Top 5 common misconceptions about how to use the Oxford Offsetting Principles
Since 2020, we have seen uptake of the Oxford Offsetting Principles by a wide range of actors. The 2024 revision of these Principles has been designed to provide further insights and updates to assist with their operationalisation. The revised Principles also present an opportunity to help users avoid common pitfalls in applying the Principles and establishing and maintaining a net zero aligned strategy:
Users picking and choosing which of the Principles to apply
Net zero alignment depends on applying the Principles as a complete package. Some actors may claim alignment to the Principles having followed only the environmental integrity and transparency guidance of Principle One, whilst neglecting Principles Two through Four. Others may be investing in carbon removal in line with Principle Two but failing to ensure these removals have a lower risk of reversal (in line with Principle Three). At the same time, offsetting strategies cannot be developed in isolation, users of these Principles must also engage in a more integrated and comprehensive market development role outlined in Principle Four to help build a net zero aligned carbon market.
Users claiming net zero alignment before they should be
Very few actors can credibly say they have already achieved net zero. For this reason, claims of net zero that rely on carbon credits should be given careful thought and adhere fully to the latest international guidance and standards. There is also a need to acknowledge the limitations in such claims, to ensure that climate mitigation is not overstated and to avoid misleading consumers. Organisations should not claim net zero until only the hardest-to-abate emissions remain and these are balanced with high integrity durable removals or abated. The Principles help users to get on the path to net zero by informing a rigorous offsetting strategy but they do not serve as a verifiable net zero standard. We have updated the Principles with reference to the latest international net zero guidance and standards to which users should also refer in the design of their specific net zero strategies.
Users Interpreting the Taxonomy in a descriptive rather than prescriptive manner
The Oxford Net Zero Aligned Carbon Offsetting Principles provide a taxonomy that highlights the distinction between different categories of carbon mitigation projects, including carbon removal and storage options, while prescribing a shift towards durable storage with low risk of reversal. However, some actors claim to use or align to the Oxford Offsetting Principles merely by showing they have a range of these approaches in their portfolio. This is not correct. The taxonomy is not used to simply encourage diversification in offsetting-related projects, but instead to facilitate the transition from the current status quo of offsetting portfolios (composed mostly of low-integrity projects) towards one fully composed of high-integrity removals with a low risk of reversal.
Users not applying the Mitigation Hierarchy correctly
The Oxford Offsetting Principles emphasise the widely held mitigation hierarchy, that any net zero strategy should prioritise emissions reductions within the value chain. Any type of offsetting, including net zero aligned offsetting, must start here, and be continually revised in line with best practice and sectoral guidance, especially as new technology offers emissions reduction opportunities in previously hard-to-abate sectors. At the same time, the mitigation hierarchy is often interpreted as a sequential principle in which organisations must ‘first’ reduce emissions ‘then’ remove and store carbon. However, waiting to invest in and help scale removal capacity might put organisations in a compromising position if they envisage having residual emissions at the net zero target date. The revised Principles clarify that if an organisation anticipates needing to rely on significant volumes of carbon removal in the future to meet net zero, it should start investing now to scale removal and storage capacity.
Users failing to manage for the risk of reversal
Many actors will want to claim net zero once they have removed equivalent tons of emissions to their residual emissions. However, offsetting with removals is rarely a zero sum game: in most removal and storage approaches there are risks of reversals of removals. While these risks themselves cannot be fully resolved, there are many strategies available to mitigate the risks of net zero alignment including emerging insurance options, and the strategy of investing in additional forms of beyond value-chain mitigation over and above that required to meet your net zero claim. A strategy to not only meet but also maintain a net zero balance will outline ways to mitigate the risk of reversal of stored carbon.
Want to know more about how to apply the Oxford Offsetting Principles? Consider applying for the brand new Oxford Programme on Net-Zero Aligned Offsetting happening late 2024 and register for the Smith School newsletter for further insights.
