Carbon Offsets vs Carbon Insets: What’s the Difference?

Carbon Offsets vs Carbon Insets: What’s the Difference?

By
Grace Smoot

Read Time:13 Minutes

Follow
this site

follow follow

Impactful Ninja is reader-supported. When you buy through links on our site, we may earn an affiliate commission. Learn more Learn more .

Affiliate Disclosure

Hey fellow impactful ninja ?

You may have noticed that Impactful Ninja is all about providing helpful information to make a positive impact on the world and society. And that we love to link back to where we found all the information for each of our posts.

  • Most of these links are informational-based for you to check out their primary sources with one click.

  • But some of these links are so-called "affiliate links" to products that we recommend.

Why do we add these product links?

First and foremost, because we believe that they add value to you. For example, when we wrote a post about the environmental impact of long showers, we came across an EPA recommendation to use WaterSense showerheads. So we linked to where you can find them. Or, for many of our posts, we also link to our favorite books on that topic so that you can get a much more holistic overview than one single blog post could provide.

And when there is an affiliate program for these products, we sign up for it. For example, as Amazon Associates, we earn from qualifying purchases.

What do these affiliate links mean for you?
  1. First, and most importantly, we still only recommend products that we believe add value for you.

  2. When you buy something through one of our affiliate links, we may earn a small commission - but at no additional costs to you.

  3. And when you buy something through a link that is not an affiliate link, we won’t receive any commission but we’ll still be happy to have helped you.

What do these affiliate links mean for us?
  1. When we find products that we believe add value to you and the seller has an affiliate program, we sign up for it.

  2. When you buy something through one of our affiliate links, we may earn a small commission (at no extra costs to you).

  3. And at this point in time, all money is reinvested in sharing the most helpful content with you. This includes all operating costs for running this site and the content creation itself.

What does this mean for me personally?

You may have noticed by the way Impactful Ninja is operated that money is not the driving factor behind it. It is a passion project of mine and I love to share helpful information with you to make a positive impact on the world and society. However, it's a project in that I invest a lot of time and also quite some money.

Eventually, my dream is to one day turn this passion project into my full-time job and provide even more helpful information. But that's still a long time to go.

Stay impactful,

Carbon offsets are a well-known sustainability term, but did you know that their counterpart, carbon insets, could play an even more important part in the fight against climate change? To make informed decisions about global carbon reduction, we must first identify the differences between the two. So we had to ask: What’s the difference between carbon offsets and carbon insets?

Carbon offsets are investments in environmental projects that reduce carbon emissions elsewhere to compensate for your carbon footprint. Carbon insets are the implementation of nature-based projects into a company’s supply chain to reduce carbon emissions.

In the fight against climate change, how can we tell the difference between carbon offsets and insets? Below we will define both terms, identify the key advantages and differences of each, explore how they operate and what impact they have on carbon emissions, and discuss why they are important in the fight against climate change.

How Are Carbon Offsets and Carbon Insets Defined

Carbon offsets and insets are two sustainability tools that can help reduce total carbon emissions. Carbon insetting is often used in conjunction with carbon offsetting with the intent of transitioning away from offsetting and towards insetting as a way to create more sustainable business models.

What Does the Dictionary Say About Carbon Offsets and Carbon Insets

Carbon offsets are a way to reduce carbon emissions beyond what we each can achieve through individual actions. They are measured in tons of carbon dioxide (CO2) equivalents and are bought and sold through international brokers, online retailers, and trading platforms. Investable project categories include direct CO2 removal, renewable energy, energy efficiency, and carbon sequestration.

Carbon Offset: a way for a company or person to reduce the level of carbon dioxide for which they are responsible by paying money to a company that works to reduce the total amount produced in the world, for example by planting trees”

Oxford Dictionary

Carbon offsets play a crucial role in reducing our carbon footprint, the amount of CO2 emissions associated with an individual or an entity and one of the ways we measure the effects of human-induced global climate change. But offsets are not the only available tool. Carbon insets are another way to reduce carbon emissions.

Carbon Inset: interventions along a company’s value chain that are designed to generate [greenhouse gas] emissions reductions and carbon storage, and at the same time create positive impacts for communities, landscapes and ecosystems”

International Platform for Insetting

Carbon insetting is the implementation of nature-based solutions (i.e., reforestation, agroforestry, and renewable energy) into a company’s supply chain which helps to re-establish our carbon sinks (i.e., forests, soil, oceans). 

Examples of carbon insetting could include: a car manufacturer planting a forest outside of its factory, a hotel chain funding the creation of olive groves and then buying back the olive oil produced, and a restaurant buying produce from farmers who prioritize soil carbon sequestration.

