For organizations that prioritize decarbonization and environmental stewardship, carbon offsetting has been a popular tool to balance out emissions and elevate sustainability efforts.
A newer concept, however, gives companies a framework to pursue these goals internally. Carbon insetting helps companies consider their own structure and work climate considerations into the fabric of the supply chains they work with.
What is Carbon Insetting?
Carbon insetting suggests companies should mitigate their avoidable emissions before offsetting the unavoidable ones. This approach, the critical net zero strategy, takes a comprehensive view of how companies operate in modern supply chains.
An organization can take action within its own value chain, both upstream and downstream, to fight climate change. Inset emissions are directly avoided, reduced, or sequestered.
Carbon insetting also means investing in sustainable practices that prevent emissions from happening in the first place. Once an organization successfully avoids and sequesters carbon as normal practice, the next step is actively protecting biodiversity and restoring ecosystems.
Carbon Insets Vs. Carbon Offsets
Taken together, both carbon measures are powerful tools to mitigate emissions.
The key difference between carbon insets and offsets is the way an entity invests to reduce its carbon footprint. Carbon insetting focuses on projects related to a company’s products; carbon offsetting involves projects that are not related to a firm’s products.
Besides the environmental considerations, investing in carbon inset projects can help make a firm’s supply chain more resilient and improve the quality of its raw materials.
Carbon offsetting, on the other hand, lets organizations reduce their carbon footprint by paying money to another entity, reducing overall carbon emissions.
The focus of carbon offsets is on the tonnes of carbon avoided/removed, while the focus of carbon insets is creating carbon emissions reduction capacity.
Besides their characteristic differences, there are key technical differences when pursuing carbon insetting and offsetting.
Methodology and standards: a third party like a registry (Verra, Gold Standard) or rating agency (Sylvera) set the certification standard for carbon offsets. In carbon insets, many parties involved agree on the standard used.
Intended project purpose: carbon offset projects are for the voluntary carbon market. Whereas inset projects are for specific businesses’ supply chains.
Accounting requirements: offsets are a negation of emissions already dumped into the atmosphere so they must meet rigorous standards (fungibility, additionality, durability, etc.).
Overall, carbon inset represents indirect but embedded emissions reduction activities within a firm’s supply chain. Insetting activities include upstream (fuel and energy-related activities) and downstream (sold product processing).
Carbon offset represents direct but outsourced emissions reduction efforts. An entity buys an offset and outsources it to another entity that takes the project into effect.
Real-world Examples of Carbon Insetting
Carbon insets are relevant across a wide variety of industries. But they’re most significant in the food and agricultural supply chains due to these agriculture-specific conditions.
Ag regenerative practices exist for decarbonizing food supply chains with nature-based, scalable climate solutions. Decarbonization in this sector has a lower cost compared to new carbon removal technologies.
Readily available financial systems:
There are existing financial mechanisms already in place that incentivize farmers to adopt ag regenerative practices. It doesn’t need to put up new payment systems.
Agricultural soils are by far the world’s largest carbon sink.
Decarbonizing food supply chains also result in other positive impacts like biodiversity, improved water and air quality, and nutritious food.
There is no one solution for the climate challenges facing people, companies, and governments.