10 reasons why I'm a convert to (nature-based) carbon offsets

**All views expressed here are my own and do not represent the official views of any of the organisations that I have worked for or are mentioned in this blog. 

There’s been a lot of heated recent debate about the use of voluntary carbon offsets to tackle the climate emergency. Opinions range from influential figures such as Mark Carney (and his recently assembled Taskforce on Scaling Voluntary Carbon Markets) who advocate for the rapid scaling of voluntary carbon markets, to Greta Thunberg who dismisses carbon offsetting as a ‘bluff, which in most cases does more harm than good’.  

As the title of this blog suggests, I’m more in Mark’s than Greta’s camp on this one and believe that if implemented well, voluntary ‘nature based’ carbon offsets can play a crucial part in mobilising the large scale investment required to scale up Natural Climate Solutions (NCS), defined as protecting, managing and restoring forests, agricultural lands and wetlands. This blog is explicitly limited to discussing ‘nature based’ carbon offsets (ie not renewables or other types of low-carbon projects), and is the first in a 2 part series in which I lay out 10 reasons why I’ve come to be a strong advocate for nature-based carbon offsets (this blog), followed by 10 principles to ensure successful voluntary carbon offsetting which maintains climate integrity . The purpose of these blogs is to share some of my first-hand experiences to dispel some of the myths which pervade the sector, resulting in headlines such as ‘carbon offsets shunned in major new ‘net zero’ guidelines for investors’. In my view this threatens one of the best opportunities we have ever had to finance natural climate solutions at scale, and the risks can be easily mitigated.   

Before laying out my 10 reasons, first some background into where I’m coming from here. I studied a module on climate change at university and came to the conclusion then that it is real, human-made and will have catastrophic effects if we don’t urgently address it. I’ve subsequently worked on climate issues for the past 14 years for the unlikely trio of Greenpeace (internship), BP (Alternative Energy) and latterly The Nature Conservancy (TNC) where I’ve led the establishment of the Africa Forest Carbon Catalyst. I’m soon going to lead Natural Climate Solutions at a carbon financing start-up. Although it may look like I don’t know which side to choose, I firmly believe in collaborative approaches to tackle huge issues and this diversity of experience and viewpoints hopefully gives me some balanced perspective on what has become an increasingly polarized, emotional and often misleading debate. One foundational belief I’ve acquired through these experiences is that markets and private sector approaches are able to get things done quickly, efficiently, and at scale. 

I haven’t always been a fan of (nature-based) carbon offsets. In the early days of my career, I used to think they were greenwash and I preferred technological solutions such as carbon capture and storage from power stations when I worked at BP. Even when I started working exclusively on NCS at TNC, I initially preferred approaches that looked at monetizing other physical commodities (such as sustainable timber products) created alongside emission reductions and removals. 

However, over the last few years, I’ve evolved to become a strong advocate for ‘nature-based’ voluntary offsets in particular. I would never advocate that nature-based offsets should come at the expense of cutting ones own emissions deeply first (more on that next week), nor that offsets are the only way to finance natural climate solutions, but here’s why I’ve come to believe they are a really crucial part of the puzzle.  

1) Natural Climate Solutions (NCS) can provide more than one third of climate mitigation required between now and 2030. 

In 2017, TNC produced a breakthrough, peer-reviewed, scientific study (Griscom et al 2017) which showed that ‘cost effective’ natural climate solutions can provide over one-third of the emissions reductions required by 2030 for the earth to be on a pathway to keep global temperatures ‘significantly below’ 2 degrees increase. This translates as 11 billion tonnes of annual CO2 emissions reductions by 2030. This is much more than previous estimates had estimated and provides solutions that are available at a lower cost than most technological solutions (especially Carbon Capture and Storage which I had previously worked on at BP) and with huge co-benefits for people and biodiversity. As well as being cheaper, crucially NCS are available at scale right now (whereas many technological solutions will take years to develop and scale). Put simply, it will be impossible to meet the Paris targets of keeping temperatures ‘well below' 2 degrees without fully embracing NCS.

The diagram below shows the potential from each of the ‘NCS’ pathways.

