Would you credit it?

Not surprisingly, we’ve spent a lot of time this week talking about troubled journeys to net zero and the woes of the voluntary carbon market (VCM).? After the Guardian appeared to launch its own rating agency earlier this year, buyers of carbon credits have recognised two things.? Firstly, that they don’t always have a good enough understanding of the credits they are buying to make value judgements, even with a rating in place. ?And secondly, given the strong legal and stakeholder backlash against greenwashing, it has seemed safer to do nothing, than to try to make any claim about offsetting emissions. ?It’s all starting to make the VCM feel rather like a life jacket – it’s good to know it’s there, but we don’t want to use it.

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It was pointed out to me this week that there is one carbon market that everyone does understand – diamonds.? When it comes to that particular form of carbon, there are four simple measures of quality, the 4Cs: cut; colour; clarity; and carat (size).? All diamond dealers know this, and an appropriately qualified person can value any diamond, using agreed scales for those four criteria.? ?I’ve been pondering what would that look like for a carbon credit.? The Oxford Principles, of course, tell us how to align our offsetting approach to good practice.? They tell us, for example, to use offsets that are verifiable, correctly accounted for and have a low risk of non-additionality, reversal, or creating negative unintended consequences.? That’s clear on the ‘what’, but light on the ‘how’ - like understanding a good diamond is clear, but not having any frame of reference behind it to determine if your diamond is an F or a H on the colour scale.? Only when we have the means of demonstrating what’s good, and what’s not so good, do we know the faith we can have in our offsets.? A happy side effect of that might be the price of a carbon credit starting to align a little more closely to its effectiveness in carbon removal.

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Of course, not every diamond is perfect, but we don’t discard every stone with imperfections.? We make judgements about the best use of the stone and trade-offs between size and colour.? Some carbon removals projects have been more successful than others, and while some may not have delivered the carbon benefits anticipated, they may still have had some valuable effects on climate, nature or local communities.? Until we coalesce around a uniform system of assessment, we can’t really tell, and, well, you’ve seen what happens....?

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For me, science-backed monitoring is the key to keeping the market honest – let’s not debate how much carbon a credit project may avoid emitting, or may sequester during its lifetime, let’s just measure it.? Rather than relying on estimates of the deforestation avoided by the supply of cookstoves over their assumed lifespan, we have good remote sensing data that will tell us if forest cover is changing.? If it is still declining at the same rate as before the project, then clearly more support and intervention is needed.? It doesn’t mean it was a bad project – the cookstoves themselves will have used less wood, reduced the pollutants inhaled by women when cooking, and resulted in fewer fire-related accidents – but we haven’t got to the heart of the problem, and we shouldn’t claim the anticipated carbon benefits.

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This uncertainty of outcome is a major reason for the slowdown in investment into these projects.? However, much as we may prefer to reduce the climate crisis to a simple equation, life isn’t like that, and to be successful we need to consider the inter-connections between people, nature and climate.? These projects are multi-layered; it’s not a ‘build some stoves and you’re done’ thing.? ?The community may now need less firewood for cooking, but are they harvesting from the most valuable areas for biodiversity?? Are they still harvesting the same amount of wood because now they can generate a much-needed income from the surplus?

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Here, ironically, we can learn from the nascent biodiversity credit markets.? Since biodiversity doesn’t reduce to a simple value, biodiversity credit projects must deal with that complexity.? Instead of driving towards a target like net zero at a company level, corporates are encouraged to contribute to the global goal of nature positive. ?That is likely to involve investing in a range of different projects that tackle different issues relevant to the company’s impact or dependence on nature, which also spreads the risk of a particular type of credit failing to deliver.? ?If we release the focus on labels like carbon neutrality, and report transparently on our impacts and benefits across climate, nature and people, then we can feel confident in contributing much-needed investment to projects that benefit planet and people, without fear of accusations of greenwashing.