Start-Ups Are Helping To Offset Emissions Through Carbon Credits

Amongst the many initiatives from the European Union to fight climate change and achieve net-zero by 2050, one initiative that’s been gaining traction with high-energy industries is the possibility to buy carbon credits, in order to contribute to carbon offsetting.

Since 2005, energy-heavy industries have been subject to the EU Emissions Trading System (ETS), which sets a price for emissions in order to promote the transition to a carbon-neutral industry. In essence, what carbon offsetting does is reduce or remove carbon by compensating for emissions made elsewhere - something that you may have seen from airlines, for example, advertising themselves as a “greener” alternative to travel.

And while this initiative has been credited with reducing emissions by about 35% between 2005 and 2019, it has also received criticism for over-allocation of permits, price volatility, and not quite meeting its goals - something that has been extensively reviewed ahead of the current Phase 4, which takes us to 2031.

Start-ups is where the game is at

With this system, large companies are buying carbon credits in order to offset their footprint (and therefore avoid fines for emissions higher than the currently allowed limit), which are purchased from emission-saving projects largely led by start-ups.

A combination of a higher trading price (currently at €98.5 per ton of emissions) and a reduction in allowances is having a double effect: forcing large industries to adopt greener practices on one hand; and financially aiding projects that support the environment.

Start-ups including ClimateTrade in Valencia, Carbonex in London or Puro.earth in Finland are using credits collected from large companies to help fund environmental projects, work closely with industries to reduce or neutralise emissions, and even use blockchain-based solutions to either aid existing projects or start new green businesses, further putting the focus on innovation in order to help fight climate change.

How cities are contributing to a greener future through carbon credits

A carbon-neutral society will now fine companies if their emissions are higher than the established allowances, which have been reduced in recent reviews.

Carbon credits have a huge impact on the life of cities, as it’s to be expected. With large industries affecting the cities that they’re based next to through pollution, carbon credits help create a necessary balance between how much they produce, and how much they offset by investing in greener projects or company transformations for a more sustainable future.

This synergy between large industries and start-ups helping not only to offset, but also to educate in ways of reducing carbon emissions, has a direct positive impact. It’s not just building a culture of resilience, but also one of environmental mindfulness and responsibility that goes way beyond just paying a fine for extra emissions.

What’s left to be seen is what will be done to take things a step further - and drive a push towards having carbon offsetting start-ups as a necessary part of the overall industrial for pictures.