What are carbon offsets? How do they contribute to the fight against climate change? And should your company be investing in them?

Top 5 Carbon Offset Projects

In today's world, increasingly focused on environmental responsibility, carbon offsetting is seen as a useful strategy for both individuals and organizations who want to reduce their carbon footprint. This strategy involves a commitment to projects specifically designed to reduce or eliminate carbon emissions, helping to create a greener future.

With an ever-expanding carbon offset market, the initiatives are increasingly diverse and impactful, ranging from reforestation efforts to advanced renewable energy technologies. Join us as we explore the top five carbon offset projects that are not only leading the charge in ecological preservation but are also reshaping our approach to sustainable living.

First up, let's define what the term 'carbon offset' actually means. In a nutshell, a carbon offset is a way to compensate for emissions by funding an equivalent carbon dioxide saving elsewhere. 

It's a method used by individuals and businesses to balance out their carbon footprints. This involves investing in environmental projects around the world that reduce future emissions or absorb carbon dioxide already in the atmosphere. These projects can range from renewable energy initiatives to reforestation efforts. The goal is to create a net zero carbon footprint by offsetting the amount of carbon dioxide (or carbon dioxide equivalent) one produces with an equal amount of reduction or removal elsewhere. 

Learn more about carbon offsets in our blog.

A carbon offset credit represents an emission reduction of 1 metric ton of carbon dioxide. The goal of carbon offsetting is to reduce all or a portion of a carbon footprint. They are typically used in regulatory or compliance markets, where governments or regulatory bodies set a cap on the amount of carbon dioxide that can be emitted. Companies are allocated or can purchase a certain number of credits, each representing the right to emit a specific amount of carbon dioxide. If a company emits less than its allowance, it can sell its excess credits to another company that is over its limit. 

Find out more about carbon credits in our dedicated article. 

On the other hand, a carbon offset more broadly refers to a reduction in greenhouse gas (GHG) emissions – or an increase in carbon storage – that is used to compensate for emissions that occur elsewhere. Carbon offsets are more commonly associated with the voluntary carbon market. Individuals or companies purchase offsets to mitigate their own carbon emissions, often as part of their sustainability goals. 

While both mechanisms aim to reduce overall carbon emissions, carbon credits are often part of a mandatory, regulated system, whereas carbon offsets are typically voluntary actions taken to achieve carbon neutrality or positive environmental impact.

This short explainer video by SOS Ecological explains what Carbon Offsetting is. You may have heard of a 'Carbon Footprint', or 'Climate Change' but what exactly is Carbon Offsetting and how can it help the environment?

What is Carbon Offsetting?

The principle of carbon offsetting lies in the idea of balancing out greenhouse gas emissions by funding projects that reduce or remove an equivalent amount of carbon from the atmosphere. The process begins with the measurement of the amount of carbon emissions produced by an individual or an organization. Once this carbon footprint is quantified, the equivalent amount of emissions can be offset through various environmental projects.

These projects might include renewable energy initiatives like wind or solar power, reforestation efforts, or even investing in technology that captures carbon directly from the air. The key is that for every ton of carbon emitted, an equivalent ton must be removed or prevented elsewhere. This approach allows individuals and companies to take responsibility for their environmental impact in a proactive manner, while also helping to reduce global emissions.

By investing in these carbon offset credits, not only do you compensate for your own emissions, but you also support sustainable practices and innovations that contribute to a broader environmental benefit. 

While carbon offsetting is a valuable tool in the fight against climate change, it's important to remember it complements, rather than replaces, the need for direct emission reductions.

To learn more about how carbon offsetting and removal works why not read our article. 

Does carbon offsetting reduce carbon emissions? 

The role of carbon offsetting in reducing carbon emissions is complex. Carbon offsets work by counterbalancing emissions that have already occurred. They are a reactive measure, allowing individuals and organizations to invest in environmental projects that reduce or absorb carbon dioxide, effectively balancing out their own emissions. However, it's crucial to note that while offsets can compensate for emissions, they don't directly prevent them.

The effectiveness of carbon offsetting in reducing overall carbon emissions depends largely on the nature and execution of the projects funded. For example, investing in renewable energy projects or reforestation can have a long-term positive impact on the environment. These projects can contribute to a decrease in future emissions or increase carbon sequestration, which is beneficial for the environment.

However, it's important to recognize that carbon offsetting is not a cure-all solution. The ideal approach to tackling climate change is a combination of reducing emissions at the source and offsetting the remaining, unavoidable, emissions. In other words, while carbon offsets are valuable, they are most effective when used as part of a broader strategy that includes direct actions to reduce emissions. This might involve adopting cleaner technologies, enhancing energy efficiency, or changing business practices and lifestyles to be more sustainable.

Carbon offsets are a meaningful step towards mitigating climate change, but they should be viewed as part of a larger, multi-pronged approach to environmental sustainability. True progress requires both preventive measures to reduce emissions and reactive measures like carbon offsetting to deal with emissions that are unavoidable.

