Carbon offsets — whereby one party pays another party to reduce carbon emissions — have always been dodgy, but now they are threatening to undermine the Paris climate agreement. That's according to a new white paper from OG climate blogger Joe Romm, who's now a visiting scholar at U. Penn.
Not so fast… The death of the carbon markets has been foretold many times in the past and yet, the market evolves and lives on, and will once again because it has an important role to play.
I’m a big fan of both you David and Joe but, as someone who has worked both directly and indirectly in the voluntary carbon markets for over 15 years, there are parts of this podcast discussion that are off target:
- No one should use credits in lieu of actual action - in fact the GHG accounting protocol and the Science Based Target Initiative, the standards over 5700 companies use to set their GHG reduction goals, will not let you take credit for carbon credits as part of your Net Zero commitment. Credits are encouraged to be used only after your are reducing in line with a “1.5 Degree Aligned Reduction Pathway.” And then, they are only to mitigate emissions “Beyond Your Value Chain” (e.g., to help mitigate emissions beyond your own footprint) with the only exception being carbon removals years in the future to address un-abatable emissions. See the guidance here: https://sciencebasedtargets.org/beyond-value-chain-mitigation.
- Companies don’t use carbon credits in lieu of taking action: it’s well documented that companies who buy credits are well ahead of companies that don’t in terms of any sort of action on climate. In fact buying carbon credits is usually done by the most responsible companies and is not an act of greenwash. One recent study by Trove Research: https://trove-research.com/report/corporate-emission-performance-and-the-use-of-carbon-credit s//]
- This discussion misses the most important reason for buying credits which is to provide much needed financing for the protection and restoration of natural ecosystems which otherwise are not being funded. NDCs or no NDCs, the sad reality is many governments don’t have the money to protect their natural ecosystems. Carbon finance provides funding that would otherwise not be available to move many conservation and community projects forward. To assure this can be done without any double claiming, the market is moving to corporations and others buying credits under the banner of “Funding Climate Action” rather than any notion of “offsetting.”
- It is not true that developing countries will be left to finance the most expensive projects. The logic of Article 6 will mean that developing countries keep the credits from the cheapest projects to count against their NDC, and they will sell the credits from the more expensive to develop projects to global corporations and developed countries. The markets for these credits are already taking shape with this assumption.
I'm never quite sure where "RECs" or "credits" end and "offsets" start but I feel like it's all the same.
I just feel double-counting is rife. Just this a.m., I'm looking at spreadsheets with local town electricity consumption, PV "production," GHGe/kWh from Xcel, etc. The town counts all local PV production as "ours" and wants to say it reduces our "emissions" from the totals reported by Xcel based on their blended CO2/kWh. BUT, 75% of local PV generation is under "Solar Rewards" where essentially Xcel pays $0.04/kWh or so to take ownership of CO2 offsets/credits and use those to reduce its blended CO2/kWh.
There's another category of double counting with behind the meter solar which reduces metered consumption, but then wants to be counted as renewable production also. Fine, but add the BTM production back onto the consumption first. Can't do both.
I agree with all the concern about whether offsets are real (additional, permanent, well measured, etc.), but there were 2 things that seemed wrong about the discussion (assuming the offsets in question are real)...
First, it seems very reasonable to let companies count avoided emissions offsets toward their net-zero targets and also let countries count those emissions reductions toward their NDCs as "separate accounting systems." If a company in the US reduced its emissions, it would obviously count that in its progress towards net zero and the US would also record that reduction in its inventory and show it as progress towards its NDC. That's not double-counting. The company and the country each have their own separate targets and their separate inventories aren't being added up to determine some global inventory. (If they were THAT would be double-counting.) Similarly, if a company based in CA paid for carbon dioxide removal (CDR), it would count that toward its net-zero goal. If the CDR occurred in Denmark, it seems reasonable for Denmark to count that as a negative emissions, too. It only becomes double-counting if the state of CA also counts that as a negative emissions because we can't have both Denmark and CA/USA count the same negative emissions -- because they are part of the same country-based accounting system. If the CA company wanted to use that CDR to comply with a state regulatory requirement aimed at lowering the state's emissions (such as SB 308: https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240SB308), then they would have to make sure that no other government was also claiming those reductions in order to avoid double-counting.
