COMMENT: A fistful of offsets: How the (wild) west was won

Published 15:38 on July 7, 2022  /  Last updated at 14:39 on July 25, 2022  /  Aviation/CORSIA, Conversations, International, Kyoto Mechanisms, Nature-based, Paris Article 6, Views, Voluntary Market  /  No Comments

Critics comparing the voluntary carbon market to the wild west are missing the point and risk undermining decades of progress on climate change, argues Renat Heuberger, CEO and co-founder of South Pole.

By Renat Heuberger, CEO and co-founder of South Pole

If the story of the voluntary carbon market was adapted for screen by talents like John Ford or Clint Eastwood it would be totally unwatchable, even to the most dedicated of disciples. This for the central reason that no other commodity can claim the level of transparency as carbon credits.  To hear it told in a recent Financial Times article “Critics take aim at ‘wild west’ carbon offset market, carbon markets are a scourge of greenwashing that deliver nothing for the planet. But the article, and other recent media criticisms, are missing the point. Critics comparing this market to the wild west are misguided, and could scratch up on some classic westerns too.

Our planet is nearing a tipping point, beyond which we face a rapidly increasing threat of hurricanes, droughts, floods and other natural disasters that will change the face of humanity and our ecosystems. We need every tool in the toolbox to drive billions towards ways to reduce emissions before it’s too late.

While the Paris Agreement sets the ideal goal of keeping climate change to less than 1.5C, the current pledges made by countries to achieve this goal are nowhere near enough. We must ensure the world’s private corporations, which together account for most of global emissions, set ambitious climate targets based on science and work as rapidly as possible to transform their supply chains and achieve net zero.

But for many companies, carbon-free operations are years– even decades– away. In the meantime, we need to ensure emissions fall today to avoid those planetary tipping points.

Enter carbon markets: a proven way to use a market-based mechanism to finance emission reductions that are possible today, while keeping up the pressure and progress towards an emissions-free future.

“Critics take aim…” is correct in saying that these markets need reforming– but that is already taking place. Like any new market, rapid growth often leads to a number of lessons learned and a need for increasing scrutiny and regulation. The Voluntary Carbon Market is over 15 years old and improvements have been made along the way. For example, the Integrity Council for the Voluntary Carbon Markets (IC-VCM) is establishing market governance and helping define what is a high-quality carbon credit. The Voluntary Carbon Markets Integrity initiative (VCMI) provides guidance on corporate claims, and a number of platforms like the Science-Based Targets initiative, which helps companies set science-based goals for removing emissions from their operations and supply chains.

Carbon markets are some of the most transparent results-based mechanisms in existence! A credit isn’t generated until after the emission reduction is achieved and verified by a third party auditor. Compare that to many consumer goods company supply chains, where it’s near impossible to identify the farm a product came from, let alone its impact on the environment or local communities. No other commodity can claim the level of transparency as carbon credits – and that is thanks to the governance systems that have been put in place to measure and certify actual impact. The standards and methods that underpin accounting of climate action credits are constantly being updated to reflect the latest science, technology and lessons learned from the field. Which is why there is such a complex set of monitoring, reporting, and verification systems in place that are backed up by independent certification processes.

While there are indeed many ways to reduce emissions and companies should prioritise those that affect their own carbon footprint and those in their supply chains, carbon markets provide an efficient, cost-effective and transparent way of channelling financing to emission reductions and removals immediately. And many of these “other ways companies can compensate for their emissions” are unproven, unregulated and far less transparent than carbon markets.

Let’s not squat with our spurs on and throw out an entire functioning market, undermining decades of progress on climate change. We should focus on how to improve and reform it to produce the highest quality credits that help us prevent a catastrophe.

“Dying ain’t much of a living, boy” (Clint Eastwood, The Outlaw Josey Wales), so let’s ask ourselves: who actually benefits from undermining carbon markets? The planet? Or companies actively opposing the regulation of emissions?