Save for later Print Download Share LinkedIn Twitter Large polluters like oil companies are voluntarily buying more credits to offset their greenhouse gas emissions as pressure mounts for them to decarbonize.Oil firms — especially international oil companies that have rolled out the most sophisticated emissions reductions plans — are “already among the biggest buyers of carbon offsets in the world,” says Francisco Benedito, CEO and Co-founder of Climate Trade, an international carbon offset marketplace.The offset market in general has been growing “exponentially since 2017,” he told Energy Intelligence as the annual Climate Week gatherings kicked off in New York.And the offset market is expected to keep swelling out in the coming decades as 2050 carbon neutrality targets — set by both corporations and governments — reach their pinnacle. Going forward, the number of offsets sold is expected to keep skyrocketing between now and then. Further, the price of those credits is seen jumping from a few dollars per ton today to as high as $600 to $1,000 leading up to midcentury, Benedito predicts.On marketplaces such as the one operated by Climate Trade, credits can be purchased by polluters from projects that take climate-positive actions such as reforestation. This is an alternative to polluters eliminating their own emissions — essentially, offsetting them instead.Buying offsets is eyed by oil companies, other energy companies, and large-scale oil users as a vital strategy for curbing their carbon footprints. It is considered especially important in the near- and medium-term since many technologies for directly lowering emissions are expensive or not yet ready.Rising PressureThe mounting interest in offsets, from oil companies and other polluters, is being fueled by policies. These include mandatory measures in Europe requiring companies to report their low-carbon sustainability steps, with similar requirements forthcoming in the US, Benedito says.Pressure is coming from other corners, too. “As a company, you want to look well in front of your investors, in front of your consumers,” Benedito says. “The mindset of the people is changing toward sustainability.”Yet reaching carbon neutrality cannot happen overnight, especially for hard-to-decarbonize emissions. “If I’m an airline, I cannot fly hydrogen planes because there are not hydrogen planes yet, and there are not electric planes yet,” Benedito says. “But I want to do something, so I can use biofuels or buy offsets.”Project PipelinesOffsets are underpinned by many types of projects that negate the effects of climate change, avoid emissions or capture emissions. The most popular projects today involve reforestation and forest management.Many of the climate-positive projects may never happen without offset buyers. “Imagine you and I generate a reforestation project. How would we pay? With our pockets. Carbon offsets allow us to get our money back — and generate funding to have a pipeline of projects,” Benedito says.He pointed to an example in Brazil, where waste management was happening poorly and large amounts of methane were being released into the air. A project developer came in and managed the waste, and then sold carbon offsets to cover the costs.Confronting CriticismCarbon offsets face a number of criticisms and risks, and Benedito said Climate Trade is very cognizant of those.A big concern is that some projects underpinning offsets are sold more than once or are illegitimate.Climate Trade works to circumvent this by verifying ownership and checking for fraud and double-counting before an offset can go on the market. To ease this process, the company only works with projects and buyers, not brokers or other intermediaries, Benedito explains.Another common concern is that offsets should not be relied on too heavily, since directly eliminating emissions for good would offer the most lasting effects. Benedito agrees, saying the primary focus of climate action should be shifting from fossil fuels to green energy.Some offset opportunities have limits. With forestry projects, for example, there is only so much land on the earth that can be used for such efforts.“There are many things we can do. It doesn’t have to be all reforestation,” Benedito insists.Climate-positive offset projects also include those involving biogas, biomass, carbon capture and wetlands management, among others.Direct air capture (DAC) is a space to watch closely going forward. Climate Trade will be unveiling plans for a new credit next month that will be underpinned by DAC facilities in the US. It is expected to be Climate Trade’s most affordable credit available when it launches, Benedito says.