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Explainer: How do carbon offsets and insets work?

They both relate to strategies on how to reduce carbon in our atmosphere.

John Hart, Associate Editor

June 6, 2024

3 Min Read
Headshot of Joe Sagues, professor of biological and agricultural engineering at North Carolina State University.
The terms "carbon offset" and "carbon inset" both relate to strategies for mitigating the impact of carbon emissions, says North Carolina State University professor Joe Sagues, but they differ in their approach and implementation. Photo: NCSU

Agriculture is expected to play a significant role in removing carbon from the atmosphere to address climate challenge. The confusion comes in as to just what practices farmers can use to achieve the goal. 

Joe Sagues, a professor of biological and agricultural engineering at North Carolina State University, says agriculture and forestry can contribute to carbon sequestration or carbon removal. Carbon in the atmosphere is measured at 3.3 trillion tons of carbon dioxide equivalents. Carbon emissions from all sources is pegged at 55 billion tons of CO2 equivalents. Carbon sequestration could remove as much as 20 billion tons of CO2 equivalents per year across all pathways, with agriculture and forestry pathways in a strategic position to play a highly impactful role in the near-term. 

Sagues says some of the carbon removal pathways under development aim to manage forests in a way to sequester more carbon and agricultural practices such as no-till, cover cropping, enhanced rock weathering, and the use of certain types of biological inoculants. Bioprocessing, used to make bio products such as biochar and bioplastics, may also remove carbon from the atmosphere. 

The key is to monetize carbon sequestration practices for foresters and farmers. It’s also important to understand the difference between carbon insetting and carbon offsetting. Carbon insetting is the newest buzzword in the field of carbon sequestration with farming and forestry production practices viewed as key in achieving carbon insetting goals.  

Related:Information Library

What do these terms mean? 

The terms "carbon offset" and "carbon inset" both relate to strategies for mitigating the impact of carbon emissions, but they differ in their approach and implementation. Here's a detailed explanation of each: 

Offsetting involves compensating for emissions by funding projects that reduce or remove carbon dioxide (CO2) or other greenhouse gases from the atmosphere. These projects are often located away from the emission source and can include various activities such as renewable energy projects, reforestation, and methane capture. 

Carbon insetting, on the other hand, refers to reducing carbon emissions within a company's own value chain or supply chain. It focuses on projects that have a direct positive impact on the company’s own operations and those of its suppliers and partners. 

While both carbon offsets and carbon insets are vital tools in the fight against climate change, they serve different purposes and are implemented in different contexts. Offsets allow companies to balance their carbon budget by supporting external projects, whereas insets focus on making internal operations and supply chains more sustainable. 

Understand key words 

Carbon ‘insetting’ is the implementation of practices like reforestation, agroforestry, renewable energy or regenerative agriculture. Carbon offsetting uses carbon credits to reduce, or “offset” greenhouse gas emissions caused by other sources, which then gets credits for reducing carbon emissions.  

Forestry is expected to play a big role in carbon insetting. Dan Sanchez, chief scientist for biomass carbon removal and storage for Carbon Direct, a New York City-based carbon management firm founded in 2019, says avoiding deforestation is a key role in carbon sequestration. He says the carbon reduction benefits of avoiding deforestation can be quantified and sold on the carbon market. 

For production agriculture, conservation tillage, cover crops, diversified crop rotation and nitrogen management can draw carbon dioxide from the atmosphere and instead, be used to build soil organic matter. Increasing carbon in the soil can lead to yield improvements and better yield stability. 

About the Author(s)

John Hart

Associate Editor, Southeast Farm Press

John Hart is associate editor of Southeast Farm Press, responsible for coverage in the Carolinas and Virginia. He is based in Raleigh, N.C.

Prior to joining Southeast Farm Press, John was director of news services for the American Farm Bureau Federation in Washington, D.C. He also has experience as an energy journalist. For nine years, John was the owner, editor and publisher of The Rice World, a monthly publication serving the U.S. rice industry.  John also worked in public relations for the USA Rice Council in Houston, Texas and the Cotton Board in Memphis, Tenn. He also has experience as a farm and general assignments reporter for the Monroe, La. News-Star.

John is a native of Lake Charles, La. and is a  graduate of the LSU School of Journalism in Baton Rouge.  At LSU, he served on the staff of The Daily Reveille.

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