Energy-Efficiency Carbon Offsets Explained: All You Need to Know

Energy-Efficiency Carbon Offsets Explained: All You Need to Know

By
Grace Smoot

Read Time:14 Minutes

CLICK TO
SUBSCRIBE

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,

Energy-efficiency carbon offsets could play a crucial role in lowering the global average concentration of carbon dioxide (CO2) in our atmosphere, which now registers at over 400 parts per million, because they upgrade traditional systems into those that use less energy to perform the same task. So, we had to ask: What are energy-efficiency offsets really, and could they help us mitigate climate change?

Energy-efficiency carbon offsets upgrade traditional systems to those that need less energy to perform the same tasks. These offsets avoid carbon emissions immediately, bolster energy security, and are relatively cost-effective. However, they can lack additionality, standardization, and monitoring.

Keep reading to find out how efficient and effective energy-efficiency carbon offsets are, how you can offset your carbon footprint with them, what their pros and cons are, how they can mitigate climate change, and what better alternatives to energy-efficiency carbon offsets are. 

The Big Picture of Energy-Efficiency Carbon Offsets

Carbon offsets play an important role in mitigating the effects of global climate change by reducing greenhouse gas (GHG) emissions beyond what we each can achieve through individual actions. 

Energy-efficiency carbon offsets are a specific type of carbon offset that upgrade conventional systems into ones that use less energy to perform the same task, generating environmental benefits in the process. 

What are energy-efficiency carbon offsetsEnergy-efficiency carbon offsets are a specific type of carbon offset that upgrade conventional systems into ones that use less energy to perform the same tasks.
How do energy-efficiency carbon offsets workEnergy-efficiency carbon offsets avoid CO2 emissions because energy-efficient mechanisms use less energy. And because energy is often generated by fossil fuels or in unsustainable ways, the less energy we use, the less carbon we emit.
How effective and efficient are energy-efficiency carbon offsetsEnergy-efficiency carbon offsets are effective because they help reduce deforestation to strengthen our natural carbon sinks and bolster energy security to help transition away from fossil fuels. However, they can also lack additionality and do not reduce your own carbon emissions, which can lead to greenwashing.

Energy-efficiency carbon offsets are efficient because they avoid carbon emissions immediately, promote energy decentralization, and are relatively cost-effective. However, they can also lack standardization and monitoring.
What are the 7 pros of energy-efficiency carbon offsets1. Energy-efficiency offsets avoid CO2 emissions immediately
2. Energy-efficiency offsets improve air quality
3. Energy-efficiency offsets help reduce deforestation
4. Energy-efficiency offsets bolster energy security
5. Energy-efficiency offsets promote energy decentralization
6. Energy-efficiency offsets are relatively cost-effective
7. Energy-efficiency offsets allow us to reduce carbon emissions in ways we wouldn’t be able to accomplish individually
What are the 3 cons of energy-efficiency carbon offsets1. Energy-efficiency offsets can lack additionally
2. Energy-efficiency offsets can lack standardization and monitoring
3. Energy-efficiency offsets do not reduce your own carbon emissions, which can lead to greenwashing
What are the best energy-efficiency carbon offsetsThe best energy-efficiency carbon offsets are offered by Carbonfund, DelAgua, South Pole, and Ecologi which all support various energy-efficiency projects across the globe. In addition, myclimate and Clear offer various offsets for individuals and businesses that support clean cookstoves projects.
How can energy-efficiency carbon offsets help mitigate climate changeEnergy-efficiency offsets specifically help mitigate climate change because they help eliminate CO2 emissions from direct fossil fuel combustion and from indirect electricity generation. By using energy-efficient appliances and methodologies, we reduce the amount of CO2 entering our atmosphere. 

What Are Energy-Efficiency Carbon Offsets

Energy-efficiency carbon offsets are a specific type of carbon offset that upgrade conventional systems into ones that use less energy to perform the same task, generating environmental benefits in the process. 

