How your organization can use carbon removals: Principles for aligning to net zero

We’re at a tipping point in how we handle climate change. We can no longer rely on reducing emissions to reach global net zero goals. We need to actively remove carbon.  

 

This means thinking — and acting — differently. New technologies that remove carbon from the atmosphere permanently play a key part. But how should they be incorporated into a high-quality carbon credit portfolio?  

 

This article is an excerpt from A way forward: Building a high-integrity and diverse carbon credit portfolio. Click here to download the guide in full, for free.


A best practice approach to carbon offsetting 

 

The Oxford Offsetting Principles provide a recognized framework for building a diverse portfolio that incorporates carbon dioxide removal (CDR) credits, and other credits and tactics, to help guide the delivery of net zero commitment. The principles promote high-integrity strategies to properly guide offsetting efforts and ensure there’s real climate benefit. When done properly, that means goodbye to greenwashing 

 

 

 


Why build a diverse portfolio? 

Let’s first consider the need to create a diverse carbon portfolio. From emission reductions to nature-based, engineered and hybrid removal solutions, there are many types of carbon credits available.  

Balancing a selection of different carbon credits within a diverse portfolio ensures long-term sustainability, helps mitigate various risks, and signals a commitment to holistic and scientifically grounded climate action. Purchasing widely also creates a broad set of co-benefits — from positively affecting nature and communities to supporting innovation and the development of new markets as technology progresses. 

Nine reasons to build balance, resilience and credibility into your organization’s portfolio

Using the Oxford Offsetting Principles 

 

Revised in 2024, the Oxford Principles for Net Zero Aligned Carbon Offsetting1 were created to help organizations understand the evolving carbon markets and offsetting practices to achieve net zero commitments. Rather than suggesting what to invest in specifically, these principles explore how to weight a portfolio over time. 

 

Emphasizing the need to scale up carbon removal 

The revised principles focus on a shift from avoidance, reductions and “short-term storage” of carbon to “long-term storage,” such as permanently storing CO2 in geological reservoirs or mineralizing carbon into stable forms. Hard-to-abate sectors including aviation, steelmaking and manufacturing may struggle to completely avoid fossil carbon, making a decarbonization pathway that includes carbon removals a necessity.² This also takes into account that reducing emissions can only take us so far — the amount of historic carbon already in the atmosphere is at dangerous levels.  


A diverse portfolio that encourages the growth of emerging technologies — such as bioenergy with carbon capture and storage (BECCS) — supports the increase of carbon removal with the lowest risk of reversal (i.e. releasing greenhouse gases back into the atmosphere) to help move us toward our net zero ambitions.  

 

A net zero-aligned offsetting portfolio using the Oxford Offsetting Principles (1)

An overview of the four principles  

 

Principle one: Cut emissions, ensure the environmental integrity of credits used to achieve net zero and regularly revise your offsetting strategy as best practice evolves. 

 

This principle highlights the continued urgency to reduce emissions from within your own supply and value chains. Though not enough on their own, these measures will still form the core component of a credible net zero strategy. Like all decisions your organization makes, integrity is key when selecting carbon credits for a portfolio. This means confirming they’re accurately measured, reported, verified and accounted for — paying close attention to the risk of double counting — and that the emission reduction or carbon removal did in fact happen. Alongside integrity is the need for transparency. Tracking your credits closely will enable you to disclose current emissions, accounting and verification practices, and show transition plans and progress against targets. 

 

Principle two: Transition to carbon removal offsetting for any residual emissions by the global net zero target date. 

 

Credits associated with reducing or avoiding emissions play a short-term role in accelerating the transition to a low-carbon economy. However, to achieve net zero emissions, you need credits that remove carbon from the atmosphere to counterbalance residual and historic emissions. It is important to design your portfolio to reflect the 2050 timescale and to gradually transition to 100% of purchases being on carbon removal projects. It is also important to look for high-quality carbon removal, for example a methodology that applies the principles of conservativeness, in order to ensure the integrity of your carbon credit portfolio.  

