What is carbon accounting?
Carbon accounting is a method to count, track, and report your organisation's greenhouse gas (GHG) position. This is also known as your organisation’s carbon footprint. Carbon accounting frameworks recognise both greenhouse gas emissions and removals which your business is responsible for.
Just like with your financial accounts, a key principle of carbon accounting is the continuity and consistency of your accounts. Any emission and removal must only be recognised once, and there are rules around how the emissions footprints of different businesses relate to each other.
Where you recognise a removal in your inventory you become responsible for keeping it removed. If it’s reversed then it becomes a liability on your ledger.
You count your emissions and removals within your business boundaries. Your net position is all of your emissions less your removals.
What is a carbon removal?
One of the most widely used international standards for carbon accounting is the ISO 14064 family.
The ISO standard defines a removal as:
“Withdrawal of a GHG [greenhouse gas] from the atmosphere by GHG sinks”.
CarbonCrop measures carbon dioxide removed from the atmosphere and stored in biodiverse regenerating native forests - a nature-based sink. These units of carbon removal can be applied directly against your carbon inventory.
What is a carbon removal applied against an inventory?
When applied against an inventory, a carbon removal is the “withdrawal of a GHG from the atmosphere by GHG sink” from within the value chain boundaries of the reporting organisation.
CarbonCrop-measured carbon removals have been used in projects independently certified as net-zero under ISO 14064-1:2018.
How is a carbon removal applied to an inventory different from a carbon credit or a carbon offset?
When used against an inventory, a carbon removal is a withdrawal of a GHG from the atmosphere by GHG Sinks from within the value chain boundary of the reporting organisation.
A carbon credit is a tradable, non-tangible instrument representing one tonne of carbon dioxide-equivalent that is reduced, avoided, or removed by a project and is certified to an internationally recognised carbon accounting standard.
A carbon offset is the practice of compensating for GHG emissions by purchasing and retiring carbon credits.
Why isn’t a carbon removal in an inventory the same as a carbon offset?
Carbon removals applied against an Inventory are not the same as carbon offsets. In an inventory, carbon removals are not tradeable carbon credits. They have not been purchased from an independent source to offset emissions. They are directly measured, monitored, and reported carbon removals within the organisation's operational boundaries, emphasising the organisation's responsibility for their permanence and accuracy.
The criteria of additionality, permanence, and leakage are important for carbon offsets because they ensure the integrity and environmental benefit of the offsets in question.
These criteria are partly because the buyer of the offset/credit usually has no control or influence over the source of that carbon sink after the transaction or the reversal risk. The quality criteria ensure an obligation by the supplier to keep that carbon out of the atmosphere.
In contrast, for carbon removals within an inventory, the focus is on the accurate accounting and reporting of these removals, reflecting the organisation's direct action towards its GHG reduction goals.
For inventory accounting, the carbon sink is within the organisation’s boundary and they have ultimate responsibility and accountability for maintaining the state of the removals. The organisation must actively manage and monitor these carbon sinks to ensure their integrity and permanence. If they do not, they risk the beneficial carbon removal becoming a liability, reported as a reversed emission.
 Inventory Carbon Removals Carbon sink is within the business boundary |  Carbon Removal Offsets Business is independent of the carbon sink |
Why should you count as many inventory carbon removals as possible?
You should measure all the removals within your boundary area if you have robust and verifiable data. This creates consistency with the other side of the carbon equation, measuring as many emissions as possible within the same boundary.
When you have the full picture of your emissions and sequestration you can look for opportunities to improve - opportunities to reduce emissions and opportunities to enhance removals. Enhancement could be reducing the risk of reversals (i.e., forest loss), encouraging more sequestration or improving measurement accuracy.
Improvement in accuracy and quality of measurement is a principle of carbon accounting under the ISO 14064 family.
What are the risks associated with applying carbon removals to my inventory?
When accounting for carbon stored in a sink, it’s important to be aware that this carbon could be released into the atmosphere if a reversal event should occur. If this happens, the reporting organisation must report this as an emission. To help manage this risk, robust monitoring and verification processes can help make sure any reversals that do occur are accurately accounted for and reported in good time. This has implications for net-zero balances and related climate claims. Careful selection of diverse carbon removal projects with lower reversal risks can also help manage this risk. Carbon removals in your inventory are a benefit but can also be a liability.
What makes a good inventory carbon removal?
When CarbonCrop measures carbon removals within a supply chain, we follow several key principles of the ISO standard plus extra layers of transparency, traceability and co-benefits.