  And this one shows how NCS are a complement to, rather than a substitute for, fossil fuel emissions reductions: 

There are a few important things to note about this study to dispel some commonly held myths 

• The reforestation estimates assume over 90% native species growth rates and assume that no historically non-native forest ecoregions (such as critical grasslands) are converted to forest 
• The study also assumes that there is no decrease to existing cropland area and food security is maintained through sustainable intensification of agriculture in the most productive areas 
• These solutions include both avoided emissions (mainly from deforestation) and removals (restoration and reforestation). Note avoiding forest loss in the first place offers a larger, near-term, ‘low cost’ (below $10/tonne) opportunity to reduce emissions than planting new trees (represented by the dark grey component of the bar in the graph). For an excellent breakdown of how these pathways play out at a country level, see the Nature4Climate website. 

2) To achieve NCS potential globally will require over a trillion dollars of investment between now and 2030. This is going to be so much easier to achieve with private sector investment, of which carbon offsets can be an important part. 

Estimates vary on exactly how much investment is required to realise the NCS potential by 2030, but some basic maths based on the volume of NCS emissions reductions required and a realistic carbon price, puts the cumulative figure somewhere in the region of $1 trillion (reaching around $300 billion of annual investment by 2030). This is a similar amount to that invested annually in renewable energy in 2019 ($280 billion). Yet current investment (both public and private) into forests are tiny in comparison (around $2.8 billion in 2019 according to the Food and Land Use Coalition, of which only $159m came from the voluntary carbon market) - implying a need to scale up 100*.  

We shouldn’t (and can’t) rely on the public purse alone to achieve this scale-up. Carbon offsets represent a tangible, scalable solution available right now to mobilise private sector investment which a huge number of corporates are beginning to embrace. For context, as the Food and Land Use Coalition calculates, if the Fortune Global 500 companies committed to compensating 100% of their scope 1 and 2 emissions, that alone would create 5 billion tonnes of demand (around half of the total NCS required amount). At an illustrative price of $10/tonne, assuming 50% of the offsets were allocated to avoiding deforestation, this would almost create enough demand and funding from offsets alone to end deforestation. In other words, Fortune Global 500 companies could provide enough financing to save the world’s forests for less than 0.1% of their total revenue and less than 1.5% of total profits (around $25bn annually). 

I acknowledge that carbon offsets are by no means the only way to attract private finance to NCS and an integrated approach to creating the right policy environment for them to be successful is a critical foundation (for example by redirecting damaging agricultural subsidies). But so long as clear safeguards and best practices are put in place around them and they aren’t seen as an excuse to divert attention from cutting ones own emissions deeply first (see next weeks blog), carbon offsets represent a historic opportunity to mobilise large scale private finance for nature and we should seek to harness this momentum and opportunity. Put another way, are we more likely to achieve NCS targets with carbon offsets or without them? I’d argue strongly for the former.  

3) It gives the environmental/conservation movement an unprecedented opportunity to hold companies to account to avoid greenwashing. 

Rather than looking wistfully from the outside, now the environmental/conservation movement has something corporations really need/want, there has never been a better chance for them to engage constructively and influence corporate policies and long-term plans to become 'Paris aligned' (consistent with keeping global temperature well below 2 degrees increase). For more on this see next week's blog 

4) Carbon is (to date) the only ecosystem service (or externality) which the market has shown any desire to value at a meaningful scale. Let’s not chuck that out of the window just as things are starting to look promising. 

The climate change and biodiversity movement have been talking for years about ‘valuing ecosystem services'. Despite numerous attempts, carbon dioxide removal or avoidance is the first ecosystem service that the market has shown any sign of paying for at a meaningful scale. Let’s harness that momentum to show that ecosystem services more broadly can be valued, paid for, and scaled. 

5) Advances in certification and monitoring allow us to be increasingly confident that the emissions reductions associated with carbon offsets are real. 