 

Principle three: Shift to removals with durable storage (low risk of reversal) to compensate for residual emissions by the net zero target date. 

 

Though all carbon removals need to be stored, not all methods are equal — with some having a higher risk of reversal and shorter permanence than others. These include afforestation and ecosystem restoration, though they do deliver biodiversity and adaptation co-benefits. Credits with moderate risk of reversal, such as certain nature-based removals, are valuable in the short and middle term, but credits with low risk of reversal and high, long-term durability, like BECCS and direct air capture and storage (DACS), are needed to achieve and maintain a net zero balance — and even potentially achieve net negative emissions. 

 

Check out our infographic on comparing credit types here. 

 

Principle four: Support the development of innovative and integrated approaches to achieving net zero. 

 

The current market for durable, high-quality CDRs will need to expand significantly if we’re to achieve net zero by 2050. There are a variety of credible options available for carbon storage, but these need to scale further with incentives that encourage take up to increase availability and grow the market. Investing in CDR technologies early will create demand, which in turn will drive supply to accelerate its development. The Oxford Offsetting Principles include the following ways to be an early adopter to support this critical CDR market. 

Ways that organizations can support the emerging CDR market

Snapshot of a high-quality strategy in action 

 

In 2020, Microsoft announced its commitment to go beyond carbon neutrality and to be carbon negative by 2030 — acknowledging that “while the world will need to reach net zero, those of us who can afford to move faster and go further should do so.” And Microsoft plans to go beyond even carbon negativity, pledging to remove all the carbon it has emitted since 1975 either directly or through electricity consumption by 2050. 

 

To cut carbon emissions by more than half by 2030, Microsoft designed a program that would aggressively cut direct emissions as well as those from across the entire supply and value chain. The below diagram demonstrates the shift Microsoft has planned to achieve carbon negativity by 2030 — transitioning from avoided emissions offsets to leveraging carbon removal in order to work toward its goals more effectively. (3) 

Currently, Microsoft is a major player in the carbon markets, leading in purchase volume by a staggering amount.

Click here to read A way forward: Building a high-integrity and diverse carbon credit portfolio in full, for free. 


Sources

 

  1. The Oxford Offsetting Principles | Smith School of Enterprise and the Environment 
  2. Decarbonizing hard-to-abate sectors with renewables: Perspectives for the G7 (irena.org) 
  3. Microsoft will be carbon negative by 2030 — The Official Microsoft Blog  


Cautionary statement 

This communication contains both historical and forward-looking statements. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements may include expectations related to targets, goals or objectives such as financed emissions targets, representation objectives and the achievement thereof, may be deemed “forward-looking statements.” These statements are not historical facts or statements of current conditions, but instead are based on management’s current expectations and are subject to uncertainty and changes in circumstances. These statements are not guarantees of future results or occurrences and involve certain known and unknown risks, uncertainties and assumptions that are difficult to predict and are often beyond our control. In addition, this communication contains statements based on hypothetical scenarios and assumptions, which may not occur or differ significantly from actual events, and these statements should not necessarily be viewed as being representative of current or actual risk or forecasts of expected risk. Actual results and financial conditions may differ materially from those included in these statements due to a variety of factors, including, among others, global socio-demographic and economic trends; energy prices; technological innovations; climate-related conditions and weather events; counterparty and client behavior and financial health; insurance applicability, legislative and regulatory changes; our ability to retain and attract qualified employees in a competitive environment for talent; and other unforeseen events or conditions, and the precautionary statements included in this document. Certain forward-looking statements referenced in this communication are also based on assumptions, standards, metrics, methodologies and frameworks for measurement, reporting and analysis of climate change that continue to evolve, vary across jurisdictions and regulatory bodies and are the subject of proposed regulatory changes in multiple jurisdictions, which may have a material impact on our future measurement and reporting, as well as the results of the efforts set forth in this communication. There is no assurance that goals or targets stated in this document (including interim targets) will be achieved or result in positive measurable outcomes. Information contained in this document, including commitments, goals, targets and objectives, and their related frameworks, methodologies or approaches, are subject to change without notice.