Undoubtedly, carbon offsets can have a positive impact on the environment and society. They fund projects that aim to reduce greenhouse gas emissions, like renewable energy initiatives, reforestation, and efforts to improve energy efficiency - especially in underprivileged communities. These projects not only help to balance carbon emissions but also often bring additional benefits like biodiversity conservation, improved air quality, and socio-economic development in developing countries. By investing in carbon offsets, organizations can demonstrate their commitment to environmental responsibility and sustainable development.

However, there are limitations to what carbon offsets can achieve. One of the primary concerns is that they can create a sense of complacency. For example, a company might continue environmentally harmful practices while relying on offsets to balance their emissions, rather than taking direct action to reduce their carbon footprint. The issue is that carbon offsets don’t address the root cause of the problem - i.e. the ongoing emission of greenhouse gases. 

Moreover, the effectiveness of carbon offsets depends on the quality and longevity of the projects they fund. There's a risk that some offset projects may not deliver the long-term environmental benefits they promise.

Take the example of a tech giant like Apple. Apple continues to release new versions of the iPhone or Macbook annually, even if the technological modifications are minor and mainly for aesthetic purposes.

The iPhone doesn’t change that much each year, but consumers want the newest thing and so Apple products remain a success. However, the never-ending production of the iPhones is detrimental to the environment. If we all kept our current iPhones for longer than a year, there would be less technology that inevitably gets thrown away – a practice that ultimately contributes to landfills. 

A company like Apple is probably more concerned about their profit margin and staying on trend, but consumers increasingly care about the environment and so companies are under pressure to demonstrate their commitment to sustainability.

Apple, for instance, implements programs like device trade-ins as a gesture towards environmental responsibility. This initiative allows consumers to exchange their old devices, offsetting the cost against the purchase of new ones. By doing so they not only promote the idea of recycling and reducing e-waste but also align with the growing environmental concerns of its customer base.

Yet, this approach of offsetting emissions fails to address the true impact of carbon emissions. The endless demand and production of new products inevitably contribute to carbon emissions - something that is not fully compensated for by recycling or trade-in programs alone. The frequency with which consumers upgrade to newer models plays a significant role in driving production cycles, which in turn affects the company's carbon footprint.

Therefore, while initiatives like Apple's trade-in program are steps in the right direction, they also highlight the need for a deeper change in both corporate strategies and consumer behaviors. It's not just about balancing emissions through offsets, it's also about fundamentally changing consumption patterns and corporate practices to prioritize long-term environmental health over short-term gains. So, while carbon offsets are valuable, they need to be part of a larger strategy that includes direct efforts to reduce emissions.

Is it really possible to buy your way out of creating harmful greenhouse gases that cause climate change?

Governments, companies and individuals already participate in carbon offsetting schemes that try to balance their emissions by finding other ways to reduce carbon in the atmosphere by an equivalent amount.

Can carbon offsetting help the planet? - BBC News

When considering whether to invest in carbon offset projects, it's important to understand their role and effectiveness. Carbon offsets are valuable for balancing out emissions, but they don't stop these emissions from entering the environment initially.

Therefore, the decision to invest in a carbon offset project should be strategic. It's most beneficial when a company or individual has already taken steps to reduce their primary carbon emissions and has the financial capability to contribute further. Investing in carbon offsets can then be an additional measure, complementing direct emission reduction efforts.

With so many carbon offsetting options on the market these days it can be difficult to know what to look for when selecting a project. For companies committed to genuine environmental impact, it's important to select the most impactful and reliable ones. Let us help demystify the process. 

Common types of projects within these programs include:

Forestry projects - These focus on reforestation, tree planting, and preventing deforestation, playing a crucial role in carbon sequestration.

Methane capture - Targeting one of the most potent greenhouse gases, methane capture projects aim to reduce emissions from landfills and agriculture.

Renewable energy projects - Investments in wind farms, hydroelectric power plants, and other renewable sources help reduce reliance on fossil fuels.

Direct carbon capture - Advanced technologies that directly remove carbon dioxide from the atmosphere or industrial emissions.

Key factors to consider to ensure the effectiveness of the carbon offset project:

Third-party verification and credibility - Opt for programs that are verified by reputable third parties. This ensures that the carbon offsets are real, quantifiable, and make a genuine difference in reducing CO2 emissions. 

Tangible and measurable impact - Choose programs where the impact on CO2 emissions can be clearly measured and is permanent. The program should have a transparent method for quantifying its environmental benefits, ensuring that your investment is actually contributing to reducing carbon emissions.

Efficient management and supervision - A well-managed program that is run efficiently and with transparency is more likely to achieve its goals. Look for programs that have a track record of successful implementation and are managed by competent, experienced teams.

