I've been reading about climate targets for businesses lately, and I keep running into the same terms: carbon credits, carbon offsets, net zero. They're often used as if they mean the same thing, and I'm not sure they do.
Here is my current understanding. Please correct me if I've got any of it wrong.
A carbon credit is basically a certificate. One credit stands for one tonne of carbon dioxide that was either reduced or removed from the air. Companies can buy carbon credit certificates to balance emissions they can't avoid. When people say they want to off set carbon, this is usually what they mean. Carbon offset projects include things like planting forests, wind and solar farms, or capturing methane from waste.
Net zero is a bit different. As I understand it, it means cutting your emissions as much as you can first. Only what's left over gets balanced out with removals or offsets. So offsets are meant to be the last step, not a shortcut around real reductions.
The timelines also seem to vary by country. The EU and the US have talked about net zero emissions by 2050, while India has set its goal for net zero emissions by 2070. I'm curious how that difference affects businesses that work across borders, like exporters selling into Europe.
I also noticed that India has started its own compliance carbon market for heavy industries such as cement, aluminium and paper. From what I read, companies that beat their emissions targets can earn carbon credits and sell them to those that fall short. That seems very different from the voluntary credits that companies buy to support their sustainability claims. Are those two actually connected in any way?
The part I find hardest is quality. I've read that some offset projects don't deliver what they promise. Things like whether the reduction would have happened anyway, or whether the carbon stays stored long term, seem to matter a lot. How would a normal company even check that?
A few questions for anyone who knows more about this:
- Is my basic understanding of credits, offsets and net zero right?
- For a small or mid-sized business, where would you start: measuring emissions, cutting them, or looking at offsets?
- Has anyone worked with carbon credits directly and can say how the process actually goes?
I'd like to hear from anyone who has worked in this area or is just trying to understand it like me.