Carbon Compensation

Created by James Robertson, Modified on Thu, 8 Aug at 11:44 AM by Daniel Earle

What is a carbon offset?

A carbon offset is a one-to-one investment in projects that sequester or prevent greenhouse gases from being emitted. Often used synonymously with “carbon credit,” which is the purchase of an offset. Carbon credits are typically calculated in terms of one metric ton of carbon emissions or their equivalent in other greenhouse gases.

Is “carbon compensation” the same thing as an “offset”?

There is a range in quality when it comes to carbon projects, and to explicitly distinguish this, Scope3 has opted for the use of “compensation” when referencing the high-quality portfolio. The term “offset” can carry a negative connotation and association with low-quality, cheap projects. Scope3’s efforts focus on contributing to high quality removal projects and setting a premium price point on carbon that incentivizes reduction first and foremost.

Where does Scope3’s portfolio of carbon removal projects come from?

Scope3 has partnered with Carbon Direct to manage a carbon removal project portfolio. Carbon Direct manages millions of tonnes of CO2 and is distinguished by its science-first approach and focus on quality. With over 30 of the world’s leading carbon scientists, Carbon Direct has a critical understanding of the risks and opportunities of all carbon technologies.

What makes up Scope3’s curated project portfolio?

Scope3’s portfolio comprises high-quality carbon removal projects ranging from reforestation to biochar. The projects consider quality, durability, and project diversity and align to the Scope3 set average cost of carbon of $100 per metric tonne.

Why is the portfolio comprised of carbon removal projects?

According to the IPCC’s 2022 Mitigation of Climate Change report, carbon removal is essential for meeting global climate goals. While other projects, such as energy efficiency and renewable energy, are necessary and important, they focus on preventing future emissions rather than removing carbon that is already in the atmosphere.

What distinguishes a high-quality project from a low-quality one?

Carbon Direct’s team has developed seven principles for high-quality carbon removal. Criteria for high-quality projects include:

The project removes carbon that would otherwise not be removed without purchase or payment.
The project quantifies net carbon removal with verifiable methods.
The project assesses the risk of negative impacts on communities.
The project fosters the inclusion of communities and improves environmental quality.
The project has a low risk of re-releasing stored carbon into the atmosphere.
The project limits the displacement of emissions from one project site to another.
The project develops a plan for long-term monitoring.

How does the portfolio work?

A GMP seller can choose to offer compensation as part of their GMP offering. When they do so, a GMP seller pays their monthly invoice to Scope3, they are purchasing a “slice” of Scope3’s curated project portfolio that is proportional to the total measured emissions from a GMP. Scope3 will provide certificates of retirement and purchase attestation forms to the GMP seller for the active portfolio projects accordingly. Credit retirement status is tracked, and reporting is provided by Scope3 to the seller monthly. TIST project credits are also searchable in the Verra registry. The initial portfolio will be replenished and updated over time to supply demand.

What are the benefits of Scope3’s pre-curated portfolio?

Scope3 has reserved all credits through purchase in advance with the pre-curated portfolio. There are many perks to compensating for carbon through Scope3’s portfolio:

Ease of activation: Relieve the burden and cost of managing this process in-house.
No minimum: High-quality carbon removal projects often require minimums. Like any portfolio manager, Scope3 allots credits at any volume to GMP sellers.
Quality assurance: Scope3’s independent position — not a media buyer or seller — ensures there are no shortcuts when purchasing carbon credits. We rely on the scientists at Carbon Direct for their expertise and project vetting.
Transparency: Reporting is provided at the project level for close tracking.
Project diversity: The dynamic portfolio allows for simultaneous access to projects with different retirement timelines and geographic regions. We believe it is important to contribute to the research of cutting-edge projects while also contributing to projects where carbon dioxide can be immediately stored.

Can GMP buyers or sellers use their own offsetting companies?

Not for a Scope3 GMP. We will gladly take recommendations for potential future partnerships but are committed to our high-quality standards.