Community benefits - Consider programs that go beyond just offsetting carbon emissions and also provide socio-economic benefits to local communities. This could include job creation, biodiversity conservation, or improved local environmental conditions. Programs that positively impact local communities tend to have a more sustainable and long-lasting effect.

Compliance with international standards - Ensure that the program adheres to international standards and best practices in carbon offsetting. This not only lends credibility to the program but also ensures that your investment is contributing towards globally recognized environmental goals.

When selecting a carbon offset program, it’s vital to look beyond the surface and evaluate the program’s real impact, management, community benefits, and adherence to high standards. This thorough approach helps prevent the risk of ‘greenwashing’ and ensures that your investment genuinely contributes to combating climate change.

Let's explore the top 5 carbon offset projects that stand out for their impact and innovative approaches:

Terrapass emerges as a frontrunner in combating climate change. With a mission centered on reducing carbon footprints, Terrapass offers a variety of projects for both individuals and businesses. Their initiatives range from renewable energy to methane capture and landfill gas capture, all verified by third parties for their effectiveness. Terrapass has made a significant impact by providing accessible options for anyone looking to make a positive environmental change.

Specializing in air travel, Atmosfair focuses on reducing carbon emissions caused by flights. They offer various subscription models to offset the carbon footprint of your air travel. Atmosfair's user-friendly approach, complete with a personal certificate for contributions, makes it a go-to choice for environmentally conscious travelers - whether it’s for business travel or leisure. 

Operating globally, Myclimate aligns its carbon offset projects with the UN Sustainable Development Goals. Their diverse projects cover areas like hydropower, energy efficiency, land improvement, and water purification. Transparency is key for Myclimate, as evidenced by their annual ESG reports and third-party project certifications.

With the rise of e-commerce, Carbon Checkout provides a seamless way to integrate carbon offsetting into online shopping. Their unique widget allows customers to choose a carbon offset project at checkout, addressing the carbon footprint of their purchases. This integration makes Carbon Checkout a practical option in our increasingly digital world.

Distinguished by its Quality Assurance Standard (QAS) certification for all carbon offsets, Clear offers a wide range of options to offset daily activities. Whether it's your commute, online activities, or even recreational activities like skydiving, Clear provides accessible and diverse ways to balance your carbon footprint.‍‍

At Greenly we can help you to assess your company’s carbon footprint, and then give you the tools you need to cut down on emissions. Why not request a free demo with one of our experts - no obligation or commitment required. 

If reading this article has inspired you to consider your company’s own carbon footprint, Greenly can help. Learn more about Greenly’s carbon management platform here. 

This article delves into the intricacies of carbon bombs, exploring their locations, impacts, and the critical steps needed to avert this looming climate disaster.

The 425 carbon bombs that urgently need to be diffused!

In an era marked by urgent climate concerns, the term "carbon bombs" has emerged as a chilling descriptor of one of the most formidable challenges facing our planet. These 425 carbon bombs, a mix of mammoth oil and gas projects and coal mines scattered globally, stand as ticking time bombs in the race against climate change. If allowed to reach their full operational potential, these projects threaten to unleash an unprecedented amount of carbon dioxide into the atmosphere, exacerbating global warming and pushing our delicate ecological balance to the brink.

As the world grapples with the necessity of transitioning to sustainable energy sources, the immediate need to diffuse these carbon bombs becomes not just a matter of environmental preservation but a pivotal battle for the future of life on Earth.

👉 This article delves into the intricacies of these carbon bombs, exploring their locations, impacts, and the critical steps needed to avert this looming ecological disaster.

The term carbon bomb refers to large-scale fossil fuel extraction projects that, if developed to their full capacity, have the potential to release massive amounts of carbon dioxide into the atmosphere, significantly contributing to global warming and climate change. These carbon bombs are composed of:

195 oil and gas projects - These include extensive drilling operations, offshore oil rigs, and natural gas extraction sites. Such projects often involve tapping into new oil and gas fields, which leads to the release of significant quantities of carbon dioxide and methane, both potent greenhouse gases.

230 coal mines - These are large-scale operations for extracting coal, a fossil fuel that, when burned, releases a high volume of carbon emissions. Coal mining and combustion are among the leading contributors to atmospheric CO2 levels and are therefore a major focus in discussions about climate change mitigation.

As our planet already faces severe environmental challenges, these 425 infrastructures, if fully exploited, could release an astonishing 1,000 gigatons of carbon dioxide over their lifetime. According to experts these potential emissions represent an amount that is four times higher than the global carbon budget needed to limit global warming to +1.5°C above pre-industrial levels!

The global landscape of these carbon bombs presents a stark reality in the ongoing struggle against climate change. Presently, many of these projects are either in development or already operational contributing significantly to the world's carbon emissions. The International Energy Agency (IEA) has highlighted in its reports that, despite a growing shift towards renewable energy sources, the global demand for oil and gas remains substantial, driven primarily by developing economies seeking to meet their rising energy needs. This continued reliance on fossil fuels poses a significant challenge to achieving the carbon reduction targets set under the Paris Agreement.

