Does Carbon offset really work?

Green Finance Advisor of Friends of the Earth (HK)

To achieve good financial returns, all of us do researches and buy different products like equities, bonds, real estate etc. in order to achieve the objective. When it comes to decarbonization, it seems like we can also ‘buy a quota’ to offset our carbon footprint so we can meet our objective of ‘living low carbon’. So how does it work, or does it really work?

In all our daily lives, we will accumulate carbon footprint – from taking the train or driving a car to work, to turning on the heater to warm up our chilly homes during this cold winter, all these actions involve consumption of energy and thus creates carbon emissions.

To ‘offset’ these emissions, we can do ‘carbon offsets’ – i.e. putting investments into green energy projects to contribute to reduce carbon emission in power generation. One very common example is the carbon offset programs that are introduced by airlines whenever we purchase a plane ticket.

Does it really work? There are programs & standards around carbon offset and it is possible that the funds are being deployed into projects that will transform the energy industry.

However as we look deeper, carbon offset is one facet of decarbonization – it is the combination of ‘awareness’ + ‘quantification’ + ‘investment’ that is also the important message to take away. It takes all 3 components for decarbonization to be really meaningfully tackled. Other schemes such as carbon tax, or pledges to divest from fossil fuel / achieve carbon neutral all work around these components.

As consumers / retail investors, our collective efforts is going to make a difference, and we need to start putting our money where it matters


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