#003.02 The Carbon offset Controversy: Curated comments and opinions on Linkedin
By Ajay Goyal, Founder & CEO @ ForestSAT.space
The Guardian report on Carbon Offsets has raked up a massive debate. Linkedin has been the primary forum for much discussion and viewpoints. We decided to devote this newsletter to some of the posts and comments on the subject.
( This list is based on People and Posts we follow, and is not comprehensive. That is in part because LinkedIN is not a search and context friendly. If you would like to point us toward thought leaders and commentators , or have something to add to this discussion and debate, please comment to keep this discussion going. We will do a more comprehensive review in some weeks)
The Guardian’s, Die Zeit’s, and Source Material’s research into Verra, the world’s leading carbon standard, found that more than 90% of their rainforest offset credits are likely to be “phantom credits” and do not represent genuine carbon reductions. (https://lnkd.in/dNMjNX8B)
Compensate has been for years highlighting the issues in the voluntary carbon market and our findings are in line with the research, which was published this week. After screening more than 170 nature-based carbon projects, only less than 10% pass Compensate’s criteria and can be considered suitable for offset use.
Regardless of the market flaws, voluntary carbon market is a crucial tool in tackling the climate crisis. As Julia Jones, a professor at Bangor University, mentions in the Guardian article: “As someone who sits outside of the kind of cut and thrust of the wild west that is the carbon markets, I need to believe it can be made to work because money is needed to fund the emissions reductions from forest conservation.” But, the market needs to deliver real results, instead of putting out meaningless carbon credits.
Our Chief Impact Officer Niklas Kaskeala wrote a blog post about the topic – read more: https://lnkd.in/dum7g4ST
In an emerging industry, growing pains and design faults are inevitable. Since we are however dealing with the future of our planet here, getting things right soon is crucial. That’s why we need forerunners like Compensate to guide the voluntary carbon market on a path toward integrity-driven and sustainable growth.In the context of carbon offsetting, high-quality carbon credits and adjacent risk management tools are key to mitigating the risk of failure and maximizing true climate impact
Walid Al Saqqaf – Rebalance Earth 🐘 🌳
Martina Igini, environmental journalist at Earth.Org wrote a wonderful thoughtful piece on “Nature Credits Can Succeed Where Carbon Capture Technologies Failed”. This piece features the work that Rebalance Earth does alongside R3 in building high integrity nature credits that protect and grow biodiversity, capture carbon and generate prosperity for the communities that preserve nature.
Thank you to Martina Igini for writing this great piece and for Amit Ghosh for participating in the interview with me.
If you’d like to find out more about the important role nature credits can play in our fight against climate change and protection of biodiversity, you can attend our international conference on Natural Capital happening here in London on the 21st of February with world class speakers from around the world including the Taskforce on Nature-related Financial Disclosures (TNFD), WWF, Capitals Coalition, Verra, NatureMetrics, BBC, Simmons & Simmons, IBM, UNDP, R3 and many more. You can register here: https://lnkd.in/ekap2sQJ
The nature based solutions we propose especially empower the local communities that are our globe’s primary stewards – and giving them the resources they need to help protect and enrich biodiversity which is for us all.
Our Chief Scientist Ed Mitchard has responded to criticism of REDD+ activity in yesterday’s Guardian newspaper.
“In a world where we’ve repeatedly said we’re going to stop tropical deforestation and failed to do so, these projects have taken private-sector money from the west and spent it in developing countries to conserve forests, normally with good community/development outcomes as well as carbon and biodiversity outcomes” he said.
Ed Mitchard no one is disputing there are benefits from these credits. The issue is that they were sold as carbon credits to then be reported to financial and government institutions. Sell credits for offsetting detrimental impacts to community development and habitat loss if you can verify impacts more robustly for these outcomes. This isn’t a gotcha it’s just a matter of delivering on what you sell.
I’m sure most of the #ESG world will be shocked by the Guardian’s article on #Verra, but I find nothing surprising in it, nothing Green Future Project didn’t already know and acted upon.