In particular, the oil and gas sector, encompassing 195 of these projects, is a major contributor to global greenhouse gas emissions. According to the IEA's oil report, while there is a potential plateau in oil demand in the 2030s, the pace of transition to alternative energy sources is crucial in determining the future trajectory of these emissions.

As for the 230 coal mines, their impact on global emissions cannot be understated. Despite the global push for cleaner energy, coal remains a dominant energy source, especially in regions like Asia where new coal mines continue to be developed to meet rising energy demands. The Global Energy Monitor's 'Global Coal Plant Tracker' provides an insight into the scale of existing and planned coal-based power plants, underlining the immense challenge of phasing out coal to meet climate objectives.

👉 Learn more about the role of fossil fuels in the global energy landscape on our blog. 

The implications of these carbon bombs are far-reaching. Not only do their fossil fuel emissions pose a direct threat to achieving global warming targets, but their operation also impacts local ecosystems, air quality, and the health of communities living in proximity to these sites. The transition away from these carbon-intensive projects is a complex interplay of economic, political, and social factors, requiring concerted efforts from governments, industry, and civil society to steer the world towards a more sustainable and low-carbon future.

These carbon bombs represent some of the world's biggest fossil fuel projects. Their distribution spans across a number of different countries:

For instance, China, leading the count with 141 carbon bomb projects, has been heavily reliant on coal and is rapidly expanding in oil and gas to fuel its massive economic growth. Russia, with its vast natural gas reserves, has 41 projects and is utilizing these resources as a major economic driver and a tool for geopolitical influence. Similarly, countries like Iran, the United States, Australia, and Saudi Arabia, each with their unique energy landscapes, have developed numerous projects aligned with their abundant natural resource reserves.

This distribution of these carbon bombs also indicates the varying stages of economic development and energy transition policies in these countries. While some nations are investing heavily in renewable energy (like the United States and Australia), their reliance on existing fossil fuel infrastructure and the profitability of these resources make the transition complex.

In contrast, developing countries such as India and China face the dual challenge of meeting rapidly increasing energy demands while attempting to shift towards more sustainable practices.

The presence of these carbon bombs in these diverse geopolitical contexts highlights the global nature of the climate crisis, underscoring the need for international cooperation in managing and mitigating the impacts of these projects. It's a stark reminder that addressing climate change effectively requires a nuanced understanding of global energy politics, economic development, and the equitable distribution of resources and responsibilities.

👉 Discover why petrostates have become so dependent on oil and gas in our article. 

Who is responsible for these carbon bombs?

The responsibility for the 425 climate bombs can be attributed to a variety of actors in the global energy landscape, each playing a significant role in their development and continued operation. Understanding who is behind these projects is crucial for addressing the challenges they present. Let's take a closer look at those responsible for these ticking carbon bombs:

Major oil, gas, and coal companies - The most direct culprits are the large fossil fuel companies. These corporations are involved in the exploration, extraction, and processing of fossil fuels. They invest heavily in developing new reserves and expanding existing ones, driven by the goal of raising profit and the energy demand. Their operations are at the core of these climate bombs.

Governments and state-owned enterprises - Many of the largest fossil fuel projects are either directly operated by or in partnership with state-owned enterprises. Governments, particularly those of countries rich in fossil fuel reserves, play a pivotal role in sanctioning and supporting these projects. In some cases, national policies and economic priorities heavily favor the development of these resources, often citing energy security and economic growth as justifications.

Financial institutions and investors - Banks, investment funds, and private investors provide the capital needed for these large-scale projects. The financial industry's role is crucial as it can either enable or restrict the flow of funds necessary for the development and expansion of these carbon bomb projects. In recent years, there has been growing scrutiny over the role of finance in supporting fossil fuel projects, leading to a push for more sustainable investment practices.

Consumers and global energy demand - On a broader scale, the global demand for energy plays a significant role. Consumers, industries, and the general population’s reliance on fossil fuels for energy, transportation, and manufacturing drives the continued exploration and exploitation of these resources. As long as there is a high demand for oil, gas, and coal, companies and governments will have incentives to develop carbon bombs.

Regulatory bodies and international agreements - The regulatory environment and international agreements also influence the development of these projects. Inadequate regulation and lack of enforcement of environmental standards can enable the growth of climate bombs. Conversely, international agreements like the Paris Climate Accord aim to reduce global carbon emissions, which can limit the development of new fossil fuel projects.

In addressing the challenge of carbon bombs, it is essential to consider the roles and responsibilities of these various actors. Effective solutions will likely require coordinated efforts across these groups, including stricter regulations, shifting financial investments toward renewable energies, and reducing global reliance on fossil fuels.

Why is it so hard to transition away from fossil fuels?

