At the moment, natural carbon removal solutions, such as forestry, dominate the carbon removal market and at a relatively low cost. However, these projects are also most vulnerable to climate- and human-related disruptions that could cause the carbon to be released back into the atmosphere. It is essential that businesses fully assess nature-based solutions, ensuring sound ecological design of reforestation projects.

Microsoft suggest incorporating the Kew 10 Golden Rules for Restoring Forests, which include protecting existing forest first, working with local people, and using natural forest regeneration wherever possible. They encourage corporate buyers to continue supporting these nature-based solutions, highlighting their contribution to decreasing peak warming and building local resilience to climate change impacts.

Finally, they recommend opting for projects that advance environmental justice, sustainable livelihoods and climate goals. 

High-durability offsets are solutions that sequester carbon for thousands of years, including biomass approaches with geologic storage, direct air capture, and mineralisation. These offsetting approaches are less at risk of reversal when compared to natural solutions, but they are also in short supply and are unaffordable for many businesses.

Microsoft advises corporate buyers to pursue multiyear purchase agreements, similar to renewable energy power purchase agreements, to accelerate mainstream high-durability offset supply. 

The recently published report, "Long-Term Carbon Offset Outlook 2022" from research firm BloombergNEF, predicts that if the current issues with the carbon credit market, such as the existence of low-quality and avoidance-based credits, prices will be driven down and mistrust and criticism surrounding offsetting will worsen. However, if the market is restricted to high-quality offsets that remove, store and sequester carbon, it is likely that there will be insufficient supply to meet the high demand.

The BloombergNEF report predicts that in this scenario, carbon offset prices could increase fifty-fold by 2050. The uncertainty around the cost of offsetting highlights the importance of prioritising carbon reduction. The fewer carbon emissions a business produces, the fewer it will need to offset. The Science Based Targets initiative’s new Net Zero Standard explains how residual emissions should be offset once long-term science-based emission reduction targets have been achieved. 

The Taskforce on Scaling Voluntary Carbon Markets (TSVCM) has recently announced the development of a new Governance Body on Voluntary Carbon Markets. The Governance Body is designed to deliver high-integrity carbon credits, traded in robust, transparent and equitable markets. They plan to develop a Core Carbon Principle (CCP) threshold standard to assess carbon credits, and hope to catalyse the market, promoting funding availability and ease of access.

The Governance Body consists of industry experts and academics bringing best practice knowledge from a range of perspectives to address the challenges currently complicating the carbon offsetting process. 

Businesses should look to plan their offsetting strategies with a focus on credibility, integrity, transparency and their wider sustainability goals, while striving for steep emission reductions in the near-term.

For expert guidance and assistance planning and implementing carbon reduction and offsetting strategies, visit our Net Zero service page.