Dan Smith’s Post

Summary of the main concerns around #carboncredits: 1. Offsetting could delay climate action - entities buying carbon credits get to keep emitting ⏱ 2. Carbon offsetting inherently lacks credibility - there is a strong incentive to choose parameters that simply generate the most credits 📈 3. There are only so many “quality” credits that could be used as offsets - projects and land would not be sufficiently available to feed the demand for a pay-to-keep-emitting model 🌍 4. The climate funding gap will not be solved by offsetting - carbon credits undermine carbon prices by providing a false sense of the existence of ultra-cheap abatement options around the world 💸 📢 In their words, "Over 70% of the global historical GHG emissions can be attributed to 78 companies (private or state owned)11. Companies therefore have a responsibility to deeply and immediately reduce their own footprint by taking concrete measures to address the emissions in their global value chains, rather than simply buying credits to avoid tackling their own emissions problems. The difficulty to achieve these massive emission reductions cannot justify widely opening the door to creative accounting and climate distractions."

In my time as an energy Management advisor for high emissions organisations this got me thinking …… If we are to address Climate change and all that constitutes sustainability, we need to be open to the criticisms and the science behind our thinking. This paper makes for interesting reading and probably accords with my observations in over 20 years in advisory, where policy and baseline reporting coupled with a carbon price (linked to a volatile, on again off again to carbon offsets) has struggled to maintain momentum. What are your thoughts?

Carbon markets have been ineffective at reducing global greenhouse gas (GHG) emissions enough to reduce atmospheric CO2 concentrations. The UNFCCC process in general and the Paris accord specifically seeks only to limit the rate of emissions growth. Today’s carbon markets do not have a “cap” on emissions: this is failure by design.  The US experience in emissions trading is instrumental to understand the fundamental flaws of international carbon markets today. The US phaseout of leaded gasoline was facilitated by emissions trading, but the phaseout was mandatory and time-bound under the Clean Air Act of 1970 (CAA-1970). Emissions trading allowed flexibility for regulated entitites -- petroleum refineries -- to comply with the mandated phase-out. The concepts of "baseline" and "additionality" did not exist and were not applicable because CAA-1970 created a new business-as-usual, which was the elimination of lead in gasoline, as opposed to slowing the growth of leaded gasoline production. In the 1990s, a broader emissions trading program for acid rain control was implemented, pursuant to the Clean Air Act Amendments of 1990 (CAAA-1990). The 1990 law allowed emissions trading as an economically-efficient alternative to installing point-source emissions controls. Regulated entities could comply with technology and performance standards and/or trade emissions to achieve compliance. Again, the concepts of "baseline" and "additionality" did not and do not apply: regulated entities can engage in emissions trading if they want to, or they can pay more to comply with the stack emissions standards.[2] Pursuant to signing the UNFCCC in the 1990s, a financial mechanism was sought to spur investment in GHG reductions, which would be complementary to the Global Environment Facility (GEF).  In 1997, the Kyoto Protocol introduced Emissions Trading, Joint Implementation, and the Clean Development Mechanism (CDM). Kyoto looked like cap and trade but had only a partial cap and there was no regulatory foundation such as CAA-1970 and CAAA-1990, so in effect there was no cap and only trading. Carbon trading under the UNFCCC remains in some suspense as the new rules pursuant to Article 6 of the Paris climate accords are still being clarified. No one can claim that the UNFCCC process has been a success, because it has been a series of failures by design. The Paris accord is another episode in this saga, as the targets of 450 ppm atmospheric CO2 and 1.5 C are the death penalty for the world’s tropical coral reefs. In layman’s terms, the Paris targets are a bit like an athlete who decides that amputation of both legs will aid in winning a future marathon.   The experience in global carbon markets brings to mind a couple of quotes, one for the educated elite and one for the masses: “We are all born ignorant, but one must work hard to remain stupid.”  -       Benjamin Franklin “Life is hard. It’s even harder if you’re stupid.” -       John Wayne

There are some great environmental projects that have come into being because of funding from offsets. But these must always be the icing on the cake and not an excuse to desist from the difficult and concentrated work of reducing carbon emissions as fast as possible and then some. Watch this space for news about a game that allows you to experience this reality, not just theorise about it!