The struggle to move away from coal, oil, and gas projects is deeply rooted in a complex web of economic, infrastructural, and geopolitical factors. At the forefront is the issue of profit: fossil fuels have been the backbone of industrial development and economic growth for over a century. Major oil and gas companies, as well as coal-producing nations, have built vast infrastructures and supply chains centered around these resources. This established infrastructure makes a swift transition challenging, as it involves not only the development of new technologies but also a fundamental restructuring of the global energy economy. Furthermore, investments in fossil fuel projects are often locked in for decades, creating a situation where short-term economic interests can overshadow long-term environmental considerations.

Additionally, the dilemma intensifies in the context of developing nations. Many of these countries are experiencing rapid growth and are seeking to improve living standards for their populations, akin to the development trajectories of more industrialized nations. However, they often face constraints in resources and technology to switch to renewable energy quickly. The reliance on affordable and readily available fossil fuels becomes a pragmatic choice for immediate economic development and energy access. These countries contend with the challenge of balancing their right to develop with the global need to reduce carbon emissions.

Addressing the issue of carbon bombs calls for a collaborative approach, where developed countries not only lead the way in transitioning to renewable energy but also support developing nations through technology transfer, financial aid, and investment in sustainable infrastructure. The global nature of climate change necessitates a unified effort that recognizes the different capacities and developmental stages of countries, ensuring a just and equitable transition for all.

👉 Read more about the challenge of transitioning away from fossil fuels in our article. 

How do we mitigate the damage of these carbon bombs?

Mitigating the damage caused by the 425 carbon bombs requires a multifaceted approach, encompassing a range of strategies aimed at reducing carbon emissions and transitioning to more sustainable energy sources. Here are several key strategies:‍

Halting funding for new fossil fuel projects

Divesting from fossil fuels - Encouraging financial institutions, governments, and investors to withdraw their investments in fossil fuel projects. Divestment campaigns can shift funding away from carbon bomb projects towards cleaner alternatives.

Enforcing stricter financial regulations - Implementing policies that discourage or prohibit financing for new fossil fuel exploration and extraction. This includes revising the lending policies of major banks and financial bodies.‍

Accelerating the transition from fossil fuels

Implementing carbon pricing and taxes - Establishing a carbon tax or a cap-and-trade system to internalize the environmental costs of carbon emissions, making renewable energy more competitive.

Strengthening environmental regulations - Enforcing stricter environmental standards for fossil fuel extraction and use, including tighter emission limits and penalties for non-compliance.‍

Reducing fossil fuel subsidies - Cutting back on government subsidies for the fossil fuel industry to level the playing field for renewable energy sources. This shift will encourage investment in cleaner energy and support a more sustainable and eco-friendly energy landscape.

Investing in renewable infrastructure - Substantially increasing investments in renewable energy technologies like solar, wind, hydroelectric, and geothermal power. This also involves upgrading energy grids to accommodate renewable sources.

Incentivising renewable energy adoption - Offering subsidies, tax incentives, and financial support for renewable energy projects and for businesses and consumers who adopt renewable energy solutions.

Enhancing efficiency standards: Implementing stringent energy efficiency standards for buildings, vehicles, and industrial processes to reduce overall energy consumption.

Encouraging behavioral changes - Promoting energy-saving practices among consumers and industries, including the use of energy-efficient appliances and machinery.

Supporting carbon capture and storage (CCS) technologies

Investing in CCS research - Funding research and development in carbon capture and storage technologies to reduce the amount of CO2 released into the atmosphere from fossil fuel use.

Implementing CCS in high-emission industries - Applying CCS technologies in industries where emissions are hardest to reduce, such as steel and cement production.

Strengthening international agreements - Participating actively in international climate agreements like the Paris Agreement, and committing to more ambitious national targets for carbon reduction.

Promoting local initiatives and policies - Encouraging local governments to implement policies that support the transition to renewable energy and reduce reliance on fossil fuels.

Encouraging public awareness and education

Educational campaigns - Conducting public awareness campaigns about the impacts of climate change and the importance of transitioning to renewable energy.

Community engagement - Engaging communities in decision-making processes related to energy projects, ensuring their concerns are addressed, and their transition to sustainable practices is supported

Addressing the issue of the 425 carbon bombs uncovers a significant truth about the current state of our global energy systems and highlights the critical necessity for transformative change. These vast, carbon-intensive projects not only symbolize the challenges we face in curbing climate change but also serve as a call to action for societies worldwide.

The road to mitigating their impact is multifaceted, requiring not just technological innovation and policy shifts but also a fundamental change in how we perceive and utilize energy. It's about reimagining our relationship with the planet, transitioning from an era of exploitation to one of sustainable coexistence.

The task ahead is challenging, yet it's essential. It demands collective resolve and swift action to ensure a habitable, thriving Earth for future generations.

If reading this article has inspired you to consider your company’s own carbon footprint, Greenly can help. Learn more about Greenly’s carbon management platform here. 