What Are the Differences Between and Advantages of Carbon Offsets and Carbon Insets

Both carbon offsets and insets represent ways in which we can mitigate carbon emissions and global warming. But they are also different methods of climate action with different environmental impacts, making it essential to understand their differences. 

The main difference between carbon offsets and insets is that carbon offsetting involves investing in projects that are not related to a company’s products. Carbon insetting involves investing in projects that are related to a company’s products. It also addresses a company’s balance within our ecosystem.

The following are other key differences between carbon offsets and insets:

  • Carbon offset projects are created for the voluntary carbon market, whereas carbon inset projects are created for specific businesses after studying their supply chains.
  • The purchaser and offset provider are typically discreet for carbon offsets, but carbon insetting is a collaborative effort between the developer and business.
  • Carbon offset projects meet certain key criteria and project standards, whereas carbon inset projects may use independent auditors to assess the project’s effectiveness.
  • The focus of carbon offsets is on the tonnes (kg) of CO2 avoided/removed, whereas the focus of carbon insets is creating carbon emissions reduction capacity. The total amount of emission reduction is uncertain and of secondary concern.
  • Carbon offsetting provides convenience and economic efficiency, whereas carbon insetting provides added value to a company’s supply chain.

The following are key advantages of carbon offsets:

  • They address both direct and indirect carbon emissions
  • They can be purchased from a variety of projects including direct CO2 capture, renewable energy, energy efficiency, and carbon sequestration
  • Additionality is guaranteed with verified offset projects

The following are key advantages of carbon insets:

  • Insets benefits the surrounding community as well as the ecosystem
  • Inset projects are closely aligned to the businesses they are designed for
  • Emphasis is placed on carbon sequestration, which helps revitalize ecosystems

A main criticism of carbon offsets is that they provide richer countries with a license to pollute. They allow consumers and businesses to pay to absolve their guilt over carbon emissions without having to make changes to their lifestyles or business models. Carbon insetting seeks to take the process of carbon offsetting and align it to businesses’ sphere of influence, forcing them to make changes to their business models.

How Do Carbon Offsets and Carbon Insets Impact Your Carbon Footprint

Choosing either carbon offsets or carbon insets is great if you are looking to lower your carbon footprint. Knowing their similarities and differences is important when making a decision of which to use. 

Carbon Offsets Carbon Insets
How are carbon emissions reduced Purchasing carbon offsets funds carbon emission reduction projects, which either prevent CO2 from entering the atmosphere or remove it once it’s already there. Carbon insets are the implementation of practices that reduce a businesses’ carbon footprint outside of its direct operations but within its own supply chain.
Impact on own carbon emissions Carbon offsets do not directly reduce your carbon footprint.  Carbon insets do not directly reduce your carbon footprint.
Impact on global carbon emissions Carbon offsetting mitigates the problem, but it doesn’t work at the core issue of reducing overall CO2 emissions. Carbon insetting mitigates the problem, but it doesn’t work at the core issue of reducing overall CO2 emissions.
Environmental benefits Carbon offsets improve air quality and protect ecosystems. Carbon insets increase carbon sequestration, maintain soil health, restore water cycles, reverse deforestation, protect biodiversity, and build climate resilience.
Overall effectiveness in reducing carbon emissions Carbon offsetting is effective if projects are additional, permanent, meet certain key criteria and project standards, and do not engage in greenwashing. Carbon insetting is effective if projects are verified according to existing standards. 

How Do Carbon Offsets and Carbon Insets Reduce Carbon Emissions

The goal of both carbon offsets and insets is to reduce total carbon emissions in order to mitigate climate change.

  • Carbon offsets: Offsets can represent direct or indirect emission reductions. Purchasing carbon offsets funds carbon emission reduction projects which either prevent CO2 from entering the atmosphere or remove it once it’s already there. 
  • Carbon insets: Insets represent indirect emission reductions. They are the implementation of practices that reduce a business’s carbon footprint outside of its direct operations but within its own supply chain. 

When you hear the words “carbon offset”, think about the term “outsourced”. Offsets represent the reduction, avoidance, destruction or sequestration of the equivalent of a ton of carbon in one place to “offset” an emission taking place somewhere else. They are purchased by one entity and outsourced to different organizations that put the offset projects into effect. 

For example, company A purchases carbon offsets from company B which is in the business of renewable energy. In exchange, company B builds a new solar plant or wind farm. Company A has reduced its carbon footprint, and company B has gained more clean energy.

