Submitted by Schneider Electric
Significant price spikes in the energy attribute certificate (EAC) and carbon offset markets have many companies are wondering whether environmental commodities are the right way to reach their goals, asking: is carbon offsetting worth it? These tools that many companies have come to rely on to achieve carbon neutrality have become much more expensive than they may have originally budgeted for. Pair this with headwinds in the renewable energy PPA market, and the question of how to reach goals gets even more complicated.
Now, companies are faced with an impossible dilemma that is putting both their financial risk tolerance and their moral obligations to the test: Do we discontinue our offsetting program and forego our carbon neutrality claim, or do we shell out the cash to buy high-priced offsets and EACs to maintain our carbon neutral status?
Weighing the pros and cons of this decision dredges up some strong and sensitive opinions about a company’s commitment to sustainability and its public reputation. But unfortunately, there are many companies in this exact position today. How to answer this question will be unique to every company, but our experts at Schneider Electric can share our opinion from working with hundreds of companies on their procurement options and affiliated claims.
Is carbon offsetting worth it? The cons of letting your carbon neutral claims lapse
The decision whether to stop buying EACs and/or carbon offsets is not always purely a financial one. When prices spike, it’s important to consider all the possible downsides of backtracking on your carbon neutral claims. While not every consideration will apply to every company, here’s a list of potential risks to weigh when talking about claims with your sustainability and leadership teams:
Maybe carbon offsetting is worth it? The pros of keeping your carbon neutral claim, no matter the price
Given the variety of potentially negative outcomes, not to mention the lost progress toward your climate action goals, it’s worth revisiting why your company may have decided to aim for carbon neutrality in the first place.
The business case for continuing to buy offsets to reach carbon neutrality includes:
Getting your company to carbon neutral requires a multi-faceted approach. Among the powerful solutions companies are exploring, carbon offsets are a credible and often necessary component in your carbon neutrality journey. Download our full guide to carbon offsets to learn more about the role they can play in large-scale emission reduction programs, how they reduce GHGs, and how to select offsets that will meet your organizational goals.
Schneider Electric is a European multinational company providing energy and automation digital solutions for efficiency and sustainability.
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