CO₂ certificates for voluntary greenhouse gas compensation
CO₂ certificates are a tool for voluntarily offsetting greenhouse gases. However, the market beyond the mandatory EU Emissions Trading System is complex: not every certificate has the same impact. We explain the mechanisms of “offsetting” and show which specific requirements apply to companies that want to pursue credible carbon management.
Many companies want to take responsibility for their emissions and use CO₂ certificates as part of their carbon management. However, the market is complex: not every certificate delivers what it promises.
Different types of CO₂ certificates
A CO₂ certificate is a tradable document that certifies that one tonne of greenhouse gases has been avoided, reduced, or actively removed from the atmosphere. But not all certificates are the same. They differ significantly in terms of:
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Market type: Is it the mandatory emissions trading system or the voluntary offset market?
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Project type: Are emissions reduced, or is CO₂ removed from the atmosphere (carbon removal)?
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Storage duration: Is the carbon stored short-, medium-, or long-term?
Impact of carbon removals
So-called “carbon removals” are based on technologies that either capture CO₂ directly at the source (for example, industrial facilities, power plants) or remove it directly from the atmosphere through biogenic or technical measures. The actual climate impact depends on the interplay of three factors: where the fuel comes from (biogenic or fossil), how the CO₂ is captured, and, most importantly, how long it is stored. Depending on the combination, the measure may result in a genuine reduction, a mere offset, or a real, additional CO₂ sink.
New rules for climate claims
Caution is advised when companies base their climate claims on offset measures whose impact is overestimated. To protect consumers from misleading impressions, the EU directive “Empowering Consumers for the Green Transition” prohibits product-related claims such as “climate neutral” if they rely solely on compensation.
For future climate-related corporate targets, transparency is paramount. Companies are expected to provide extensive information and have it externally verified. Internationally recognised standards such as ISO 14068-1:2023 or the Science Based Targets initiative (SBTi) provide guidance.
Our downloadable article for you: This article offers an in-depth overview of how CO₂ certificates differ, why details matter in compensation, and how companies can use certificates credibly and legally.