The Oxford Principles for Net Zero Aligned Carbon Offsetting, introduced in 2020, have served as an essential resource to guide companies on what types of credits align with net zero, and under what conditions they should be used. Reflecting the dynamic progress in both the voluntary carbon market and scientific research, Oxford University researchers have now released an update on these crucial guidelines.

This revision, welcomed by CEEZER—an advocate for these principles—aims to steer significant shifts in carbon markets and carbon credit procurement practices. It maintains the original's essential elements while providing further clarity to assist corporations in enhancing their compensation strategies towards net zero alignments.

This article delves into the Oxford Principles, examines the latest revisions, and provides essential insights for building a net-zero-aligned portfolio.

Oxford Categories as a taxonomy of carbon credits 

Although all carbon credit projects aim to achieve the same thing –mitigate climate change–, there is a wide variety of approaches underlying these projects in today’s market. One key contribution of the original Oxford paper has been to provide a clear classification of projects within the voluntary carbon market (VCM), which has received a small update in this revised edition. 

Carbon credits can broadly be sorted into two groups: emission reductions and carbon removal. As shown below, the taxonomy further breaks this down into five different project classifications, distinguishing between where carbon is removed from the atmosphere, how it is stored (in the biosphere or geosphere), and the risks and benefits associated with these different approaches.

• Oxford Category I: Avoided fossil and carbon use
• Oxford Category II: Emission reduction from the biosphere
• Oxford Category III: Emissions reductions with a lower risk of reversal
• Oxford Category IV: Carbon removal with higher risk of reversal
• Oxford Category V: Carbon removal with low(est) risk of reversal 

It is important to note that both between and within project types there are stark differences in terms of risk of reversal, specific tradeoffs, and co-benefits. For instance, nature-based projects within Oxford Category IV are generally associated with a range of co-benefits, but in some instances also have potential adverse impacts. That is, afforestation with non-native, single-species plantations offers a radically different impact on an ecosystem compared to holistic ecosystem restoration with a clearer focus on local biodiversity. The same holds for biochar, which increases crop yields and offers resilience to drought when applied to soils, whereas direct air capture with capture and storage (DACCS) projects typically offer limited benefits beyond the carbon impact (especially on a dollar basis). 

With a repository of over 8,000 projects spanning a broad range of registries and methodologies, CEEZER offers a streamlined gateway to the market's diversity. In addition to a wide array of tags and categories, the projects in this market-leading database have all been meticulously classified into Oxford Categories. By doing so, the platform transforms the potentially overwhelming task of understanding the VCM into a manageable and insightful experience, fostering a more accessible and transparent carbon market.

What are the revised Oxford Offsetting Principles?

The Oxford Offsetting Principles paper revolves around four key principles that outline how offsetting needs to be approached to help achieve a net zero society:

• Principle 1: Cut emissions, ensure the environmental integrity of credits used to achieve net zero and regularly revise your offsetting strategy as best practice evolves
• Principle 2: Transition to carbon removal offsetting for any residual emissions by the global net zero target date
• Principle 3: Shift to removals with durable storage (low risk of reversal) to compensate for any residual emissions by the net zero target date‍
• Principle 4: Support the development of innovative and integrated approaches to achieving net zero

By following these principles, users can lay the groundwork for a strategic approach to carbon credit procurement. 

Most significant updates in the revised Oxford Offsetting Principles

The principles as outlined above broadly remain the same in the 2024 revised edition but there are some important changes throughout. These updates reflect a deeper understanding of the complexities involved in achieving net zero, from the urgent need to reduce emissions to the critical role of durable carbon removal and the importance of ecosystem restoration. 

Delving into the specifics, the revised paper underscores the following areas of focus: 

1. Stressing the urgency of reducing emissions. Organizations committed to net zero need to prioritize early investments in renewable energy and enhance energy efficiency within their own value chains. Reducing emissions has multiple co-benefits and there are limits to the availability of high-quality credits. 
2. Reinforcing the need to address the carbon removal gap. The market for high-quality removals is immature and needs early adopters to support its growth. Removal projects comprise only a small fraction of credit issuances and retirements on the VCM. As shown by the State of Carbon Dioxide Removal 2023 durable carbon removal needs to be scaled 30-fold by 2030 and 1,300-fold by 2050, in alignment with the Paris Agreement. 
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   “One little-known fact is that hardly any of the carbon market removes and stores carbon at all,” says Kaya Axelsson, co-author of the revised paper and Head of Policy and Partnerships at Oxford Net Zero. “Currently, the majority of carbon credits are for avoided emissions, and these are often over-credited or have trouble proving that they had an impact beyond what would have happened anyway.”   
3. Highlighting recent evidence demonstrating that nature-based systems are essential in tackling the causes and consequences of climate change. Ecosystem protection and restoration are necessary to achieve global net zero and support climate change adaptation, regardless of whether these efforts are used for compensation claims. 
4. Aligning terms with new international guidance on net zero and nature commitments and claims. Since the initial publication of the Principles, guidance has converged significantly across international net zero initiatives and standards. This guidance stresses that organizations must urgently reduce emissions within their sphere of influence (Scopes 1, 2, and 3) and fund high-quality, durable removals to balance residual emissions. 
   