Energy efficiency describes products or systems that use less energy than conventional systems to perform the same task. Energy-efficiency carbon offsets are a specific type of carbon offset that upgrade conventional systems into energy-efficient ones

“Energy efficiency: the use of less energy to perform the same task or produce the same result.”

U.S. Department of Energy

Examples of energy-efficiency projects include: 

  • Energy-efficient solutions for disadvantaged households
  • Energy-efficient buildings use less energy to heat and cool
  • Energy-efficient facilities use less energy to manufacture goods
  • Energy-efficient transportation reduces fuel usage

How Do Energy-Efficiency Carbon Offsets Work

Energy-efficiency carbon offsets avoid CO2 emissions because energy-efficient mechanisms use less energy. And because energy is often generated by fossil fuels or in unsustainable ways, the less energy we use, the less carbon we emit.

Some of the most common energy-efficiency projects involve clean and efficient cookstoves, water filtration programs, and co-generation facilities. Altogether, energy-efficiency carbon offsets save money, increase the resiliency of our power grid, positively impact public health, and avoid carbon emissions. 

Related: Are you interested in learning more about the big picture of direct carbon capture offsets? Check out the full article here: “What Are Energy-Efficiency Carbon Offsets and How Do They Work? The Big Picture”

How Effective and Efficient Are Energy-Efficiency Carbon Offsets

In terms of effectiveness, energy-efficiency carbon offsets help reduce deforestation and strengthen our natural carbon sinks, and bolster energy security to help transition away from fossil fuels. However, they can also lack additionality, and they do not reduce your own carbon emissions, which can lead to greenwashing.

In terms of efficiency, energy-efficiency carbon offsets avoid carbon emissions immediately, promote energy decentralization, and are relatively cost-effective. However, they can also lack standardization and monitoring.

Energy-efficiency carbon offsets are effective at mitigating climate change because they:

  • Reduce the demand for wood fuels, thereby reducing deforestation and strengthening our natural carbon sinks
  • Bolster energy security by providing reliable, affordable access to fuels and energy sources that emit less carbon than traditional fossil fuels

However, energy-efficiency carbon offsets can also lack effectiveness because they often lack additionality because many projects receiving revenue now would have been built regardless.

Energy-efficiency carbon offsets are efficient at reducing CO2 emissions because they:

  • Avoid carbon emissions immediately after installation of the technology
  • Promote energy decentralization, whereby power is generated at or near locations where it will be used
  • Are relatively cost-effective when compared to other methods of carbon emission reduction

However, energy-efficiency carbon offsets can also lack efficiency because they often lack standardization and monitoring due to them being a decentralized solution.

Also, energy-efficiency carbon offsets do not reduce your own carbon emissions, which can lead to greenwashing. This occurs when emissions are only offset and not reduced from the source, and the consumer is deceived into thinking they are offsetting their emissions but in reality, they are not. This is why we should first reduce our emissions before relying on offsets.

Related: Are you interested in learning more about how effective and efficient energy-efficiency carbon offsets are? Check out the full article here: “How Effective and Efficient Are Energy-Efficiency Carbon Offsets? Here Are the Facts”

What Are The 7 Pros and 3 Cons of Energy-Efficiency Carbon Offsets

Energy-efficiency carbon offsets avoid carbon emissions immediately, improve air quality, reduce deforestation and strengthen our natural carbon sinks, promote energy decentralization, bolster energy security and help transition away from fossil fuels, are relatively cost-effective, and allow us to reduce carbon emissions in ways we wouldn’t be able to accomplish individually.

Energy-efficiency carbon offsets can lack additionality, standardization, and monitoring, and they do not reduce your own carbon emissions which can lead to greenwashing.

Related: Are you interested in learning more about the pros and cons of energy-efficiency offsets? Check out the full article here: “Energy-Efficiency Carbon Offsets: All 7 Pros and 3 Cons Explained”

What Are the 7 Pros of Energy-Efficiency Carbon Offsets

Energy-efficiency carbon offsets have various pros that make them effective at avoiding carbon emissions.