I'm sure this will be a divisive comment: but I'm not convinced that vilifying corporate spending on carbon markets helps address the chronically underfunded protection and investment in nature-based solutions we all know we need to protect life on Earth. Could carbon offsetting be used as a mechanism to mislead consumers or shareholders on the action a company should actually be taking to address climate risk - for sure - and should companies do all they can to halt emissions or transition their sectors - of course... but in the absence of a global price on carbon (or other such externalities) that prices that in, how else will we stimulate this nascent market and have any hope of achieving carbon negative emissions into the second half of this century. This isn't just "Net Zero"... or "Zero", even... the AR6 shows we need deep carbon removals. I posit we need more supportive language, more nuanced engagement, and more collective action. #climatecrisis #carbonmarkets

I respect the work of ClientEarth and the organizations writing to the Science Based Targets initiative to disallow carbon crediting. The concerns are valid: that offsetting delays or disincentivises cutting emissions at source: it is a license to pollute. There is a deep ideological divide in the pro versus anti offsetting debate. I would have preferred to see a statement that ‘If carbon projects do X and Y, some credits could be used in the transition’. I worry about this argument being too binary. Here are some alternative scenarios to the letter’s points below: 🌱 Some companies follow the mitigation hierarchy but cannot get to zero emissions today. Neither can households currently. Our lives and economies are so dependent for now on fossil fuels. 🌿 The amount of funding going into voluntary carbon credit projects is miniscule compared to the overall carbon markets, and the approximately $800 billion a year needed to protect biodiversity and forests. 🌳 Companies can set carbon negative targets. This means to remove more carbon than you have emitted since incorporating. Microsoft have done this, as have small #African social enterprises like BCP (BioCarbon Partners). Setting carbon negative targets means industrial decarbonization and nature-based carbon projects both have a role. ‘Carbon Neutral’ is not enough. 🌱 Push the corporates to become carbon negative, and push the regulators to produce more funding and legislation that drives decarbonization. Some of the largest emitters listed in the letter are partially state owned. Push those states to channel more into solutions. 🦜 The argument that supply would not meet demand if included in Scope 3 is non-sensical. Why is this an issue if supply is so low? Low supply will drive higher pricing and funding to planetary restoration. 🌴The climate funding gap will not be solved by offsetting is true. But, it is not right to hold this against credit projects. Of course there needs to be legislation that forces the drive of public and private capital to decarbonization. No one ever said offsetting is a silver bullet that will solely fund the planetary crisis. It is an and/and both solution: decarbonize and offset residual emissions. 🌱 The argument that crediting lacks credibility is justified given the numerous scandals. But there is daily improvement and course corrections happening to build more integrity. Around the world millions of people and hectares of land are better off due to carbon projects. I call on ClientEarth to lead a campaign to recruit more companies to become carbon negative. Let this become mainstream. I hope that Science Based Targets initiative conditionally allows crediting: the climate sector is at a crossroads and needs this signal of the both and and/and approaches.

I understand these concerns outlined and they are valid! I believe we can neutralise drawbacks by monitoring credit issuance. How about disallowing the sale of credits to greenwashers and only sell credits to companies that are genuine about carbon reduction and IPCC recommendations.

I agree vilifying all #CarbonOffsetts is wrong headed. #NatureBasedSolutions that achieve #ecosystem and #biodiversity restoration while achieving atmospheric #CarbonDrawdown simultaneously are ABSOLUTELY THE RIGHT WAY TO GO! More importantly, we need to shift to #NaturePostive solutions.

I simply do not agree. Carbon offsetting is a first step which is better than doing nothing. We want fossil fuel economies to reduce carbon emissions but we need to be realistic. There must be some option that is economically viable. But until that option becomes sustainable, carbon credits will at least compensate, in some small way, to treat with loss and damage in non annex 1 countries and LDCs. Carbon offsetting is climate action. Perhaps a feable action, but an action nonetheless.