What You Need to Know
As calls intensify for businesses to act responsibly, a wave of innovative energy solutions has emerged, including insets and offsets. One common question about insets and offsets: what’s the difference between the two? To answer that question, it’s important to first understand the challenges companies face when trying to reduce their environmental impact in energy-intensive industries.
In industries like aviation, trucking, iron and steel, and chemicals, it can be challenging to implement renewable biofuels such as sustainable aviation fuel or green hydrogen. These fuels are often in short supply and produced long distances from where they are used. Getting them where they are needed often requires expensive transport methods, such as tankers and planes. The logistics, cost, and emissions from physically moving biofuels to customers this way reduces the overall environmental benefits of using them in the first place.
On top of that, managing Scope 3 emissions is difficult. These sectors have complex value chains of vendors, suppliers, and distributors. Many are based in other countries with different or nonexistent regulatory requirements about carbon emissions. Companies in the value chain often lack the technical expertise or resources to measure and monitor their output accurately, or even at all. With little direct control over value chain activities, businesses at the end of the value chain must rely on influence rather than authority.
What is a Carbon Offset?
Some businesses have turned to carbon offsets to compensate for their emissions. Offsets allow companies to fund projects or entities that reduce or remove emissions, such as reforestation projects, or businesses that provide energy from wind, solar, hydropower, or other renewable sources.
However, not all offsets are created equal. High-quality offsets are verifiable, permanent, and run by trusted or credible entities that provide accurate and regular reporting of environmental outcomes. They should also be “additional,” meaning they would not exist without offset funding. Lower-quality offsets may not actually deliver meaningful reductions in emissions, making them risky investments.
The impact of carbon offsets also varies widely depending on the nature and quality of the project. Some efforts, like reforestation, can take years or decades to provide significant environmental benefits. Other concerns include “double counting” — multiple businesses claiming the same offset benefit — and a lack of transparency and standardization in reporting and metrics. This can undermine confidence about whether projects are making a genuine difference.
What Is an Inset?
Insets are emission-reduction projects that occur within the same sector where the emissions are produced, even if they don’t reduce the specific emissions of the customer that buys them. This enables businesses to purchase insets that mirror their operations, such as a firm using sustainable aviation fuel certificates (SAFc) to compensate for its business travel or cargo flight emissions, or a construction company using insets that support more responsible cement manufacturing.
Because insetting focuses on activities that are more “apples to apples” than offsets, emissions reductions are easier to verify, monitor, and quantify. This is crucial in industries where it may be too expensive or impractical for businesses to reduce their own emissions by purchasing renewable fuels or upgrading equipment. As long as an inset purchase results in real emissions reductions somewhere in the supply chain, a company can claim the environmental benefit, regardless of where their specific emissions occur.
Insets also help promote technological and market advances in the supply chain by encouraging industry growth and innovation while also expanding the universe of customers who can benefit. These efforts not only advance responsible business practices, they also strengthen the overall resilience of the supply chain and expand access to energy resources.
Carbon insets can be a key driver of “virtuous cycles” that foster this type of large-scale change. For example, when businesses purchase SAFc, they demonstrate demand for sustainable aviation fuel. This leads to more confidence in the market, attracting more investors and increasing supply. More supply lowers costs, which leads to greater demand. This cycle continues, and the entire industry benefits, from farmers to fuel producers to airlines and beyond.
Insets vs Offsets at a Glance
| Insets | Offsets |
| Reduce or remove emissions inside an industry’s supply chain | Reduce or remove emissions outside of an industry’s supply chain |
| Easier to verify and track across the value chain | Difficult to verify and prove project effectiveness |
| Greater transparency and credible data support accurate measurement and accountability | Lack of clear data on environmental benefits |
| Expand options and resilience across the industry supply chain | Have no effect on supply chain activities |
| Help expand the American biofuels industry | Benefit the project’s industry and country |
A Long-term Strategy for Sustainability
Insets empower companies in any sector to confidently grow their business while reducing their emissions. This makes insets the more sustainable option for supporting decarbonization across the value chain now and for years to come. World Energy is pleased to offer responsible businesses a way to address their air travel and freight cargo emissions through our sustainable aviation fuel certificates (SAFc).
