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My last @climate column looked at negative emissions in companies’ “net zero” pledges. This one looks at the push from big finance & polluting industries to turbo-charge those negative emissions by building a big, scalable, liquid market: https://www.bloomberg.com/news/articles/2021-01-29/messy-carbon-offsets-show-markets-aren-t-always-the-answer?srnd=green&sref=GBEdnt3o
Carbon credits or offsets have been a painful and delicate topic in climate mitigation for decades. UN bodies, NGOs, governments, industry... a lot of people have tried, but a lot of bad stuff has happened regardless. /2
To illustrate how long this has been a tricky area: I always remember this “Carbon cowboys” series by @fionaharvey when we were both at the FT (I worked on some of the digital stuff, iirc producing video).
It’s from 2007! https://on.ft.com/3afq6sX
It’s from 2007! https://on.ft.com/3afq6sX
In 2 screenshots here are some of the common pitfalls with spending money for “carbon neutrality”, as it was called then...
Many of these projects take place in developing countries, paid for by countries in the first world. Things have probably improved since; some credible multi-stakeholder initiatives & accreditation providers have emerged. But problems persist. Dec 2020: https://www.bloomberg.com/features/2020-nature-conservancy-carbon-offsets-trees/
That’s not to mention the land disputes, displacements, and worse that have plagued offsets, even in the official “compliance” markets: https://www.theguardian.com/environment/earth-insight/2014/jul/03/world-bank-un-redd-genocide-land-carbon-grab-sengwer-kenya
HOWEVER, it’s not all bad. Planting trees, protecting forests, capturing CO2, and getting big companies to pay ppl in developing countries... what’s not to like?
So carbon offsets aren’t intrinsically evil - but it’s all in the detail, and on the ground.
So carbon offsets aren’t intrinsically evil - but it’s all in the detail, and on the ground.
Currently offsets are cheap. I’d argue that, to maximise the chance of offset projects being all-round good, the best bet is to have the most powerful parties - big companies wanting to flex their green credentials to investors & customers - carefully scrutinising what they buy.
Oh I forgot to mention: “compliance” markets will be a key topic in the next big UN climate meeting. You’ll hear a lot about Art. 6 of the Paris Agreement. Big implications for north/south climate justice, which is a huge factor in international climate talks.
And of course, we need SOME level of negative emissions. So why not preserve forests and plant more trees and reward the world’s poorer people for not cutting down trees - I mean, if wealthy companies & countries are splashing $$ to be green etc?
Meanwhile, on the science side we are running over of “carbon budget” and really really fast. In the private sector and govt statements, “Net zero plan” is the new “carbon neutral”.
Offset buyers currently have the upper hand, but maybe not for long. So what do they do?
Offset buyers currently have the upper hand, but maybe not for long. So what do they do?
They propose a solution:
Make it MOAR MARKETS-Y
Scale up those offsets.
You want liquidity, a forward curve, an active secondary market. Digital protocols. Some DLT in there. Etc.
Make it MOAR MARKETS-Y
Scale up those offsets.
You want liquidity, a forward curve, an active secondary market. Digital protocols. Some DLT in there. Etc.
With all of that background, perhaps you can see why I really struggled to understand the logic of this “Taskforce on Scaling Voluntary Carbon Markets”.
It wasn’t at all obvious what was the problem that could be solved by scalable markets.
It wasn’t at all obvious what was the problem that could be solved by scalable markets.
I mean, if these folk setup a taskforce for more stringent, coordinated monitoring of offset projects? A lot of people would probably get behind that. A taskforce for ensuring buyers ONLY use offsets when they really truly can’t cut emissions? That’d also be cool and logical.
Here’s the CEO of Standard Chartered bank insisting that his taskforce will sort out problems that have plagued offsets for decades in less than a year:
Finally: commodities markets, which is what this would be, are hardly known for their perspicacity. They’re even less renowned for their contribution to the greater good https://www.bloomberg.com/news/articles/2018-12-05/trafigura-glencore-and-vitol-ensnared-in-brazil-bribery-scandal