7 Pros of Energy-Efficiency Carbon OffsetsQuick Facts
#1: Energy-efficiency offsets avoid carbon emissions immediatelyAs soon as energy-efficient mechanisms are installed, switched on, or implemented, they begin reducing CO2 emissions because they use less energy to perform the same task as traditional methods. 
#2: Energy-efficiency offsets improve air qualityEnergy-efficient cooking, heating, and lighting mechanisms can reduce the amount of total air pollution, improving overall air quality and human health as a result. For example, energy-efficient cookstoves can help reduce fuel use by 30-60%, leading to less harmful emissions.
#3: Energy-efficiency offsets help reduce deforestation and strengthen our natural carbon sinksEnergy-efficient cookstoves and water filtration projects reduce the demand for wood, which in turn reduces the need to cut down trees. This is important in the fight against climate change because globally, forests act as a carbon sink capable of absorbing a net 7.6 billion tons (bt) of CO2 per year.
#4: Energy-efficiency offsets bolster energy security and help transition away from fossil fuelsOverall, energy-efficient mechanisms use less energy than traditional mechanisms to perform the same task. This reduces overall energy demand, which in turn reduces reliance on imports of biomass fuels or fossil fuels (e.g., coal, oil, and natural gas). Being able to produce your own energy without relying on other entities increases energy security, which is reliable, affordable access to fuels and energy sources. 
#5: Energy-efficiency offsets promote energy decentralizationEnergy-efficient practices promote energy decentralization, where power is generated at or near locations where it will be used. This decreases the need to transport energy and generates environmental benefits associated with a lower carbon footprint
#6: Energy-efficiency offsets are relatively cost-effectiveEnergy-efficiency offsets from leading providers (e.g., Carbonfund, Ecologi, myclimate) cost less than $40 per ton of CO2 offset. Compare this to direct carbon capture offsets which can cost anywhere from $100-$1,200 per ton of CO2
#7: Energy-efficiency offsets allow us to reduce carbon emissions in ways we wouldn’t be able to accomplish individuallyEnergy-efficiency carbon offsets allow us to reduce emissions from activities where sustainable alternatives are not yet widely available. 

What Are the 3 Cons of Energy-Efficiency Carbon Offsets

Understanding the drawbacks of energy-efficiency carbon offsets is important when in order to effectively mitigate climate change.

3 Cons of Energy-Efficiency Carbon OffsetsQuick Facts
#1: Energy-efficiency offsets can lack additionalitySince 2020, global markets have contributed approximately $1 trillion towards energy efficiency-related practices involving buildings, transportation, infrastructure, and electric vehicles. The large demand for energy-efficient practices in general means that the infrastructure could have been built independently of energy-efficiency carbon offsets. 
#2: Energy-efficiency offsets can lack standardization and monitoringThere are different standards for different types of energy-efficiency practices. Appliances, lighting, buildings, cooking, and fuels are held to different standards, making it difficult to standardize energy efficiency as one singular entity. 
#3: Energy-efficiency offsets do not reduce your own carbon emissions, which can lead to greenwashingIf emissions are only offset and not reduced from the source, this could lead to greenwashing, when the consumer is deceived into thinking they are offsetting their emissions but in reality, they are not. 

How Could You Offset Your Own Carbon Footprint With Energy-Efficiency Carbon Offsets

The market for carbon offsets was small in the year 2000, but by 2010 it had already grown to represent nearly $10 billion worldwide. The voluntary carbon offset market (VCM) is where everyday consumers can purchase carbon offsets to offset their carbon emissions. 

The Ecosystem Marketplace predicts the VCM can grow to $50B by the year 2050. And because energy-efficiency carbon offsets are effective and efficient at reducing carbon emissions, they could make up an increasingly larger share of this market. Below are our favorite energy-efficiency offsets.

