbon credits are for avoided emissions, and these are often over-credited or have trouble proving that they had an impact beyond what would have happened anyway.’  

‘A key update to the Principles acknowledges the variety of credible options available for carbon storage,’ adds Audrey Wagner, co-author from the Department of Biology. ‘For instance, while storing carbon underground in geological reservoirs is thought to have low risk of reversal, high integrity nature-based approaches – that respect local rights and support biodiversity – can also store carbon for centuries across a range of ecosystems. But given the multiple benefits of nature-based solutions beyond carbon removal and storage, including building resilience to climate change impacts, it makes sense to invest in them even when they carry a moderate risk of reversal in the short to medium term.’

‘Another key clarification in the revised Principles is that high-quality avoided emission offsets still have a crucial role to play in the short to medium term, and typically offer many co-benefits,’ adds Dr Alison Smith, co-author from the Environmental Change Institute.  ‘For example, avoiding loss of existing forest with irreplaceable biodiversity value and huge carbon stocks is far preferable to planting new trees. It is vital to support well-verified ecosystem protection projects in the run-up to the global net zero date, even though after that date they cannot be used for offsetting.’

The voluntary carbon market is trapped in a crisis of its own making, with severe consequences for people and planet alike. But make no mistake: high-integrity financing for climate action is possible, as long as it's based on rigorous science and conservative assumptions. We hope the Oxford Principles will be a first step toward righting the ship.

 

Co-author Stephen Lezak, Smith School of Enterprise and the Environment.

While the Principles provide a useful framework for offsetting strategies based on the latest science and evidence, regulation is now urgently needed, say the authors. Governments, standard setters and others must deploy them, to steer the market away from low-quality credits and low-integrity offsetting strategies.   

‘The demand for and supply of high-quality offsets is far too immature. Adopting the Oxford Offsetting Principles will help to attract investment into carbon removal projects that have a low risk of reversal, as well as durability over the long term. This is a necessary condition for achieving global net zero and the aims of the Paris Agreement,’ says Dr Ben Caldecott, co-author and Director of the Oxford Sustainable Finance Group. ‘Realism is required though. We will never be able to scale enough high-quality carbon removals to offset like-for-like currently avoidable fossil fuel emissions. The use of finite carbon removals needs to be preserved for hard-to-abate emissions and then bringing us back to safe levels after we almost certainly overshoot 1.5 degrees, and not sustaining existing fossil fuel interests.’

Co-author Dr Eli Mitchell-Larson, a research associate at Oxford Net Zero and the Environmental Change Institute, said: 'Carbon credits are just one means of financing emission reductions and removals, and by no means the best tool for each situation. Leaving the fate of our natural world, and the scale-up of crucial carbon removal methods, to the whims of voluntary corporate donations is a recipe for disaster. In the three years since we launched the Principles much of corporate offsetting has remained low-integrity, triggering the EU’s complete ban on net zero product claims in response to perceived greenwashing. We have an opportunity to refocus attention towards embedding climate action into policy and rule-setting, and we hope the revised Principles will encourage governments to issue binding rules on what claims corporates can and cannot make, using which carbon credits.'

The Oxford Principles for Net Zero Aligned Carbon Offsetting (revised 2024) were devised through collaboration with experts across the University of Oxford. They incorporate expertise from the Blavatnik School of Government, Environmental Change Institute, Nature-based Solutions Initiative, Oxford Martin School, Oxford Sustainable Finance Group, Saïd Business School, School of Geography and the Environment, and the Smith School of Enterprise and the Environment.

The revised Oxford Offsetting Principles can be read online. For more information, watch the Oxford Offsetting Principles launch webinar.