Earlier this week, Mark Carney, the co-chair of the Global Financial Alliance for Net Zero, drew attention to an often overlooked truth with regards to corporate climate efforts. He clarified that investment in carbon offsetting, the means through which many corporate entities aim to achieve net zero carbon emissions, should be treated as a “last resort.”
Carbon offsetting is the process of calculating total carbon emissions resulting from one’s business activities, and then investing in projects designed to remove the same amount of carbon from the atmosphere. This is calculated by buying a certain number of carbon credits in a market set up for the purpose – for example, the European Emissions Trading System (ETS) – with each credit corresponding to a certain, predetermined quantity of CO2.
The goal is net neutrality, the state of having cancelled out one’s carbon footprint. The mathematical soundness of this kind of carbon counting is often brought into question, given that the efficacy of the carbon offsetting projects themselves is often hard to measure. Those relying heavily on carbon offsets are often accused of employing an “accounting trick.” Even the world’s longest carbon market, the ETS set up after Tokyo, has been and is open to criticisms and has recently engaged in reform to improve it.
According to Carney, the practice of buying carbon credits in order to compensate for the expulsion of carbon into the atmosphere, should come “at the end of a process of reducing absolute emissions.” In other words, instead of aiming simply for carbon neutrality, companies should aim to actually decarbonise their industrial and corporate processes, to the best degree that they can.
Carbon offsetting would be best applied to try and balance the effect of “the residual emissions,” which are released as a result of practices that cannot feasibly be decarbonised. For example, a company that produces furniture should attempt to produce that furniture in a way that releases as little CO2 as possible. They might then use carbon offsetting as a way to neutralise the carbon footprint of the electricity used in their corporate offices.
Can you believe this? Shell thinks that a “zero-shaped” forest is climate action. Shell thinks that carbon offsets will address the climate crisis. There is a big hole in the middle of that argument. #COP26 beware. pic.twitter.com/dqG8adGAad
— Yeb Saño #ClimateJustice (@YebSano) November 4, 2021
Carbon offsetting is not enough, corporations must do more
Carbon offsetting was a controversial topic ahead of the COP26 Summit held earlier this month. Activists, including Greenpeace, condemned the conference for “greenwashing,” accusing participants of the event of using carbon offsetting as a smokescreen to distract from actual corporate accountability.
Importantly, achieving carbon neutrality, or “net zero,” does not mean that carbon emissions are not being released, it only means that the entity releasing those emissions has captured or funded the capture of an equal amount of emissions. Given the current status of climate, more urgent action is required – the total amount of carbon in the atmosphere must be reduced.
One way this might be worked towards would be through the funding of carbon catching technology. Early this month, Joe Biden’s administration revealed an initiative intending to fund research in this vein. Such technology has been described by experts as advantageous to carbon offsetting, which often involves vague accounting and speculation, as the results are more tangible and measurable.
Carbon Offsetting lacks transparency, and contains much scope for manipulation
Some dangerous loopholes were closed, one of them being the double counting of carbon credits. This is when the reduction in emissions achieved by a project is counted towards the carbon goals of the company that financed the project, as well as the country in which the project is based.
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The need for the more stringent regulation of the carbon offsetting industry is made clearer in the light of investigations into the efficacy of certain projects. A Bloomberg investigation published December last year into Nature Conservancy revealed that the “the world’s biggest environmental group” was a “dealer of meaningless carbon offsets.”
Nature Conservancy were using money from the corporations in order to finance the preservation of land which was at no credible risk of deforestation. Shockingly, the corporations financing the preservation, including Disney and Delta (a major American airline company), were able to count the imaginary benefits of such preservation towards the calculation of their carbon output.
An investment in the Global South, or a destructive project distracting from actual financial duties
Another controversial aspect of carbon offsetting projects is that most are based in developing countries, largely in the global south. The projects have garnered accusations of “climate colonialism,” causing tension with regards to issues of land ownership. They have also had detrimental impacts on the access of local people to farming, housing and food security. Locals are expelled, often having to leave their homes, from areas they rely on for water and crops, in order to make way for conservation efforts.
The negative effects of the carbon offsetting industry’s practices in the global south feel even more unjust when you consider the outsized contribution of “developed” countries towards the climate crisis, and the fact that “developing countries” in the south bear the majority of the brunt.
The G20 group, which includes 19 countries plus the EU, represents 90% of global GDP. They are responsible for 75% of the world’s total emissions. Meanwhile, climate change across poorer nations continues to create untenable living conditions, forcing people into migration. The recent US-Mexico border crisis was fueled at least in part by the climate crisis in Central America.
The Taskforce on Scaling Voluntary Carbon Markets, lead by Mark Carney, has been lambasted by critics for its insistence that carbon offsetting markets would benefit the Global South. Yet the Taskforce has its defenders. Dame Clara Furse, Chair of the UK Voluntary Markets Forum, praised the work of the taskforce, claiming that a carbon market enables “the efficient channelling of investment from the global north to support nations in the global south.”
The Taskforce recently established a governance body to “Ensure Integrity of Voluntary Carbon Markets.” The body aims to include indigenous leaders and people representing bodies based in the Global South, to try and ensure that the voices and concerns of the populations affected by the projects are heard.
Wealthier countries have continued to fall short of paying poorer nations adequate damages for destruction caused by their emissions. As noted in Vox’s COP26 summary, the conference failed to raise funds for past, present and future damages. Only one country, Scotland, contributed to the voluntary loss-and-damages fund, committing $2 million.
Carbon offsetting, when employed in ways that are not destructive to local environments, and in ways that produce results that are tangible and easily measured, can be useful. It must be seen however, as a small part of a larger, more concerted effort towards real decarbonisation, rather than just net neutrality.
Investments into carbon offsetting should also not take the place of actual efforts to improve the infrastructure and climate resilience of those nations at the most immediate risk. In short, carbon offsetting should be a tool of last resort, as Carney suggests.