Explainer: Carbon offsets and carbon neutral


Contributed by Ray Wilson, Chief Executive, Carbon Neutral.

CitySwitch signatories are typically cutting their own direct greenhouse gas emissions, water use, and waste production – and are always on the lookout for more ways to get those metrics trending down.

Most businesses can easily find cost-effective ways to reduce energy use and trim their energy bills by 10 to 30 per cent, lowering their climate impact in the process. But it is nearly impossible to reduce all the carbon emissions we are responsible for in business. For example, we can reduce emissions by taking fewer flights, but may not be able to cut flights completely.

Carbon offsetting means paying for greenhouse gas reductions to be made elsewhere, such as via reforestation, wind farms and hydro-electricity.   It is possible to account for all emissions sources and purchase enough offsets to balance what’s left after (direct reduction efforts).  This makes the net emissions zero or the business is ‘carbon neutral’.


Carbon offsetting is a market-based mechanism. The unit of currency in this market is one metric tonne of carbon dioxide equivalent (CO2-e).  Purchasing a one tonne (verified) carbon offset means there will be one less tonne of carbon dioxide (or an equivalent greenhouse gas) in the atmosphere than there otherwise would have been.

Carbon offsetting and carbon neutrality have become powerful and credible choices for companies that are looking to make considerable reductions in their carbon footprint. Voluntary carbon offset purchases allow companies to take responsibility for their own climate impact. It can also:

  • reduce energy costs by adopting a carbon reduction program
  • provide a reliable way for businesses to factor carbon into the costs of goods and projects
  • demonstrate Corporate Social Responsibility policy, business plans and strategies
  • help meet environmental procurement requirements
  • make companies a preferred supplier when environmental management matters to customers
  • enhance branding and increase engagement with stakeholders
  • increase staff motivation and be an employer of choice
  • be a way to just do the right thing.

Going carbon neutral

Carbon neutrality can cover an entire organisation’s activities or be applied to one part, such as its head office, fleet of cars, a product, an event or air travel.  To claim ‘carbon neutrality’ a business needs to demonstrate that it has firstly properly calculated its greenhouse gas emissions and then offset them all. Easy-to-use carbon calculators are available on a number of good carbon offsetting websites, including Carbon Neutral's own calculator.

Carbon offset projects can sequester (remove), reduce, or avoid greenhouse gases from entering the atmosphere. For example, wind farms create renewable energy and can reduce the need for coal burning generators, which create greenhouse gas. Reforestation stores carbon dioxide in the trees’ woody biomass (stems, roots and branches). Other typical offset projects are solar farms, small hydroelectric dams, biogas, methane avoidance, landfill gas capture, and efficient cook stoves in developing countries which burn far less wood in thousands of homes.

What to look for when buying carbon credits

Organisations who choose to buy credits from projects like these are undertaking voluntary offsetting.

To make sure your choice has the most impact, it is important to seek high quality carbon credits that are issued in compliance with trusted certification schemes and standards.


With certifications, offsets meet crucial criteria, including:

  • additionality (the emissions reduction would not have occurred without the project),
  • permanence (the project permanently delivers the claimed emission reduction),
  • independently verified,
  • have unique ownership, and
  • be listed on a publicly transparent registry

International and Australian-accredited carbon offsets have been through a certification process by complying with one (of a number) of voluntary standards, including:

  • Gold Standard: selling Voluntary Emission Reductions (VERs)
  • Carbon Farming Initiative: selling Australian Carbon Credit Units (ACCUs) and the
  • Verified Carbon Standard: selling Verified Carbon Units (VCUs).

Many offset projects also deliver additional improvements, or co-benefits, such as employment and better quality of life for local communities.  For example, the co-benefits of reforestation offset projects   include improved soil quality by reducing water and wind erosion, lowering salinisation, and re-establishing habitats for native flora and fauna.

Case study: Taylors Wines

Third generation family owned wine company, Taylors Wines, was the first winery in the world to have a range of its wines made 100 per cent carbon neutral based on an ISO 14044 compliant life cycle assessment. To get there, Taylors measured everything from the inputs in the vineyard, through to grape growing, picking, winemaking and bottling, (including the carbon footprint of the glass and glass furnaces used to melt the glass), shipping and electricity used in a retail store and the energy needed to recycle the glass after consumption.  The assessment was done together the Australian Wine Research Institute to meet ISO 14044’s rigorous demands.

Taylors soon adopted best practice principles in sustainable business activities to improve energy efficiency, water conservation and packaging. They switched to lighter-weight glass bottles with a 15 percent lower carbon footprint, introduced energy efficient winery tank refrigeration based on ammonia and put more insulation in the cellars so the winery could more effectively control temperature. 

Neil Hadley MW, Export Manager at Taylors says these initiatives all contribute to shrinking the total environmental footprint. “We are then left with a residual (unavoidable) carbon footprint, and so we purchase carbon offsets from Carbon Neutral”.

After they achieved carbon neutrality, Taylor’s won a valuable tender with the Swedish retailer, Systembolaget for their Eighty Acres 100 per cent carbon neutral shiraz and chardonnay wines.

Research found that wine consumers in Sweden had around a 30 per cent greater propensity to purchase products with ethical credentials. Hadley says that Australians may be less driven by ethical decisions than the Swedes at the point of purchase, however new research is indicating that a change could be on the way due to a growing awareness of ethical considerations, particularly carbon neutrality.


Case study: Psaros

Psaros, an international award winning property developer and member of CitySwitch and is committed to sustainable urban apartment developments.  

The Psaros Property Group (PPG) is committed to reducing the environmental impact of their business in 2013. The organisation undertook a first carbon footprint of their head office and identified various measures to reduce these operational carbon emissions. They purchased carbon offsets to reduce their footprint to zero. PPG is now the first mid-tier developer in Western Australia to operate a carbon neutral head office. PPG has since committed to measuring and managing their carbon footprint annually and in 2014 undertook a second carbon footprint assessment and offsetting project.

Read the full Psaros case study >


Psaros accept the 2014 CitySwitch New Signatory of the Year Award for Western Australia

Psaros accept the 2014 CitySwitch New Signatory of the Year Award for Western Australia


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