Second, it seemed like there was confusion between specific tons of offset emissions and reduced on-going rates of emissions, similar to the mistake we often see between kW and kWh. If I pay to help shut down a coal plant 5 years earlier than planned, I could claim an avoided emissions offset for the number of tons of CO2 that would have been emitted during those 5 years. Even if the host country agrees to let me take credit for those emissions reductions for those 5 years, it can still take credit for lower emissions from year 6 on into perpetuity. I'd be buying tons of avoided emissions (like kWh), not an on-going lower rate of emissions (like kW) that would offset my own emissions for every year into the future. And perhaps that host country doesn't really care about its emissions during those first 5 years since its NDC just aims for a certain target by 2040 or 2050. It may see little value in keeping those early years of emissions reductions and would be happy to sell those off at a lower price. By doing so, it is not requiring itself to "buy them back" or to do more expensive emissions reductions in the future as Joe was describing. This seemed like a big flaw in the argument that developing countries would be foolish to sell off some avoided emissions because then they would have to do even more expensive emissions reductions later.
Isn’t the answer for Amazon, Microsoft, etc., to--buy EVs for fleets, put backfeed-able solar on all their roofs, install on site battery backup--actually *do* everything they can? And as much as able, literally procure actual clean grid power from local power companies. They can also directly fund microgrids in Nigeria, etc. It may not cover 100% and not all of that can be claimed, but the sooner they do it, the sooner they stop polluting. And the sooner they help physically clean their own grid, the faster other “free power” opportunities like electrolyzers can arise. And the “area of carbon emissions under the drawdown curve” shrinks by doing it faster. So it would do a measurable good that they can point to for PR.
Great to hear Joe Romm's voice. Nice to see him come out swinging. On a different podcast, one of the folks who developed carbon offsets back 35 years ago said they didn't expect these to be in place for more that a decade or so, when everyone would just actually be required to do it. Similar to what Joe said. I liked the takedown of the successful SO2 emissions market as a good analogy or guide for the CO2e market.
There seems to be a place for a CO2 market, but I've thought for a long time, the offsets should logically be much more expensive and limited, and fairly few emitters should be allowed to buy them. Can't wait to wade into his full whitepaper and the ones he's working on.
I was wondering if anyone has tried buying and retiring credits from the European Emission Trading System, as Dr. Romm suggests. This sounds like a great alternative to carbon offsets, but after a half hour or so of searching, I haven't yet found how to do it. Perhaps someone cleverer or more experienced can offer a few tips? Thanks!
Enjoy, David. Thanks for the great episodes. https://youtu.be/eoHUiX-jsk4
The end of this episode has me thinking on government gatekeepers and mitigation contribution claims, and the rich countries' responsibilities- and commitments - to help the poor countries, which have mainly been empty promises. Is there a seed of a market there - that private companies look to burnish their reputations with easier tasks than reaching carbon zero would support projects in other countries and get something like a tax credit for contributing to the developed nations' international support promises? Could be a total mess! But I can't help seeing connections there...
Looking forward to the BECCS analysis. I hope Joe Romm will look at biofuels, syngas, and alt fuels next. My comment: if $150/ton is enough to convince non-state entities to reduce their own emissions because there are no cheap carbon offsets, fine. The cost of the last ton of emissions must be much more than $150/ton, because the climate conditions we are on track for are not conducive to a thriving global economy. Uncertain economics and political instability are unquantifiable -- but should be anticipated. We can’t keep pushing our responsibilities onto our children. We are crushing them with impossible problems.