We need carbon offsetting, and we need to do it properly. This is where the Oxford Principles for Net Zero Aligned Carbon Offsetting – known as the Oxford Offsetting Principles for short – come in.

Previously, best practice was to focus cutting emissions by 80-90%. Only once these long-term decarbonisation targets have been met, could a business offset the final 10% to claim net zero status. But this has shifted. Now best practice is to prioritise decarbonisation, while offsetting any residual emissions leftover each year.

So how can businesses use offsetting without greenwashing?

What are the Oxford
Offsetting Principles?

Climate change is a multifaceted problem, and so we require a multifaceted solution. Decarbonisation is one of these critical levers, and net-zero-aligned carbon offsetting is another.

Revised earlier this year, the Oxford Offsetting Principles are the four principles a business can use to build science-backed carbon credit portfolios. The Principles were devised through collaboration with experts across the University of Oxford.

Not only will these principles help a company offset its residual emissions, but will simultaneously scale essential carbon removal technologies, and protect and restore ecosystems and communities. All while accelerating our shared, global net zero goal.

Principle 1: Cut emissions, use high quality offsets, and regularly revise strategy as best practice evolves

Without rapid decarbonisation, there is no net zero. Businesses must measure, and reduce their direct and indirect CO2e emissions, first. By rapidly decarbonising value chains, businesses reduce the quantity of carbon offsets needed to neutralise residual emissions, allowing for tighter budgets.

While they decarbonise, residual emissions should be offset with only high quality carbon credits. And all this should be done with complete transparency – from disclosing current emissions, verification of net zero transition plans, to the selection process of the carbon credits.

Learn about Lune’s transparent, quality over quantity approach to vetting carbon credits.

Principle 2: Shift to carbon removal offsetting

There are two types of carbon offsets: emissions avoidance and carbon removal. A business's decarbonisation strategy identifies emissions that cannot be eliminated, such as the embodied carbon in steel production. Based on this, the Principles recommend establishing a minimum target for carbon removal offsets. For instance, if a steel manufacturer determines that 300tCO2e of emissions are irreducible, their offsetting portfolio should aim to include at least 300tCO2e of permanent carbon removal.

However, since permanent carbon removal technologies are nascent, making offsets expensive and unaffordable. Yet, permanent carbon removal essential for reaching and maintaining net zero. To meet demand, it needs scaling by 1000x. And as we’ve seen with renewable energy, when technologies scale, the price drops.

Which is why the Oxford Offsetting principles state businesses should increase the proportion of carbon removal in their offsetting portfolio overtime, and aim to reach 100% carbon removal by 2050. While the steel manufacturer cannot afford to offset 300tCO2e using carbon removal today, it must be able to by 2050.

Principle 3: Shift to removals with durable storage

Net zero is forever. We can’t afford for GHG emissions to be re-released into the atmosphere. Which is why we need to fund offsets that store carbon with a low risk of reversal.

All offsets store carbon differently. For example, mineralisation provides stores carbon in a stable form, permanently removing it for centuries. Whereas, reforestation projects could store carbon for decades, but only if future generations look after it.

Again, to reach net zero we need to scale technologies that enable long-lived storage. Which means buyers can continue to fund high quality climate projects with a moderate risk of reversal in the short- to medium-term, but must increase the portion of long-lived offsets overtime. The goal should be funding 100% carbon removal with low risk of reversal by 2050.

Principle 4: Support the development of net zero aligned offsetting

The main takeaway from the Oxford Offsetting Principles is by 2050 we should only be deploying permanent carbon removal. But these technologies are immature and in need of early adopters to support its growth.

Businesses can do this by:

• Creating long-term purchase agreements that give project developers access to the capital needed to scale operations
• Form sector-specific alliances to develop market demand
• Support ecosystem protection and restoration projects with strong co-benefits that remove CO2e
• Publicise support for using the Oxford Offsetting Principles
• Go beyond offsetting residual emissions by funding additional projects (also known as beyond value chain mitigation)

How to align offset purchases with the Oxford Offsetting Principles

The aim of the Oxford Offsetting Principles are clear: shift offsetting towards permanent and durable carbon removal by the net zero target date. However, the authors acknowledge that this shift cannot happen overnight. Right now, it’s not feasible to most voluntary carbon buyers due to availability and cost.

We need to balance future permanent and durable carbon removal with immediate climate action. Many Direct Air Capture facilities are still being built, but there are plenty of established ecosystems that need protecting and restoring.

What does a net zero aligned offset portfolio look like?

The Principles suggest businesses should start building a portfolio with a blend of offsets (emissions avoidance and carbon removal, short-lived and long-lived storage), and shift towards more permanent and durable credits as the market develops overtime.

The revised Principles below demonstrate how businesses can use a portfolio approach to build diverse credit portfolios that maximise climate impact while accelerating global net zero goals. Not only supporting the transition to a low carbon economy, but towards a climate positive future.

Building science-backed carbon credit portfolio with Lune

At Lune, we’re committed to delivering positive climate impact with peace of mind. Which is why we want to make it as easy as possible for businesses to build science-backed carbon credit portfolios.

With just a few clicks, Lune customers can access pre-built portfolios that align with the Oxford Offsetting Principles. These diverse portfolios blend the five types of offsets outlined by the principles in a way that maximises climate impact and accelerates global net zero goals in line with your budget.

Finnish art and licensing business firm Moomin, for instance, wanted to ensure their offsets were high-impact and even better value for money. They didn’t have the internal expertise in offsetting to know how to best approach this. Discovering the Oxford Offsetting Principles offered them a framework to effectively support net zero goals.

Moomin takes a contribution-led approach to carbon offsetting, setting a monetary budget of 100,000€ per year and buying carbon credits with it, regardless of how many tonnes it buys. And by working with Lune as a trusted partner for carbon offsetting they could use a pre-built Oxford Offsetting Principles portfolio to do just that.

Via Lune's dashboard or API you can select a portfolio that aligns with the Oxford Offsetting Principles with just one click. In this way you maximise climate impact today (principles 1, 2, & 3) and support the development of the market for cutting-edge innovation (principles 4).

Plus, by working with us you access messaging frameworks, templates, and best practices to communicate your actions – so you’ll also be spreading the word with customers, employees, stakeholders, and others in your industry (principle 4). It’s win-win!

To learn more about how you can build science-backed carbon credit portfolios with Lune, request a demo today.