As more companies commit to cutting their emissions to net zero, the offsets they purchase, to make up for carbon pollution they do not reduce themselves, could spur development of clean technologies like hydrogen fuel, market backers said this week.
Carbon market investments in hydrogen, greener aviation fuel and technologies that suck planet-heating gases from the air “maximise our probability… we get those technologies when we really need them”, said Mark Carney, a UN climate envoy.
But critics of efforts to scale up problem-plagued markets for carbon offsets say they threaten to undermine lagging emissions-cutting efforts further and will be hard to operate in a transparent and effective way, despite planned reforms.
Since the late 1990s, “the world has tried to make offsets work - and frankly, it hasn’t,” Jennifer Morgan, executive director of Greenpeace International, told a virtual meeting of the World Economic Forum (WEF) this week.
Bill Gates, the co-founder of Microsoft, which has pledged to become “carbon negative” by 2030 - removing more emissions than it has produced in its operating history - said cash spent on offsets could help lower the cost of new technologies.
Just as Germany and Japan invested in solar panels at a time when they were new and expensive, helping drive down prices as sales volumes grew, companies should now pour cash into technologies such as hydrogen fuel, he said at the WEF event.
Hydrogen can be used to replace natural gas in home heating or fossil fuels in transport, scientists say, without producing climate-changing emissions - though making it cleanly would require large amounts of renewable energy.
Carbon-offsetting projects have often focused on protecting forests - which absorb carbon dioxide (CO2) from the air - or planting new trees, as companies flock to “nature-based solutions” to help tackle climate change.
But Gates, a technology billionaire, warned that trees have a limited lifespan and are at risk from threats such as forest fires, while the planet lacks sufficient suitable land to plant enough trees to soak up carbon emissions from human activities.
Effectively monitoring and verifying carbon reductions from planting and protecting forests, changes in agricultural practices and other means of offsetting emissions also has proved challenging.
But Stephen Donofrio, director of ecosystem marketplace initiatives for Washington-based nonprofit Forest Trends, which works on economic tools to protect ecosystems, said offsetting investments in protecting nature offered many side benefits.
Those range from more support and income for indigenous people and others who help keep forests standing, to stemming rampant biodiversity loss.
“There are more dimensions than CO2 (reduction) from many of these projects,” he said in a phone interview.
He compared the surge in companies setting net-zero goals to a similar earlier rush to make zero-deforestation commitments, saying better systems and guidance to turn declarations into real action now needed to be put in place.
As companies aim for net-zero, “it’s too early to be critical,” he said. “We have to be open-minded about how we get there.”
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Companies such as fossil fuel majors or airlines pretend they can continue their destructive business models because they are also investing in nature protection – but, sorry to say, it’s just not true. It’s a lie.
Jennifer Morgan, executive director, Greenpeace International
Market reforms
Bill Winters, chief executive of Standard Chartered Bank and chair of a task-force on scaling up carbon markets, said efforts to reform markets had to make clear that companies needed to reduce their own emissions “first and foremost”.
But many could not get all the way to net-zero goals without using some level of offsets, he said at the WEF event.
The task-force, launched by former central banker Carney, estimates that carbon offsetting markets will need to be 15 times bigger by 2030 and 100 times bigger by 2050 to meet global emissions reduction goals.
To keep average temperature rise to 1.5 degrees Celsius above preindustrial times, the lower limit in the Paris Agreement, emissions - which are still on an upward trajectory - will need to fall by half or more by 2030, scientists say.
Because such rapid emissions cuts will be hugely challenging to achieve, removals of carbon already in the atmosphere will almost certainly be necessary as well, they say.
Having a transparent market for good-quality, verified offsets is the simplest way to get money from polluters to projects that could remove emissions “in the most efficient way”, Winters said.
His group this month produced a report that proposed market reforms to ensure offsets are high-quality and lasting, and to effectively verify their claimed emissions cuts, as well as to ensure purchasing companies use them appropriately.
Window-dressing?
The aim of the reforms is to build confidence in carbon markets and make sure offsetting is more than simply environmental window-dressing for companies, Winters said.
“If you’re going to be participating in this market as a buyer, you can’t just show up and buy a few offsets and put them in your window and feel good about yourself. You have to have a comprehensive net-zero plan,” he said.
Morgan, of Greenpeace, said far too much of that window-dressing was a serious problem at the moment.
“Companies such as fossil fuel majors or airlines pretend they can continue their destructive business models because they are also investing in nature protection – but, sorry to say, it’s just not true. It’s a lie,” she said.
Winters acknowledged that using offsets as a central means of reaching global climate goals remained controversial - one reason rules around them need to be tightened.
But as the world pushes toward net-zero targets, “we’re all looking for the same objective,” he insisted.
“We need to maximise our probability of getting to net zero - and this is part of the answer.”
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