Key Principles
Rights to the removal: The reporting organisation must be able to show they hold the rights to the carbon removals. If the carbon sink is on land within the reporting business’s supply chain but not directly owned by them (ie Scope 3, not Scope 1), this would be an agreement between the reporting organisation and the landholder.
Permanence: Landholders who are awarded carbon removal units through CarbonCrop have a binding obligation to ensure the CO2 stays sequestered in the regenerating biomass of the registered native forest for the next 100 years.
No double counting: CarbonCrop maintains a separate registry holding all carbon removal units issued. This information is available to third parties for independent verification. Before issuing any removal units, a thorough search of international registries and the ETS to ensure no double-counting of sequestration.
Certifiable: CarbonCrop-measured carbon removals have been used in projects certified under ISO-14064-1.
In addition to raising the bar on transparency and traceability, CarbonCrop-measured carbon removals also have several key co-benefits.
Biodiversity: Carbon removal units are issued from biodiverse regenerating native New Zealand forests that are unable to access carbon finance elsewhere.
Local community investment: Direct impact investment locally, back into your supply chain rather than spending sustainability budgets on consultants or international carbon offsets.
Land use capability: Although not required, most of the supply chain carbon removals so far have been issued from forest growing on land considered unproductive (LUC 6 or higher)
How should the ownership or rights to the carbon removal be proven for inventory accounting?
Provided they are not already committed elsewhere, carbon removals from within the direct boundaries of the reporting organisation are already under full control and ownership of the reporting organisation. These removal units are within your Scope 1.
For Scope 3 removals, where forest is within the value chain but owned by someone outside the reporting organisation, the right to the carbon removal must be established. A contract documenting the transfer of the removal right from the forest owner to the reporting organisation is required so the removal can flow through the value chain to the reporting organisation.
Once ownership is established, measurement and reporting must be clear and transparent. This is important for verification and support of any claims made as a result. Independent, third-party verification supports credibility for removal claims and helps ensure measurement, monitoring and reporting accuracy. Think twice before marking your own homework!
How do I know a carbon removal is permanent?
Landholders who are awarded carbon removals from CarbonCrop sign a binding agreement to ensure the CO2 stays stored in the regenerating biomass of the registered native forest for the next 100 years. This obligation transfers with the land if and when it is sold. We monitor for forest loss annually to make sure the trees are still standing.
How do I know the carbon removal isn’t being double-counted?
Trust and check. There are two sides to double-counting: (1) making sure one forest isn’t registered in multiple schemes; (2) making sure one removal unit isn’t being used by multiple companies. Before issuing any removal units, CarbonCrop conducts a thorough search of their own registry, the ETS registry and major international registries to ensure the carbon hasn’t already been committed elsewhere.
Independent verification ensures that the carbon that is removed is only counted once towards a claim. CarbonCrop’s registry currently tracks tens of thousands of carbon removal units and counting. Third-party organisations are also able to search CarbonCrop’s registry to ensure the same in reverse.
This ability to conduct independent verification is important and more powerful than a promise on a piece of paper. It ensures forest owners, whether they are handing over removal rights or counting what’s already within their boundaries are not claiming carbon sequestration twice.
Why should inventory carbon removals be independently verified?
You shouldn’t mark your own homework! This is a major issue with carbon offsets right now.
Independent, third-party verification makes sure the measurement, monitoring and reporting of the carbon sequestration and carbon emissions increase the integrity of any net-zero position or claims by removing any potential for bias or influence.
Do I still need to reduce emissions?
Carbon removals are one part of the carbon equation and influence your net-zero position. Climate claims should be transparent on the gross emissions, sequestration and net position. Ambitious gross emissions reductions strengthen the integrity of any climate claims and are still required if we are to meet our climate targets.
Is an inset the same as a carbon removal?
Yes and no. Insets result from climate mitigation activities within an organisation’s value chain. They could be recognised through removals, avoided emissions or reductions. So carbon removal units resulting from projects within a supply chain could be carbon removal insets, but not all insets are carbon removals. Both can be used to help an organisation address their carbon footprint.
Unless independently monitored and verified, insets may have a higher integrity risk because everything is done in-house, so it’s hard to check for things like permanence or double-counting. Integrity and effectiveness are key no matter the type of carbon removal or reduction strategy. Independent monitoring and verification can help.
CarbonCrop only issues carbon removal units, and never for avoided emissions or emissions reductions. We add further requirements for permanence and go further on transparency and traceability to avoid double counting. Our methodology and all supporting data are available for independent audit.