What Is Carbon Offsetting? Explained in 2 Minutes

Carbon offsetting will be a major point of tension at the COP26 climate summit in Glasgow. How does it work and who makes use of it?

Countries participating in the Paris Agreement will update their pledges at the United Nations Climate Change Conference in Scotland between October 31 and November 12. The agreement aims to substantially reduce greenhouse gas emissions to limit the global temperature increase to well below 2 degrees Celsius above pre-industrial levels.

Countries can become carbon neutral by limiting the amount of greenhouse gases they produce and by compensating the emissions that can’t be cut. The carbon offsetting market has become increasingly attractive for countries, companies and individuals, who finance projects that will either suck CO2 out of the atmosphere, or reduce the CO2 release. 

Compulsory versus voluntary compensation

In Switzerland, power stations and high-emission companies, such as cement or chemical producers, must participate in the EU emissions trading system. These companies receive or buy emission allowances and can trade them with one another. Medium-sized companies can join the scheme voluntarily.

Carbon offsetting is also available at the individual level. Many platforms – such as the UN Carbon offset platform or myclimate.ch – allow people to calculate their carbon footprint and choose to donate to reforestation or renewable energy projects, for example. 

Switzerland’s carbon offsetting pledge and actions

Switzerland aims to halve its emissions by 2030 and become climate-neutral by 2050. The government’s roadmap covers industry sectors, energy efficiency in buildings, and investments in CO2 reduction projects.

Switzerland failed to meet its intermediate goal of reducing emissions to 20% below 1990 levels: It only managed a 14% reduction by 2020. To fulfil obligations under the Paris Agreement, the Swiss government suggested a set of measures. The so-called “CO2 law” is one of them. It was put to a nationwide vote, but rejected in June 2021.

Switzerland has signed deals with Peru, Ghana, Senegal, Georgia, Dominica, and Vanuatu to offset its carbon emissions. Investments will fund biogas plants, solar panels, geothermal energy, and programs to increase energy efficiency in buildings and electrify public transport.