Everyone should know what ‘greenwashing’ means by now. It is when a company or organisation is focused more on how they market themselves as environmentally friendly, rather than actually minimising their environmental impact.
Often, this can take the form of buying cheap and poor quality offsets while saying that you are going for net zero emissions, when in fact you are doing nothing of the sort. We urgently need to boost quality and credibility in the carbon offsetting market.
Carbon offsets are here to stay. Last year, the market for carbon offsets, the voluntary carbon market, hit the $1 billion mark and will continue to boom as net zero commitments become ever more prominent for governments and the private sector. On top of this, the Article Six agreement at COP26 was a landmark moment. It made sure that countries are able to use carbon credits to help meet their Nationally Determined Contributions and acted as a strong market signal that carbon credits will play a major role in the pursuit of net zero emissions.
Offsetting is a matter of necessity as some industries will be unable to successfully decarbonise due to technological barriers over the next three years. An obvious example of this is aviation. Even under a best case scenario, sustainable aviation fuels will only be able to reduce emissions by 70%. Electric planes will never be a viable option for medium and long-haul flights, even with advances in battery technology. Alongside less carbon intensive means of transportation, carbon offsetting is a major way for the aviation industry to improve its environmental impact in the short and medium term.
At present, however, the voluntary carbon market is opaque and untrusted. This is understandable, given that analysis by BeZero Carbon finds there is just a 27% correlation between price and quality currently in the voluntary carbon market. The ‘quality’ of a carbon credit means the likelihood that a credit actually avoids or removes a tonne of carbon from the atmosphere. Our analysis uncovered two projects which exemplified this problem: the poorer quality offset was six times the price of the better quality credit. No market should work like this.
This means that some businesses are ploughing millions of pounds into poor quality carbon offsets, which have marginal, if any, climate impact. Alongside this colossal waste of capital, these companies are undertaking huge communications campaigns telling their customers that they are carbon neutral, when they are far from it.
Businesses and policymakers need to step up to ensure transparency and quality in the market. If this doesn’t happen, this Wild West style offset market will continue to be used as a way for companies to greenwash their activity.
That is where the BeZero Carbon Market comes in. At BeZero Carbon we have created a rating methodology to rate every single carbon credit in the world using six risk factors: additionality, permanence, over-crediting, leakage, perverse incentives, and policy environment. This ratings system adds a layer of transparency to the voluntary carbon market, going beyond the binary system of credited or non-credited and creating a way to define quality.
If we can rewire the voluntary carbon market so that price and quality correlate – like any functioning marketplace – it can be a highly effective tool to catalyse capital for carbon removal, be it through planting trees or carbon removal technologies. As recent polling by BeZero Carbon and Stack Strategy found, the UK public are overwhelmingly in favour of this; 86% of people support Government investment in carbon removal and 87% are in favour of business investment in carbon removal. Instead of being a front for greenwashing, the market can become an accelerator of climate change reversal, but companies need to start taking responsibility for their actions and ensure that their offsets are of good quality.
The potential climate-positive impact of the market is seen in tech-based removals. The Swiss company Climeworks has just opened a plant in Iceland solely funded through the voluntary carbon market which sucks in 4,000 tonnes of carbon a year. Even though these credits are very expensive at over $600 a tonne, the company has experienced huge amounts of demand and they are rumoured to be sold out for many years to come.
If we pull this off, we can help reverse climate change and keep company’s feet to the fire on their net zero commitments.
Ted Christie-Miller is the Head of Carbon Removals at BeZero Carbon and a Policy Fellow at Onward. Views expressed in this article are those of the author, not necessarily those of Bright Blue. [Image: DOMINIKJPW]
