Procurement:
Carbon Offset Credits

Companies motivated to procure climate smart wood (CSW) are often also interested in carbon offsets. However, these two approaches have different objectives and are designed to transform different parts of the economy.

Carbon offsets are verified reduction, removal, or avoidance of carbon dioxide emissions from the atmosphere. They play a role in enabling greenhouse gas emitters to meet jurisdictional or corporate greenhouse gas reduction targets.  Forest carbon offset projects, which may align with climate-smart forestry, are one way to generate carbon credits.

In contrast, CSW procurement leverages purchasing power to promote supply chain transparency and CSF management practices, creating a direct link between building materials used in a project and climate impacts.

For these reasons, purchasing carbon offsets is not a replacement for intentional procurement of CSW for building construction and carbon offsets are not presented as a procurement option in CSWG’s guidance, though CSW procurement and carbon offsets can be complementary.

There are two types of markets for carbon offsets: regulatory or compliance carbon markets are established and regulated by governments and operate on a mandatory basis, while non-regulatory voluntary carbon markets are not.

The impact of carbon offsets is likely most meaningful in economy-wide cap and trade programs like those in California or Washington where, offsets are an option for regulated entities to meet emissions reduction targets by compensating for their carbon emissions. Forest carbon offset projects use measurement and verification protocols to demonstrate greater carbon storage and sequestration than would occur in a business-as-usual scenario.

These market signals in the building sector supply chain are necessary to transform wood supply chains, and therefore expectations related to the management of forests producing wood products.

The primary forest carbon offset project types are reforestation, improved forest management, and avoided conversion.

The degree of rigor of carbon offset projects is variable. Forest carbon offsets have faced criticism related to credibility and environmental justice issues, including providing a pathway for greenhouse gas emitters to continue to pollute.

An important benefit of forest carbon offset projects is the provision of financial incentives for landowners to implement forest management practices that store and sequester more carbon and often increase ecological resistance and resilience in the face of a changing climate.

Many carbon offset projects involve production of timber. The resulting wood could be one pathway to climate-smart procurement, given the high level of transparency and associated data.

Offsets projects also provide credible forest-level carbon data and therefore have a built-in transparency and traceability system. Procurement Option 1 provides more information on this approach.

Offsets and climate-smart wood procurement can be complementary strategies to address climate impact provided that the primary emphasis is on minimizing impacts to the extent possible via direct procurement efforts.

Prioritizing climate-smart wood procurement within a company’s supply chain can decrease the direct impact of sourcing and promote climate adaptation and mitigation in forests of origin.

These efforts can lower the carbon footprint of a building that uses wood in its construction, but the larger project will generally still produce net carbon emissions. A company could subsequently choose to offset remaining carbon emissions by purchasing carbon offset credits at the level of a project and/or a company’s operations.