There’s been plenty of bad press over the years about ‘carbon cowboys’ and ‘dodgy offsets’. Of course, there have always been bad actors in every industry, especially in early stages where standards and monitoring are being developed and where many people lack expertise. However, in my experience, the scientific rigor, improved monitoring technology and attention to detail associated with the majority of the best standards mean that the majority of previous concerns with ‘dodgy offsets’ have been addressed. If a carbon credit or verified emissions reduction (VER) has been certified by one of the leading standards (such as Verra or Gold Standard) then it’s been subject to huge amounts of peer-reviewed rigor and audit (way more than I had initially anticipated). Not everything is perfect and, for sure, methodologies and monitoring can always be (and always are being) improved. But for the most part, I believe that the major standards can be trusted. 

Going through the certification process also has the added benefits of 1) standardizing claims and 2) forcing project developers to adhere to stringent social, environmental and governance (ESG) best practices. Without that, people make all sorts of claims about how much carbon (or CO2e) they are avoiding, storing or sequestering (often mixing all these terms up) with no common methodology and you have no way of knowing if safeguards are in place to ensure communities are being treated fairly or biodiversity harmed. The best certification standards (such as Verra’s Climate, Community & Biodiversity standard) address this. 

6) Paying for carbon, rather than solely relying on ‘deforestation-free supply chains’ or physical commodities (such as timber) produced by NCS approaches allows one to address subsistence-driven deforestation and do more interesting things from a biodiversity perspective for restoration. 

Trying to monetise NCS projects without selling carbon is like Volkswagen producing cars and not being able to sell cars! True, there are other commodities that can be produced and monetized from NCS approaches (like sustainable timber) in the same way as Volkswagen could sell batteries or car seats. Yet, not being able to sell your main (and common) commodity seems counterproductive. In the days when the voluntary carbon market looked less promising, I spent a long time looking at ways to create ‘bankable’ forest conservation and restoration projects in Africa that didn’t rely on carbon credits. Inevitably this took us down the road of looking at deforestation-free supply chains (for forest conservation) and looking at producing ‘sustainable timber’ (for restoration). 

Although deforestation-free supply chains are an appropriate way to address deforestation driven by commercial agriculture for export (such as beef and soy in Brazil and palm oil in Indonesia), they are not relevant for the primarily ‘slash and burn’ subsistence agricultural deforestation which is the primary driver in Africa and many other economically less developed parts of the world. Other ways of earning revenue from forest conservation such as beekeeping or ecotourism are just way too small to conserve the amount of forest we need. Hence, in Africa at least, carbon payments are one of the few available alternatives to provide an incentive to keep the forest standing. 

Similarly, when looking at forest restoration (or reforestation) approaches, by monetising the carbon sequestered, a non-timber economic incentive is thus given to not only plant the trees, but crucially leave them in the ground and plant a greater diversity of (native) species. Although I still believe there is such a thing as ‘sustainable timber’, the main issue is that it normally takes you down a road of planting exotic timber plantations which are challenging from a biodiversity perspective.  

In short, an expanding voluntary carbon market, underpinned by a reliable and fair (see next week’s blog) carbon price makes NCS approaches to directly address subsistence driven deforestation, enables restoration projects to be much more impactful from a biodiversity perspective and enables then all to be way more ‘bankable’ for private sector investors,.  

7) There are now plenty of examples of NCS Carbon offset projects working 

We always hear the bad stories in mainstream media. We hear of projects failing, mistreating local communities or selling ‘hot air’. We hear of governments wasting millions on bilateral REDD+ agreements. Yet, we very rarely hear of the hundreds of good projects that are verifiably avoiding or sequestering CO2, conserving or restoring landscapes and improving local community livelihoods. Many projects have now been operating for more than five years, some over ten. We are no longer in ‘early-stage pilot days’ – it’s time to scale up! I’ve been lucky enough to visit and work closely with a number of these projects over the last few years during my time living in East Africa. There’s some great examples of things being done well such as the Rukinga REDD+ project in Kenya (the world’s first which has protected over 200,000 hectares and impacted over 120,000 people), the TIST smallholder reforestation project spanning East Africa and India (which has planted 20 million trees with 100,000 farmers) and the BioCarbon Partners Luangwa Community Forests Project in Zambia (protecting 1 million hectares and impacting 236,000 community members whose benefits are described in this excellent podcast).