   “The revised Oxford Offsetting Principles are designed to complement rather than conflict with the many standards that have evolved in recent years to guide investments into the voluntary carbon market,” Injy Johnstone, co-author of the paper and Research Associate in Net Zero Aligned Offsetting says. “At the same time, they provide more specific guidance on how users can develop an innovative and integrated net-zero aligned offsetting portfolio, recognizing that ambition needs to be ratcheted up across the board and further embedded into standards and regulation.”‍
5. Clarifying the durability risks and co-benefits of various types of removal and storage. The previous version of the Principles distinctly separated removal and storage types into short- or long-term storage. Recognizing that durability and risk of reversal exist on a continuum and storage within types can vary under different conditions and governance arrangements, the revised Principles discuss the risks to storage across different project types in greater detail.
6. ‍Acknowledging the importance of mitigation efforts beyond organizational net zero targets. In response to heightened standards of integrity for climate claims, many actors and initiatives continue to purchase credits and support mitigation projects without making compensation claims. While the Principles discuss net zero aligned offsetting, the authors acknowledge there are many other reasons to buy credits and support mitigation projects other than to compensate for emissions, e.g., to pay for reductions in wider society or to restore ecosystems.

Key takeaways for portfolio building

When planning a long-term carbon credit procurement strategy, the Oxford Principles provide a well-defined course of action for corporations. This entails gradually increasing the portion of carbon credits procured from carbon removal projects, with the ultimate goal of obtaining 100% of credits from carbon removal initiatives with low(est) risk of reversal to neutralize your residual emissions in the target year.

Injy Johnstone, co-author of the paper and Research Associate in Net Zero Aligned Offsetting states that “We do not have sufficient carbon removal to address the world’s residual emissions: users of these Principles need to reduce emissions as much as possible right now, whilst at the same time demonstrating support for the development of more carbon removal projects, particularly those that store carbon on a meaningful timeframe.”

The figure presented below offers an illustrative breakdown of the various project types that could be employed to tackle residual emissions from 2020 to 2050. While not a prescriptive guide, it depicts a possible pathway towards net zero compensation, aligning with Principles 2 and 3. It showcases a strategic shift from projects focused on emissions reduction to those centered on carbon removal. Additionally, it highlights a transition towards projects with storage solutions that present a lower risk of reversal, moving away from those without storage or with a higher risk.

The 100% line indicates the total carbon credit portfolio for the emissions attributable to the organization’s value chain, encompassing Scope 1, 2, and 3 emissions. The striped area above the line suggests that investments across all credit types may contribute to wider mitigation efforts beyond an organization's value chain mitigation or net zero target, up to and beyond the net zero target date. That is, all actors with the means to do so should consider how they can invest in further contributions to climate mitigation. For instance, this can be philanthropic afforestation and reforestation providers such as Stiftung Wilderness International, or funds such as Milkywire that provide catalytic research and development funding for durable removal. These contributions might be especially valuable for organizations setting climate-positive targets. 

Take action towards net zero today

According to the Net Zero Tracker 2023, 88% of global emissions, 92% of global GDP, and over 50% of the largest publicly listed companies in the world are now covered by some form of net-zero targets. Righteously so, many actors invest in carbon credits to take responsibility for their ongoing emissions as part of their climate strategy. However, many corporate compensation strategies do not fully align with global net zero goals yet. 

Companies must now take responsibility for unavoidable emissions. To do this in a science-based manner, the Revised Oxford Principles for Net Zero Aligned Carbon Offsetting helps to answer several critically important questions that emerge for those designing a net zero aligned climate action strategy. What types of carbon credit projects should be invested in and when? How can actors investing in these projects avoid greenwashing? How can users catalyze the cost-effective supply of the right kind of carbon credit projects to achieve net zero globally?

CEEZER’s unified platform is designed for complex carbon credit transactions, helping your company align with the Revised Oxford Offsetting Principles. On CEEZER, you can build a portfolio in line with these principles, maximizing your climate impact today (Principles 1, 2, & 3) and contributing to market development for innovative solutions (Principle 4). 

The Portfolio Manager tool on CEEZER maps out a net-zero journey based on a company's current and future portfolio. It provides constant monitoring and long-term planning to mitigate supply and price risks. 

Contact us to learn more about our platform.

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