What is the spend based method and activity based method? Which methodology is better? What is Greenly’s preferred carbon accounting methodology?

Spend Based Method vs Activity Based Method: Our Methodology

Carbon accounting can already feel pretty daunting - and when you throw in terminology like spend based method and activity based method, it’s easy to feel overwhelmed. But not to worry because Greenly has your back. In this article we’ll outline the two different methods of carbon accounting and look at the advantages and disadvantages of both methods. 

What is the spend based method and activity based method? Which methodology is better? What is Greenly’s preferred carbon accounting methodology? 

Before we dive into the detail on the spend based method and activity based method, let's have a quick reminder of what carbon accounting actually is and why it's important. 

Carbon accounting (also referred to as greenhouse gas accounting) is a methodology that is used to measure and track an organisation's greenhouse gas emissions. Just like financial accounting, it quantifies the impact of a company’s business activities - though instead of calculating the financial position, carbon accounting calculates the emissions impact. 

Carbon accounting may be required for regulatory or legal purposes - increasing numbers of companies are required to disclose emissions information - but it can also be used as a starting point for any company wishing to reduce their environmental impact. 

What's the purpose of carbon accounting? 

The primary aim of carbon accounting is to evaluate the amount of greenhouse gas emissions that an organisation is responsible for.  

Carbon accounting also serves as a basis for carbon assessment. Carbon assessment is the act of evaluating the numerical data. It allows a company to understand the emissions that they’re producing and therefore what actions they can take to reduce their carbon footprint. After all, as the adage says “you can’t manage what you can’t measure”.

And finally, carbon accounting may even be required by law. Companies across the world are increasingly being asked to disclose information on their climate impact. Carbon accounting enables companies to accurately report on their emissions footprint. 

There are two primary methodologies used in carbon accounting. These are the spend based method and the activity based method. There is also a hybrid approach which combines a mix of the two. 

Let’s take a closer look at the different methodologies below.

The spend based method of carbon accounting takes the financial value of a purchased good or service and translates it into emissions with a corresponding spend based emission factor.

The spend based emissions factor is a representative value that relates the quantity of an emission that is emitted with a certain financial expenditure. Ie. it allows us to calculate the amount of emissions produced per financial unit of a certain activity. 

The financial or accounting data actually matches the activity-based flows insofar as each delivery or action results in payments (energy bills, travel expenses, etc.).

When it comes to the spend based approach, these flows can be divided into two categories: 

Outward flows - i.e. payments made by the company to its suppliers, its employees, the State (taxes), or the repayment of bank loans;

Inward flows - i.e. payments made by consumers who purchase the goods (or services) of the company.

Good to know: Emissions factors are usually expressed as the amount of emissions divided by a currency unit (for example kilograms of CO2 equivalent emitted per dollar spent on furniture). This emissions factor is then multiplied by the financial value of the good or service in order to calculate the emissions from that activity.

Emissions factors use averages that are calculated based on available data, which means that they are frequently updated as new data becomes available. They may relate to a specific geographic area (for eg. national or regional) which is why it’s important to consider their source when selecting an emissions factor - for example technology and practice may vary by country or region and so it’s important to ensure that the emissions factor being used is appropriate. 

Emissions factors are often provided by a variety of sources: for example the UK government conversion factors for company reporting of greenhouse gas emissions, the US EPA's GHG emission factors hub , the IPCC Emissions Factor Database, the European Environmental Agency database and the International Energy Agency database. Additionally, there are a variety of national emissions factors databases that can also be used.  

It’s also worth noting that greenhouse gas emissions are often measured in CO2 (carbon dioxide) or CO2e (which stands for carbon dioxide equivalent) expressed in weight - usually kilograms (kg) or tonne/metric ton (t). 

Carbon dioxide equivalent allows us to easily express the emissions value of various greenhouse gases. The various greenhouse gases affect the environment in different ways - for example they warm the atmosphere at different rates and also remain in the atmosphere for different periods of time. This is why these greenhouse gases are calculated as carbon dioxide equivalents - it allows us to compare different greenhouse gases fairly.  

One of the main ways that the activity based method differs from the spend based method is in the collection of data. 

The spend based method collects financial data only, whereas the activity based method of carbon accounting focuses on collecting specific and detailed data from across a company’s entire value chain. 

In this context, physical flows or “real flows” include physical data relating to the functioning of the company. They are expressed in terms of mass (kg purchased or processed), in distances travelled (km travelled) or in units (number of products sold).

Internal - for example, a truck transporting semi-finished products from site A to site B (both owned by the company);

External - in which case they may include flows of incoming goods (raw materials and supplies - necessary for the manufacture of the goods or for the running of the company), of incoming services, outward flows of goods (sales of finished products), or the provision of services.

The activity based method is based on emissions activities performed by the company and involves the collection of the company’s raw data for these different emissions sources. The type of data collected by the company will vary depending on their specific activities but typically includes things like energy consumption, fuel usage, production volumes, transport distances etc.