When you hear the words “carbon inset”, think about the term “embedded”. Insets represent indirect emission reductions from activities embedded within a business’s supply chain. This includes upstream activities (i.e. purchased goods and services, fuel and energy-related activities, waste generation, employee commuting) and downstream activities (i.e. sold product processing, usage, and end-of-life treatment). 

For example, company A pays company C to perform forest restoration initiatives. Company A has reduced its carbon footprint, and company C has helped reverse deforestation, protect biodiversity, and create jobs for the local community.

What Impact Do Carbon Offsets and Carbon Insets Have on our Own Carbon Emissions

One of the best ways we can aid in the fight against global climate change is to reduce our carbon emissions. And to do this we first have to reduce our own carbon emissions. 

  • Carbon offsets: Carbon offsets do not directly reduce your carbon emissions. 
  • Carbon insets: Carbon insets do not directly reduce your carbon emissions. 

Carbon offsets do not directly reduce your own carbon emissions, they only make others reduce their carbon footprint to compensate for your carbon footprint. 

Carbon insets do not directly reduce your own carbon emissions. Insetting is an indirect method of emissions reduction because it reduces a business’s carbon footprint outside of its direct operations. 

Coupled with direct measures of emission reductions, such as reducing individual energy use and consumption, carbon offsetting and carbon insetting can be more effective. 

What Impact Do Carbon Offsets and Carbon Insets Have on Global Carbon Emissions

Every year we pump over 36 billion tons of CO2 into the atmosphere, fueling climate change. This causes temperature and sea-level rise, melting of sea ice, changing precipitation patterns, and ocean acidification. Carbon offsets and insets aim to reduce global emissions and mitigate these negative environmental effects.

  • Carbon offsets: Carbon offsetting mitigates the problem, but it doesn’t work at the core issue of reducing overall CO2 emissions. 
  • Carbon insets: Carbon insetting mitigates the problem, but it doesn’t work at the core issue of reducing overall CO2 emissions. 

Carbon offsets do not have a significant impact on global carbon emissions because in comparison to our 36 billion tons of CO2 emissions, carbon offsets for only ~1 billion tons of CO2 have been listed for sale on the voluntary market. Meaning that only about 0.8-1% of our annual CO2 emissions are offset.

Carbon insets do not have a significant impact on global carbon emissions because the main goal of insets is to do more “good” rather than doing less “bad”. Insets still do not curtail energy from fossil fuels or limit their production. They simply increase carbon sequestration activities via nature-based solutions.

So far, neither carbon offsets nor carbon insets have been successful in curtailing global carbon emissions. The COVID-19 pandemic triggered the largest decrease in energy-related carbon emissions since World War II, a decrease of 2 billion tons. However, emissions rebounded quickly at the end of 2020, with levels in December ending 60 million tons higher than those in December 2019. This indicates that the earth is still warming at an accelerated rate, and not enough is being done to implement clean energy practices. 

Illustration of annual CO2 emissions globally
Our World in Data: Annual total CO2 emissions

What Are the Environmental Benefits of Carbon Offsets and Carbon Insets

Using carbon offsets and insets can reduce our consumption of fossil fuels (i.e., coal, oil, and natural gas) which, in turn, reduces total carbon emissions. But they also come with various environmental benefits.

  • Carbon offsets: Carbon offsets improve air quality and protect ecosystems. 
  • Carbon insets: Carbon insets increase carbon sequestration, maintain soil health, restore water cycles, reverse deforestation, protect biodiversity, and build climate resilience.

Carbon offsets can reduce overall CO2 emissions, leading to improved public health and healthier ecosystems. Offsets can reduce the instances of asthma, respiratory allergies, airway diseases, and lung cancer caused by carbon emissions. And healthy ecosystems have been linked with cleaner air, water, and food

Carbon insets can reduce overall CO2 emissions, leading to healthier ecosystems and increased climate resilience. Insetting allows companies to have an integrated and holistic approach with climate action practices by connecting inset projects to the communities and ecosystems that companies source their products or services from. The issues of deforestation, loss of biodiversity, and carbon sequestration can be addressed through these projects. 

How Effective Are Carbon Offsets and Carbon Insets in Reducing Carbon Emissions

Carbon offsets and insets can be effective at reducing carbon emissions if they are used correctly.

  • Carbon insets: Carbon insetting can be effective if projects are verified or certified against existing standards

The overall effectiveness of carbon offsets depends on various factors. Direct CO2 removal is the most effective category of offsets followed by renewable energy, energy efficiency, and carbon sequestration. But most importantly, carbon offsets must be realized in order to be effective. When offsets do not get realized they do not offset any carbon, and we don’t reduce any emissions. A main problem with carbon offsets is that the number of sellers on the voluntary carbon market exceeds the buyers by about 600-700 million tons. Meaning that only about 300-400 million tons of CO2 offsets actually get realized. 

