In The Wild West Of Carbon Offsets, Who Plays The Sheriff?
The apparent endorsement of carbon offsets by a leading standards watchdog was welcomed with jubilation by those who sell them. Everyone else is steaming mad about it. Here's why.
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The market for carbon offsets is a mess. It is riven with bad incentives, as eager providers sell inflated promises to corporations hungry to greenwash their image. In such a sector, trust is hard to find—and it just got even harder.
Last week, the Science Based Targets initiative (SBTi), a widely respected organisation that sets standards for how firms should structure their climate strategy, made waves when it indicated it would soften its stance on offsets, allowing companies to purchase them to cover some of their “indirect”, or scope 3, emissions. Now, insiders have revealed to me that the SBTi’s shift was the result of intense lobbying by vested interests.
The initiative’s announcement was significant because its most recognised standard states that, in order to be recognised as net zero compliant, companies must cut their emissions 90-95% before 2050—without the use of offsets. Loosening the rules around offsets would represent a sea-change for the organisation, and for the status and use of offsets more broadly.
Speaking on condition of anonymity, a researcher and member of the SBTi’s technical advisory committee told me that the move was the result of a “coordinated campaign” by an alliance of corporations and firms that sell offsets, “to force the [initiative’s] board to allow more flexibility on scope 3 and use of [carbon] credits”. In their view, corporate interests were “trying to water down climate targets in order to scale the carbon market. It's almost as if they think that setting targets is an end in itself, as if how we achieve those targets doesn’t matter.”
Sure enough, in the wake of the announcement, I was deluged with excited press releases from carbon offset providers and their middlepersons, all heralding a bright new dawn for the industry. Pretty much everyone else, however, was some type of furious—including the staff of the SBTi. As my source put it, the decision “completely undermines the point of having technical experts”, noting wryly that “Iván Duque [former President of Columbia and a member of SBTi’s board] is not a technical expert.”
Indeed, such was the outcry that the SBTi board was forced to kind of backtrack a few days later, saying that nothing had changed and that more detailed guidance would come out in the summer. But the damage had been done. “Even just the rumours going out that you can now use credits for scope 3 is dangerous, right?” my source said. “That's a form of corporate climate accountability education. It’s almost as dangerous as the standards getting changed themselves.”
Where’s Wyatt Earp When You Need Him?
The SBTi furore is also instructive as an indicator of the general level of confidence among experts in the so-called voluntary carbon market (VCM) and its products. Which is to say: there is no confidence in the market and its products.
This is hardly surprising. The news last year that 90% of offsets sold by the biggest offset provider, Verra, were “worthless” has helped feed the narrative that all offsetting is a scam (indeed, Greenpeace uses exactly that wording).
The fact that corporates desperately want to make offsetting work isn’t helping. After all, actually changing how your company operates is a painstaking, expensive business that can impact the bottom line in ways that displease shareholders. It must surely be quicker and cheaper to get someone else to deal with an equivalent volume of CO2 elsewhere—by, for example, growing some trees, or investing in low carbon tech. Once that’s done, ACME Corp. Ltd. can write in its sustainability report that it’s now a net zero business, making all those nice liberal customers very happy that their grandkids won’t have to resort to cannibalism. And hey, if those offsets don’t deliver, where’s the harm? ACME Corp. got a nice little public relations buzz from claiming it was net zero compliant. And do those nice liberal customers really have to know that all those promises went up in smoke?
This is why the voluntary carbon market is regularly likened to the wild west, where ne’er-do-wells and snake-oil salesmen sell empty promises to make a quick buck. What’s needed, clearly, is a sheriff—and the SBTi was, in a sense, that sheriff. It might lack a badge and the power of the law, but it develops standards to help organisations understand what the rules ought to be. And the SBTi, at least until recently, commanded respect among researchers, a.k.a. the people who (are supposed to) know what they’re talking about. Colleagues at Oxford who work with the SBTi consider it to be a serious, sober organisation that, “historically, has gone through a rigorous process of receiving technical guidance from scientists”, as one researcher noted.
Last week’s announcement, then, was akin to the sheriff telling the townsfolk, “well, perhaps a little hornswogglin’ is just fine.” Needless to say, that’s undermined confidence in the sheriff.
Laying Down The Law
To recap, there are two main, conjoined problems with carbon offsets. As Barbara Haya, director of the Berkeley Carbon Trading Project tells me: “Offset programs persistently generate far more credits than their true climate benefits—it is common for projects to generate many times more credits than their actual benefit. Offsets also create the false impression that we can keep emitting without any impact on the climate.”
The effectiveness of offsets is—or ought to be—central to their value. But as Haya’s work has shown, that effectiveness is far from assured. The Berkeley Carbon Trading Project, which monitors this sort of thing, shows that some 90% of offsets take the form of emissions reductions, which can include measures such as renewable energy investments, energy efficiency and forest protection. But 82% of carbon reduction offsets sold as carbon credits do not represent real emissions reductions.
Meanwhile, carbon removal projects, which pull CO2 out of the air and store it, make up less than 4% of offset schemes, not least because most removal technologies are still in their infancy—which adds a further level of complexity. Many institutions hold that carbon removals are superior to reductions, because the economy has key areas where simply reducing emissions will become progressively more difficult—think heavy industry, or aviation. As well as compensating for these “residual” emissions, carbon removals can theoretically enable society to move beyond net zero to net negative emissions, which is where we need to go in order to have any hope of limiting climate change.