The projects I know best are those operated by long-term TNC partner Carbon Tanzania, across three project sites in Northern and Western Tanzania. Collectively, these projects have placed over 650,000 hectares of forest under the protection of indigenous communities. They have provided the incentives for these local communities to secure their land rights creating the legal foundation to protect their own forest. Deforestation rates within the project area are now observed to be 20-times less than surrounding areas and 1,350,000 tonnes of VERs have now been verified and issued. These credits have all been sold, creating a revenue stream of more than $6.5m which is split between the community, local government and the project developer. Funds are mainly spent on creating paid employment for hundreds of forest rangers to do the foundational work of protecting the forest resources, paying school fees, conducting mobile health clinics, building village offices and classrooms and supporting critical local governance structures. 

Picture from Carbon Tanzania showing community rangers at Makame project

8) ’Carbon Babalao' – carbon is everything for communities.

One of the most powerful phrases I heard came from one of the community members in the Carbon Tanzania Yaeda Valley project. He related how community members routinely use the phrase ‘carbon babalao’ – which means ‘carbon is everything’ in Kiswahili. The community in question in Yeada valley have received nearly $500,000 since the start of the carbon project in 2013. Although this may not seem a lot by western standards, for the predominantly Hadza hunter-gatherer community it has meant that they have earned enough to be able to protect the woodlands and forests of their cultural heartland. They can now pay for community forest scouts to protect the forest, directly protecting it from illegal deforestation, for legal processes needed to enforce by laws laid down in the communal land-use plans and access social services like health care and education for their community members which would otherwise would have been funded through the unsustainable and illegal exploitation of the forest itself

Picture from Carbon Tanzania showing traditional lifestyle of Hadza community

9) It’s not beyond the realms of human ingenuity to solve the outstanding technical issues such as ‘double counting’, ‘nesting’ and ‘corresponding adjustments’ issues. 

The complex technical issues of ‘double counting’ (somebody buying or accounting for the same emission reduction twice), ‘nesting’ (integrating private ‘projects’ into broader national and jurisdictional programs) and ‘corresponding adjustments’ (deducting an emission reduction from a country’s account if another country claims it) are terms which cause much consternation and inaction in the carbon offset (particularly REDD+) debate. They are important issues that need to be resolved – but I believe there are relatively simple solutions that will be covered in my blog next week. In general, though, these issues (which primarily come down to accounting for emissions reductions) are certainly not beyond the realms of human ingenuity to solve. We have solved much more difficult challenges. The debate about who claims and counts emissions reductions is, in my view, an overstated problem which should not slow down private investment needed now. 

10) It’s not all some conspiracy. 

There’s often an assumption that carbon offsets are some conspiracy cooked up in corporate boardrooms with CEOs of oil companies locked away for hours with CEOs of large conservation organisations trying to pull the wool over everybody’s eyes. From my experience, this couldn’t be further from the truth. If only CEOs of such organisations had the time to be diving deeply into the details of carbon offset transactions! From my experience, conversations mainly take place between committed environmentalist middle managers from both sides who have a common goal of tackling climate change. Having worked closely with some excellent colleagues on both the corporate and NGO side of things over the years, I’m yet to meet anyone who doesn’t want to solve climate change! I’m yet to meet anybody who doesn’t subscribe to the view that it isn’t best to cut your own emissions deeply first before resorting to offsets. Sure, people want to decarbonise in the most cost-effective way, but mainly it’s full of reasonable, well-informed people looking to create win-win solutions.  

I’d love to hear your thoughts and reactions to this. Of course, one has to be very careful about how offsets are used and implemented in order for the benefits illustrated here to be realized and unintended consequences avoided. Please look out for my follow-on blog next week called '10 principles for successful (nature-based) voluntary carbon offsetting' where I will offer some thoughts on how buyers and sellers can achieve both integrity and scale. It will also address some of the more technical issues of the role of offsets in corporate net zero pathways, which offsets to prioritize, what to look for in certification, fair pricing as well as some of the thorny issues of nesting and corresponding adjustments