Once the various activity based data sources have been collected, this information is then used to calculate the emissions from each activity by applying the corresponding emission factors. 

The activity emission factors represent an average greenhouse gas emission per unit of activity and offer a more accurate reflection of emissions associated with each activity. 

The hybrid based carbon accounting method is - unsurprisingly - a hybrid of both the spend based method and the activity based method. Essentially, it is the practice of using all of the activity based data available, and then supplementing any missing activity based data by using the spend based approach to calculate the rest. 

This is, more or less, Greenly's carbon accounting method. Let's find out why we believe it's the best option. 

Regardless of what methodology is used, the process is repeated for each activity of the organisation in order to establish the company’s overall carbon footprint. However, one important consideration is the scope of emissions, because depending on the scope the final carbon footprint may not in fact paint the whole picture. 

Emissions estimates are often divided into different emissions ‘scopes’. This is arranged depending on where the emissions originate from. 

The Greenhouse Gas Protocol outlines three different emissions scopes.

Scope 1 emissions are direct greenhouse gas emissions that come from sources that are either directly controlled or owned by the organisation. For example vehicle fuel use or emissions from fuel combustion in furnaces or boilers. 

Scope 2 emissions are those that an organisation causes indirectly when the energy it purchased and uses is produced. For example the emissions from the generation of electricity used to power a company’s electric vehicle fleet. 

Scope 3 emissions are those that arise from activities or assets not owned or controlled by the organisation, but that the organisation indirectly affects in its value chain. For example the emissions resulting from purchased goods or services, or business travel. 

A lot of the time companies are either only required to, or choose to only include scope 1 and 2 emissions within their carbon footprint calculation. However, scope 3 emissions are really important as they usually account for the bulk of an organisation's emissions (more than 70% of the average company’s carbon footprint) and by forgoing scope 3, a company doesn’t have an accurate picture of their greenhouse gas emissions.

To find out more about the different scopes and what activities they cover, read our article on the topic. 

Benefits of the different accounting methodologies 

Spend Based Method benefits and challenges

The spend based method of carbon accounting has the benefit of being pretty easy to source and compare. It uses readily available data which makes the whole process simple and time efficient. 

The spend based method is also very useful for organisations with large and complex supply chains, where it may be tricky to obtain individual data for all emissions associated with the value chain. 

However, the drawback to the spend based method is that it’s somewhat less accurate than the activity based method. This is because it assumes that all goods and services have the same emissions intensity, and spend based emissions factors are derived from industry averages which means that they don’t take into account the particularities of individual organisations. 

Another limitation of the spend based method is that because it relies on financial data, it may not cover all activities (and associated emissions) within the company's scope. 

Activity Based Method benefits and challenges

The activity based method relies on the collection of granular, detailed data which allows for a more precise carbon footprint calculation. It also - generally speaking - provides a more complete picture of an organisation's emissions because it tends to encompass a wider range of emission sources, both direct and indirect. 

The limitations of the activity based method however lie in its complexity. It is often more time consuming and complex to compile all the different sources of data. Most organisations will have a wide variety of emissions activities (both direct and indirect) which means that collecting data is not straightforward. 

An organisation may also find that it struggles to procure all the data sources necessary - for example from third party suppliers. This means that gaps may exist in the data collection. 

Hybrid Based Method benefits and challenges

The hybrid based approach to carbon accounting merges the advantages of both the spend based method and the activity based method, allowing for a more balanced and comprehensive approach.

It ensures that organisations can optimise their accuracy by providing activity based data whenever possible, while also limiting any data gaps by allowing for the spend based method to be used where activity based data is unavailable. 

In terms of limitations, the hybrid approach may also prove to be complex given that it doesn’t rely on a single data type but combines both activity based and financial based data.

As you’ve probably realised - calculating an organisation’s carbon footprint is a complex process which requires a certain amount of balancing of different priorities in order to establish the best carbon accounting approach. This is why it’s so useful and important to enlist the specialist help of a carbon accounting provider such as Greenly. 

Greenly’s expert team is on hand to guide you through every step of your carbon accounting journey - from providing the best advice on how to measure it, to actually calculating your greenhouse gas emissions, to helping you to implement a plan of action that starts you on your net zero journey. 

Greenly’s methodology is the best of both worlds and uses both the activity based approach and the spend based approach. We flex these two methodologies on a case by case basis to ensure that each individual client has a tailored approach that works for their specific scenario. By combining these two complementary methodologies we’re able to ensure that your carbon footprint is as accurate and reliable as possible. 

Greenly starts by categorising the company's spendings, and then completes the carbon assessment with physical analyses - which are associated with more accurate emission factors and help to overcome price variability.

Greenly’s carbon assessments systematically take these two approaches into account, as the monetary approach alone is insufficient to obtain an accurate overview of a company’s emissions.