However, it is not clear which, if any, of the nascent carbon removal processes will prove scalable, efficient and durable enough to get the job done. From direct air capture to direct ocean removal, we simply aren’t certain what will work. For a better understanding of this problem, I asked a prominent researcher and expert in ocean carbon for their assessment of one specific project: Captura, from Pasadena, California. Captura is a high-profile startup that claims its technology, which removes CO2 from the upper ocean so it can absorb more carbon from the air, is “scalable, permanent, verifiable, affordable and safe”.
But my expert contact, who asked not to be named, had concerns. “The process they’re using is very energy intensive, so how much electricity are they using?” they asked. “What’s their plan to permanently lock away the CO2 they’re stripping out of the ocean? How many organisms does their process kill?” To these questions, Captura was not especially forthcoming. On energy usage, the firm told me that its systems are “designed to run on renewable energy” but also that they are “early-stage and pilot-scale versions of the technology and so are not representative of large-scale commercial systems”. On storing the removed CO2, Captura said “we’ll partner with experienced sequestration or utilization partners”, indicating that this absolutely critical part of the process isn’t in place. And as to the number or volume of organisms killed, the firm said, “we have not confirmed any deaths during this process”—a statement my expert source described as “useless”.
Yet, despite such unknowns, firms are throwing money at Captura. The company has now received more than $45 million in series-A funding from investors such as Japan Airlines, a company that, for obvious reasons, wants to be seen to be doing something about its emissions. Big business, it seems, isn’t too concerned about sweating the small stuff—and it’s a pattern that’s being repeated across the board. Indeed, at the macro scale, Bloomberg forecasts that the carbon offsets market could be worth $1 trillion by 2037, as more and more countries and companies cast around for ways to get to net zero—at least on paper.
So, in light of the travails of the SBTi, what can be done to improve confidence in this hectic, anything-goes sector?
Noting that “most actors do not employ sufficient criteria to guide how and for what purposes such credits or projects will be used”, Oxford, for one, has developed a set of four offsetting principles in an attempt to instil some order, as well as to stimulate investment in better quality and more durable offsets. Updated this year, the principles direct governments, cities and companies to:
Cut emissions, ensure the environmental integrity of credits used to achieve net zero, and regularly revise your offsetting strategy as best practice evolves.
Transition to carbon removal, offsetting for any residual emissions by the global net zero target date.
Shift to removals with durable storage (low risk of reversal) to compensate any
residual emissions by the net zero target date.
Support the development of innovative and integrated approaches to achieving net zero.
The authors explicitly call on regulators and lawmakers to use this foundation to develop binding, enforceable rules that “steer the market away from low-quality credits and projects and align decarbonisation plans with net zero”.
Barbara Haya thinks the Oxford principles “do a lot to address the shortcomings” of the voluntary carbon market. “Importantly,” she says, “they would not allow a company that does nothing to reduce their own emissions to make the same ‘carbon neutral’ claim as a company that reduces their own emissions dramatically and provides upfront funding for well-vetted new projects.”
And yet, as has been shown here, even the most prominent, well-funded, well-meaning carbon removal projects come with their share of both known and unknown unknowns. The way forward is sure to be riven with surprises, setbacks and disappointments.
Nevertheless, it is to be hoped that frameworks like the Oxford Principles will help governments to begin governing the claims that businesses can and cannot make about their climate commitments. Because without the force of the law, the wild west of carbon offsets will remain a perilous place.
Elsewhere in climate news …
Seth Borenstein at The Independent covered a new PIK (Potsdam Institute for Climate Impact Research) report showing that climate change will cut incomes globally by 19% by 2049. As ever, the poorest countries will be hit hardest, seeing an income loss 61% greater than wealthy nations. A comparable previous study, from 2015, forecast a smaller impact of 25% by the end of the century. (The Independent)
Climate Action Against Disinfomation published a new analysis showing that all major social media platforms are doing extremely badly when it comes to dealing with climate misinformation in compliance with EU regulations. Out of a possible 18 points, Elon Musk’s Twitter—a.k.a. the website absolutely no one calls X—scored a miserable 0.5 points. Facebook and Tiktok performed (cough) best, with 4.5 points. Key findings highlight: “insufficient categorisation of climate misinformation in advertising and content moderation, a troubling lack of transparency and an absence of policies preventing fossil fuel greenwashing.” (CAAD)
Scotland, which is a renewable energy pioneer and has been a driver of global climate action, has ditched its key climate target of reducing greenhouse gas emissions 75% by 2030. By 2021, Scottish greenhouse gas emissions had fallen 49.2% compared with 1990 levels—but Scottish law required a 51.1% drop to stay on track with the overall target. All told, the country has missed eight of the 12 climate targets it set for itself. The fact that even progressive Scotland is struggling with its own targets is a stern reminder of just how tough climate mitigation is and will continue to be. (BBC)
Matthew Zeitlin at Heatmap has an update on American progress on geothermal, one of the most promising yet almost completely untapped sources of renewable power. Federal agencies have now made it markedly easier to start drilling, but experts say Congress needs to do more to accelerate progress towards getting that hot, clean, stable stuff out of the ground. (Heatmap)
In idiot media this week: The absolutely abysmal Telegraph, now little more than a conspiracist rag, published a story titled “The British scientists plotting to control the world’s weather”, and attempted to claim that the University of Reading was responsible for climate change-fuelled record flooding in the United Arab Emirates. Taking to Twitter, Reading Uni was having none of it.