Related: Are you interested in learning more about the best energy-efficiency carbon offsets? Check out the full article here: “Best Energy-Efficiency Carbon Offsets (Complete 2024 List)”
Energy-Efficiency Carbon Offset CompanyQuick Facts
CarbonfundAbout: Purchases support energy-efficiency carbon offset projects including efficient cookstoves, water filtration, waste co-generation, and tailpipe emissions reduction.
Costs: $16.25-$17.16 per 1,000kg of CO2 for individuals, $390-$1,560 per year for small businesses, determined after initial contact for large businesses
DelAguaAbout: Purchases support the Rwandan clean cookstoves energy-efficiency carbon offset project.
Costs: Costs are determined after initial contact
South PoleAbout: Purchases support energy-efficiency carbon offset projects including clean cookstoves in China, Mali, and Rwanda.
Costs: Costs are determined after initial contact
EcologiAbout: Purchases support energy-efficiency carbon offset projects including efficient cookstoves in Kenya, Tanzania, Zambia, Ghana, and Honduras.
Costs: $6.04 per 1,000 kg of CO2 offset
myclimateAbout: Purchases support energy-efficiency carbon offset projects including efficient cookstoves in Kenya, Bolivia, Peru, and Madagascar. 
Costs: $ 23-$30 per 1,000kg of CO2
GoClimateAbout: Purchases support energy-efficiency carbon offset projects including the clean-burning stoves in Kenya project.
Costs: $16.99 per 1,000kg of CO2 for monthly subscriptions, B2B determined after initial contact.
CarbonClickAbout: Purchases support energy-efficiency carbon offset projects including the Improved Cooking Practices in Nigeria project.
Costs: $20 per 1,000kg of CO2
ClearAbout: Purchases support energy-efficiency carbon offset projects including improved cookstoves in Kenya and Malawi.
Costs: 18.99-$25 per 1,000kg of CO2
WrenAbout: Purchases support the clean cooking fuel for Refugees project in Uganda, which converts farming waste into charcoal bricks to be used as cooking fuel.
Costs: $19.80 per 1,000 kg of CO2 offset
Native EnergyAbout: Purchases support energy-efficiency carbon offset projects including the Madagascar Solar and Efficient Cookstoves project.
Costs: $15.50 per 1,000 kg of CO2
Cool Effect About: Purchases support energy-efficiency carbon offset projects including the Breath of Fresh Air clean cookstoves project in Honduras, which builds cookstoves in rural communities.
Costs: $8.79 – $21.97 per 1,000 kg of CO2
Zero SmartAbout: Purchases support energy-efficiency carbon offset projects including the efficient cookstoves project in Eritrea, which empowers local women to build, install and maintain fuel-efficient cookstoves.
Costs: $5.37 – $5.97 per 1,000 kg of CO2
3DegreesAbout: Purchases support energy-efficiency carbon offset projects including the BioLite Improved Stove Programme in Uganda, which provides communities with ultra-clean burning fan-assisted wood stoves that reduce air pollution.
Costs: Costs are determined after initial contact
Co2nsensusAbout: Purchases support energy-efficiency carbon offset projects including efficient cookstoves in Kenya and geothermal and solar energy in Turkey.
Costs: Costs are determined after initial contact

How Can Energy-Efficiency Carbon Offsets Help Mitigate Climate Change

Climate change is a severe and long-term consequence of fossil fuel combustion. Energy-efficiency carbon offsets can help mitigate climate change because they eliminate fossil-fuel-derived carbon from our atmosphere which, if left untreated, can remain there for tens of thousands of years and exacerbate the negative effects of climate change.

How is Climate Change Defined

Climate change is arguably the most severe, long-term global impact of fossil fuel combustion. Every year, approximately 33 billion tons (bt) of CO2 are emitted from burning fossil fuels. The carbon found in fossil fuels reacts with oxygen in the air to produce CO2

“Climate change: changes in the earth’s weather, including changes in temperature, wind patterns and rainfall, especially the increase in the temperature of the earth’s atmosphere that is caused by the increase of particular gasses, especially carbon dioxide.”

Oxford Dictionary

Atmospheric CO2 fuels climate change, which results in global warming. When CO2 and other air pollutants absorb sunlight and solar radiation in the atmosphere, it traps the heat and acts as an insulator for the planet. Since the Industrial Revolution, Earth’s temperature has risen a little more than 1 degree Celsius (C), or 2 degrees Fahrenheit (F). Between 1880-1980 the global temperature rose by 0.07C every 10 years. This rate has more than doubled since 1981, with a current global annual temperature rise of 0.18C, or 0.32F, for every 10 years. 