This does not mean that the spend based method is ruled out by our experts. It is very useful for taking into account issues related to purchase of goods and services for which physical data collection would be too time-consuming.

However, the physical approach is preferred where the data already exist (emission factors of a process, activity, product). This reflects the company’s real impact.

Normally, Greenly will recommend starting with data collection using the monetary approach, in order to identify the main issues. The physical approach is then used to deepen the analysis and facilitate the development of an action plan.

Copywriter specializing in environment, climate change and ecological transition

Ines Gendre is a copywriter specializing in environmental issues. She joined Greenly's team in 2022.

Ines Gendre

Ines Gendre holds a master’s degree in marketing and began her career in the fast-moving consumer goods (FMCG) industry. After retraining, she joined Greenly in 2022 as a copywriter specializing in environmental issues. Ines brings her expertise to companies and individuals seeking to understand the challenges of climate change, the green transition, and their impact on society and the economy. Trained in key tools for developing climate strategies - such as Carbon Assessments, Life Cycle Analysis (LCA), and carbon offsetting - she studies earth and life sciences and climate change with the United Nations Institute for Training and Research (UNITAR) and the SDG Academy, and political philosophy at Oxford University in England.

Laura Schmitz joined Greenly as Marketing Development Representative in 2024.

Laura Schmitz

With a degree in digital marketing, Laura Schmitz has 10 years’ experience in tech and digital, working for companies specialising in the use of data for industry, people and the environment. Passionate about environmental issues, she has also worked as a communications volunteer for Biomimicry Switzerland. Her expertise combines technology and sustainability, enabling her to raise awreness on issues relating to the ecological transition and sustainable innovation.

After seeking opportunities to put her various creative passions to good use, she joined Greenly in mid 2022 as SEO copywriter for the U.S. blog to provide her American perspective on the climate change issues we face today.

Stephanie Safdie - Greenly

Stephanie Safdie holds a bachelor's degree in English Language & Literature from the University of Maryland College Park, where she specialized in multimedia studies and media literacy to write engaging content made for the internet. She previously worked as a social media content video creator, freelance copywriter, and continues to write SEO generated content for her travel website. After seeking opportunities to put her various creative passions to good use, she joined Greenly in mid 2022 as SEO copywriter for the U.S. blog to provide her American perspective on the climate change issues we face today. Her work at Greenly covers a wide variety of topics, such as the impact of popular culture events on the environment, offering unique ideas for sustainable development, and breaking down new climate legislation in simple terms. As Stephanie is passionate about linking the bridge between the everyday activities we love to do (such as travel, concerts, fashion, food, etc.) and the effect it has on the environment, she is pursuing further training for more in-depth journalistic endeavors on the environment in the future.

After starting her career at Greenly in 2022, she started a joined PhD between the startup and CentraleSupélec to improve company sustainabilty performance ratings.

Marine Kohler

Marine has an engineering degree from the French school of CentraleSupélec and a masters in Industrial Management from DTU. After starting her career at Greenly in 2022, she started a joined PhD between the startup and CentraleSupélec to improve company sustainabilty performance ratings.

Kara joined the team at Greenly in 2023 as SEO copywriter for the UK market.

Kara Anderson - Greenly

Kara Anderson holds an undergraduate law degree and a master’s degree in international law from the University of Glasgow and the University of Aberdeen, specializing in human rights and EU law, where she developed strong research and writing skills. After working at Ernst & Young as part of their audit graduate scheme and gaining experience in analytics, she transitioned to advertising, working with major global brands like American Express and Dove.
In 2023, Kara joined Greenly as a writer, focusing on sustainability and climate-related topics for the UK market. Her work spans a wide range of environmental issues, including climate science, sustainable development, and climate policy. Collaborating with climate scientists, Kara has produced data-driven investigations into key climate challenges. With a passion for international politics, sustainable development, and climate change science, she continues to build her expertise in the field and is currently pursuing further training in journalism.

Ben Field, Climate Action Strategist at Patch

Quentin Bourhis, Climate Expert at Greenly

Matthieu Vegreville

Matthieu is a 28 year-old graduate engineer from Ecole Polytechnique and Télecom Paris, with a background in data science at Withings. While there, he worked on watch activity detection algorithms, and developed a health study activity so that connected objects could be used to better monitor certain pathologies. He has long been involved in data science projects with his brother, who has the same training. Faced with the urgency of the climate crisis, he decided to put his know-how at the service of the environment. 

Arnaud Delubac

Arnaud, 26 years old, trained as a designer and in digital communication at INSEEC before joining the Master Entrepreunariat at ESSEC-CentraleSupélec. Passionate about social media since his teenage years, he has created some of the biggest Twitter communities in France before joining the digital communication team of the Prime Minister’s office in Matignon. It was at the Secretaries of State for Digital, Mounir Mahjoubi and Cédric O, where Arnaud directly managed the team, that he developed a strong conviction for the need to use technology to bring awareness to the greatest causes of our time.

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