Tuesday 30 May 2023

‘Carbon offset costs set to double by 2030’

The cost of carbon offsetting could potentially double for companies by 2030, according to new analysis.

International professional services firm Price Waterhouse Coopers (PwC) recently published a report revealing that FTSE 350 companies publicly reported voluntary carbon offset purchases worth £38 million in 2022.

However, an analysis of BloombergNEF forecasts suggests that the same amount of offsets could cost companies more than £154 million by the end of the decade, marking a significant increase of 256%.

Furthermore, prices are expected to continue rising until 2050, with the cost of the equivalent volume of offsets peaking at £356 million as businesses rush to meet their net zero targets.

These findings have raised concerns that companies may struggle to achieve their targets if they find the cost of offsets to be unaffordable in the future.

In 2022, around 80% of the offsets purchased by FTSE 350 firms were classified as "avoidance offsets”, according to the report.

These offsets originate from projects that aim to prevent or reduce environmental harm, such as renewable energy initiatives or efforts to combat deforestation.

The concept of carbon offsetting involves compensating for one's own carbon emissions by investing in projects that reduce or remove greenhouse gases from the atmosphere.

It is often viewed as a way for companies to mitigate their environmental impact while working towards sustainability goals.