What You Need to Know
As the urgency to combat climate change intensifies, a wave of innovative solutions for decarbonization has emerged, including insets and offsets. One of the most common questions business leaders have is the difference between the two. To answer that question, it’s important to first understand the challenges of decarbonization.
For aviation, trucking, iron and steel, chemicals, and other hard-to-abate sectors, renewable fuels, like sustainable aviation fuel or green hydrogen, can be challenging to implement. They are often in short supply and produced long distances from where they are used. Getting them where are needed often requires heavy and expensive transport methods, such as tankers and planes. These also emit significant amounts of carbon, which reduces the environmental benefits of using renewable fuels.
On top of that, managing Scope 3 emissions is difficult. These sectors have complex value chains of vendors, suppliers, and distributors. Many are in other countries with different or nonexistent regulatory requirements about carbon emissions. Companies in the value chain often lack the technical expertise or resources to measure and monitor their output accurately or even at all. With little direct control over value chain activities, businesses at the end of the value chain must rely on influence rather than authority.
What is a Carbon Offset?
Some businesses in hard-to-abate sectors have turned to carbon offsets to compensate for their emissions. Offsets allow companies to fund projects or entities that reduce or remove carbon emissions. These could include reforestation projects that plant trees to absorb carbon, or businesses that provide energy from wind, solar, hydropower, or other renewable sources.
However, not all offsets are created equal. High-quality offsets are verifiable, permanent, and run by trusted or credible entities that provide accurate and regular reporting of carbon emissions saved with accepted metrics and methodologies. They should also be “additional,” meaning they would not exist without offset funding. The danger of lower-quality offsets is that they may not actually deliver meaningful reductions in emissions.
The impact of carbon offsets also varies widely depending on the nature and quality of the project. Some efforts, like reforestation, can take years or decades to reduce a significant portion of carbon. Other concerns include “double counting,” where the same offset is claimed by multiple businesses, and a lack of transparency and standardization in reporting and metrics. This can lead to uncertainly and a lack of clarity about whether projects are genuinely making a difference.
What Is an Inset?
Insets are emission-reduction projects that take place in the same sector that the carbon is produced. This enables businesses to use insets that mirror their operations, such as using sustainable aviation fuel certificates (SAFc) to decarbonize business travel or cargo flights, or a cement company using insets that are alternatives for the more carbon-intensive operations of the manufacturing process. These could include using lower-carbon alternatives to a binding element in cement called clinker, a mix of limestone and minerals that must be heated in a kiln.
Because carbon insetting focuses on activities that are more “apples to apples” than offsets, emissions reductions are easier to verify, monitor, and quantify. This is key in hard-to-abate sectors where it can be too expensive for businesses reduce their own emissions by buying renewable fuels or upgrading equipment.
Insets also help promote long-term systemic change in the value chain as well as greater accountability by promoting awareness and the need for everyone to play their part in reducing emissions. These efforts not only advance sustainability goals as an industry but also support a more resilient value chain.
Carbon insets can be a key driver of “virtuous cycles” that foster this type of large-scale change. For example, when businesses purchase sustainable aviation fuel certificates (SAFc), that demonstrates demand for SAF. This leads to more confidence in the market, attracting investors and causing supplies to increase. More supply lowers costs, which leads to greater demand.
Insets vs Offsets at a Glance
| Insets | Offsets |
| Reduce or remove emissions inside an industry’s value chain | Reduce or remove emissions outside of an industry’s value chain |
| Easier to verify and track across the value chain | Difficult to verify and prove emissions benefits |
| Greater transparency supports accurate measurement and accountability | Lack of clear data on carbon emission reductions |
| Supports systemic change and accountability across the industry value chain | Have no effect on value chain activities |
A Long-term Strategy for Sustainability
Insets require businesses to make a stronger commitment and be more engaged with efforts to reduce emissions. This makes them the more sustainable option for supporting decarbonization across the value chain now and for years to come. World Energy is pleased to offer the businesses seeking to decarbonize their air travel and freight cargo insets through our sustainable aviation fuel certificates (SAFc).