As outlined in the 2015 Paris Climate Agreement, we must cut current GHG emissions by 50% by 2030 and reach net zero by 2050

How Do Carbon Offsets Generally Help Mitigate Climate Change

Levels of carbon in our atmosphere that cause climate change have increased as a result of human emissions since the beginning of the Industrial Revolution in 1750. The global average concentration of carbon dioxide in the atmosphere today registers at over 400 parts per million. Carbon offsets can help prevent these levels from increasing even more.

When you hear the words “carbon offset”, think about the term “compensation”. Essentially, carbon offsets are reductions in GHG emissions that are used to compensate for emissions occurring elsewhere

Carbon offsets that meet key criteria and verified project standards, are additional and permanent, and are part of projects that are carried out until the end of their lifespan have the best chance of reducing carbon emissions and therefore reducing climate change. 

When we offset CO2 we also slow the rate of global temperature rise, which in turn minimizes the effects of climate change. 

How Do Energy-Efficiency Carbon Offsets Specifically Help Mitigate Climate Change

Energy-efficiency offsets help eliminate CO2 emissions from direct fossil fuel combustion and from indirect electricity generation. By using energy-efficient appliances and methodologies, we reduce the amount of CO2 entering our atmosphere. And because higher levels of atmospheric carbon exacerbate global warming, less is better.

What Are Better Alternatives to Energy-Efficiency Carbon Offsets

If used correctly, energy-efficiency carbon offsets can provide environmental, economic, and social benefits 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 this method be a guilt-free way to reduce carbon emissions. Energy-efficiency offsets must be used in conjunction with direct carbon reduction measures so that we are directly reducing emissions as well as avoiding them.

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 carbon footprint:

Reduce your travel carbon 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 carbon 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 fewer 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 GHG 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.

Because energy-efficiency offsets are an indirect way and not a direct way of reducing emissions, they alone will not be enough to reduce global carbon emissions significantly. Direct measures of emission reductions, such as reducing individual energy use and consumption, are better alternatives to energy-efficiency offsets. 

Related: Are you interested in learning why reducing your carbon footprint is so important? Check it out in this article here: “4 Main Reasons Why Reducing Your Carbon Footprint Is Important”

Final Thoughts

Energy-efficiency carbon offsets help avoid carbon emissions by upgrading systems so that they need less energy to perform certain tasks. They are relatively cost-effective, help reduce deforestation and strengthen our carbon sinks, and bolster energy security to aid in the transition away from fossil fuels. However, they can lack additionality, standardization, and monitoring. 

The top energy-efficiency offset companies support third-party verified projects involving clean cookstoves, waste co-generation, and water filtration. But although energy-efficiency offsets can instigate meaningful change, they should not be seen as the only solution to climate change. They are effective at reducing CO2 in the short term, but in the long term, they fail to reduce CO2 enough. 

When used in conjunction with direct CO2 reduction measures, carbon offsetting can be much more effective. We should reduce our own carbon footprint as much as possible first, and only then choose the most effective energy-efficiency carbon offsets.

Stay impactful,

Illustration of a signature for Grace



Sources

Photo of author
Did you like this article?

Get the 5-minute newsletter that makes reading impactful news enjoyable—packed with actionable insights to make a positive impact in your daily life.

Newsletter Form - After Content

Three Related Posts

One Unrelated Post

Illustration of our Impactful Ninja logo, holding up a newsletter with a green heart
Become more impactful, one email at a time
Get the 5-minute newsletter that makes reading impactful news enjoyable—packed with actionable insights to make a positive impact in your daily life.
Illustration of our Impactful Ninja logo, which is a ninja holding a green heart and has a light-green outline here
Become more impactful, one email at a time
Get the 5-minute newsletter that makes reading impactful news enjoyable—packed with actionable insights to make a positive impact in your daily life.