Carbon insetting projects can target the largest source of a businesses’ carbon emissions, which is why they can be effective at reducing overall emissions. They create synergy between climate change mitigation and agricultural adaptations, helps restore the ecosystems on which company’s depend. Healthier ecosystems can reduce total carbon emissions because they can sequester carbon emissions before they enter our atmosphere. 

However, carbon insetting currently does not require any verification or certification from agreed upon global standards. Many insetting companies choose to use independent auditors because this gives projects increased credibility, but it is not a requirement. Resources used include standards from the Gold Standard, Verra, Rainforest Alliance, Plan Vivo, and the IPI’s Insetting Program Standard amongst others.

Why Are Both Carbon Offsets and Carbon Insets Important to Fight Climate Change

Carbon offsets and insets are important to fight climate change because they are both ways to reduce total carbon emissions. Reducing emissions is important because it mitigates the effects of climate change, which has a positive cascade effect on public health and plant and animal diversity. In addition, this boosts the global economy and leads to innovative, more environmentally-friendly solutions. 

However, carbon offsets and insets should not be used as a Panacea for climate change. Relying on offsets and insets solely is impractical because there aren’t enough carbon sinks to offset every ton of CO2 produced from our collective human activities, and because they are indirect, rather than direct, methods of emission reduction. 

In the long term, direct methods of carbon emission reduction are much more effective. Reducing your household, travel, and lifestyle carbon footprint can go a long way in the fight against climate change!

What are Better Alternatives to Carbon Offsetting and Carbon Insets

If used correctly, carbon offsets and insets can provide environmental, economic, and social benefits that go beyond reducing carbon emissions. They have the potential to instigate meaningful environmental change and begin to reverse some of the effects of climate change. 

However, we can’t let these two methods be a guilt-free way to reduce carbon emissions. Carbon offsets and insets must be used in conjunction with direct carbon reduction measures until the industry has time to invest, develop, and refine more sustainable innovations. 

These reduction measures don’t have to involve drastic changes either. Actions that may seem small can have a big impact because those small changes add up! You can reduce your carbon footprint in three main areas of your life: household, travel, and lifestyle. 

Reduce your household footprint:

Reduce your travel footprint:

  • Walk or bike when possible: The most efficient ways of traveling are walking, bicycling, or taking the train. Using a bike instead of a car can reduce carbon emissions by 75%. These forms of transportation also provide lower levels of air pollution.

Reduce your lifestyle footprint:

  • Switch to Renewable Energy Sources: The six most common types of renewable energy are solar, wind, hydro, tidal, geothermal, and biomass energy. They are a substitute for fossil fuels that can reduce the effects of global warming by limiting global carbon emissions and other pollutants.
  • Recycle: Recycling uses less energy and deposits less waste in landfills. Less manufacturing and transportation energy costs means less carbon emissions generated. Less waste in landfills means less CH4 is generated.
  • Eat less meat and dairy: Meat and dairy account for 14.5% of global greenhouse gas emissions, with beef and lamb being the most carbon-intensive. Globally, we consume much more meat than is considered sustainable, and switching to a vegan or vegetarian diet could reduce emissions. 
  • Take shorter showers: Approximately 1.2 trillion gallons of water are used each year in the United States just for showering purposes, and showering takes up about 17% of residential water usage. The amount of water consumed and the energy cost of that consumption are directly related. The less water we use the less energy we use. And the less energy we use, the less of a negative impact we have on the environment.

Final Thoughts

In short, carbon offsets are not the same thing as carbon insets, although insets are derived from offsets. Carbon offsets represent the avoidance or removal of CO2 from the atmosphere via verified projects available for purchase on the voluntary market. Carbon insets represent the addition of nature-based projects into a company’s supply chain. They do not require formal verification.

Both are tools in our sustainability toolbox that can be used to reduce carbon emissions and mitigate climate change. But we should not rely on either, or both, to be a cure-all for our environmental problems. Direct measures of carbon emission reduction are much more effective in reducing emissions both in the short and long term.

Stay impactful,

Illustration of a signature for Grace



Sources

Photo of author

Grace Smoot

Grace loves to research and write about all things related to climate action and sustainability. She holds a Bachelor’s of Science degree in Environmental Biology and works as an Environmental Survey Technician. Outside of work, she loves to work out, play soccer, and take her dog for long walks.

Did you know that the internet is a huge polluter of the environment? But fortunately not this site. This site is powered by renewable energy and all hosting-related CO2 emissions are offset by three times as many renewable energy certificates. Find out all about it here.

Three Related Posts

One Unrelated Post