Carbon Offsets Are Alive and Well
By Justin Worland
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To a casual observer, the future of carbon offsets might look bleak. Story after story in recent years has shown the pitfalls of faulty offset schemes . Corporations have faced legal challenges for using them as the basis of green claims—and for that reason shied away from talking publicly about them. And a recent attempt to facilitate their use by the standard setting Science Based Targets Initiative (SBTi) led to a backlash.
These stories often make waves because they’re easy to understand and often upsetting. Carbon credits are meant to offer companies a way to offset their emissions by paying for real emissions-reducing projects. The stories we often hear are of companies pouring money into places where, say, forests are actually being cut down.
But a string of developments cut the other way. Last year, companies purchased more offsets than in any previous year, according to data from BNEF. Many emerging and climate-vulnerable countries are calling for offsets as a necessary mechanism to finance their energy transition. And, on Tuesday, the White House announced its own principles for credible carbon offsets, a not so implicit endorsement of the role offsets can play in decarbonizing.
Taken together, these indicators suggest a robust, if complicated, future for carbon offsets driven by a range of factors. Most obviously, cutting emissions is difficult. And it’s hard to envision how companies can achieve their net zero commitments without some form of offsets—even if those companies do everything they can with existing technology. Perhaps just as importantly, the money generated by carbon offsets is increasingly seen as a potential building block to pay for projects that cut emissions in developing countries. Known as carbon finance, this funding can help pay for projects that are too financially risky for investors looking for a return.
The key now will be to tame the market for offsets such that they are credible. The White House announcement this week includes a number of key principles with that aim. Companies should prioritize reducing their own carbon footprint, as well as the footprint of their value chain, before turning to offsets, for example. Companies should disclose the details of their carbon credit purchases. Perhaps most crucially, carbon credits should meet high verification standards. Other groups including SBTi and the Voluntary Carbon Markets Integrity Initiative have laid out principles, too, that have key tests for companies interested in carbon offsets.
Sorting all of this out will take time. But anyone who dismisses the future of carbon markets because of the recent negative headlines would be missing the market’s long term potential—perhaps even likely—growth.
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Thank you, TIME, for sharing this informative report on the sustainability of carbon offsets. It is essential to understand the significance of carbon offsets in protecting our environment. Your insights help raise awareness about this important issue.
Managing Director at GIBB West Africa Founder and CEO at TSL Sustainability
3 个月Sustainability is topical. It is driven by the desire to do good and ensure the effects of our operations do not damage the environment. This article is insightful and educative. I want to start a real-emissions reduction project in Ghana as an ESG sustainability practitioner but who funds this? who is interested in partnering and offsetting their carbon footprint?
The sustainability of carbon offsets is crucial for our environment. Your insightful report shed light on the importance of this issue. Thanks for keeping us informed, TIMETIME!
Sr. Project Manager
3 个月This is BS science.