Actually, something did surprise me. The article didn’t mention one of the major weaknesses of the Verra trading system – A large part of their carbon credits’ monetary value goes to investors and brokers, not to project developers(http://bit.ly/3XoTPqV)
So, where does this leave us?
I can’t stress this enough – deforestation is one of the chief causes of climate change. Tropical deforestation alone accounts for 23% of human induced CO2 emissions and is the world’s main driver for biodiversity loss.
While we MUST keep financing conservation projects, we also MUST have a tracking system to ensure that every cent is well spent.
As the article points out, the key problems are related to Verra’s methodology, its application, and the failure to have real-time third-party verification to spot project developers and verifiers misconduct.
As the investigations points out there are some very high quality Verra projects that generate real impact. If you absolutely need to by Verra Credits (there are many alternatives to Verra carbon credits as explained later) ensure to finance only the best in class!
The solution:
Just like for any other type of investments, when buying #carboncredits ESG managers must do proper due diligence and demand tools to track their returns (i.e., positive impact). Green Future Project has developed a platform that allows investors to track the deforestation rate of a project in real time via satellite. We also partnered with Orbify, a third-party satellite verification system, to provide all investors with annual reports on the deforestation rates of a given project. Moreover we also audit projects with an internal methodology this is why we end up refusing the majority of projects proposed!
There’s no global standard for carbon offsets, and each certification (Verra, Gold Standard, etc.) uses their own methodology, protocol, and registry. So, which one should you choose?
Green Future Project suggests ESG managers to back Invest Conservation because they:
-Protect tropical forests on the deforestation frontier and backs only projects that are developed by best-in-class conservation groups with 20+ years of track records.
– Cut out the middleman so that more of every $ goes to conservation and leverages blockchain to ensure 100% transparency on trading. As a result, unlike traditional carbon offset projects, 90% of every dollar goes directly to landowners.
– Monitor every hectare independently via satellite technology and link every carbon credit to a specific hectare rather than to a random pool of credits.
– Conduct annual third-party satellite verification, with publicly available reports.
– Only support projects with very high biodiversity ratings.
A company invest more in communicating ESG than in ESG… And sadly what they invest in compensating….is the majority for speculation…Credits is going anywhere, invented in the last century, you can not expect to solve today’s problems…To create an impact, invest to those who has the boots on and not a suit on! No stakeholders, using blockchain, working with landowners and organizations on the field!Hoping that credits does not turn in a new economical exchange and hoping that regulations takes that into account rather than back up the business of credits.
“fool me once, shame on you; fool me twice, shame on me”
The transition to a sustainable society and 🌎 is NOT going to be easy! We know that.With this report, a warning signal is being fired…..90% of rainforest carbon offsets by biggest provider are worthless, analysis shows – Investigation into Verra carbon standard finds most are ‘phantom credits’ and may worsen global heating
Important that we get more law and order + transparency in carbon offsets. Though have a look at Verra’s response to the article. Some questions whether Guardian may have over-extended their findings in this case: https://verra.org/verra-response-guardian-rainforest-carbon-offsets/, , ref. Anders Porsborg-Smith
We have quoted VERRA in previous newsletter but its important we do it again. So here it is:
Verra RESPONSE TO GUARDIAN ARTICLE ON RAINFOREST CARBON OFFSETS
Verra is disappointed to see the publication today of an article in the Guardian, developed with Die Zeit and SourceMaterial, which incorrectly claims that REDD+ projects are consistently and substantively over-issuing carbon credits.
The claims in this article are based on studies using “synthetic controls” that do not account for project-specific factors that cause deforestation. By contrast, Verra’s approach for REDD+ projects compares them to real areas. Because of this discrepancy, the studies have massively miscalculated the impact of REDD+ projects, which we believe are crucial for avoiding and reducing deforestation, and meeting the 1.5°C Paris Agreement goal.
We worked closely with both publications in the run-up to the publication to explain why the claim is untrue, and we want to share this same information with our stakeholders and the wider climate community.
Read our response here: https://lnkd.in/e8CtzQGz
#ClimateAction #CarbonMarkets #CarbonCredits
Kim Schumacher, PhD, CEnv comment on Verra Response :
Verra You do not provide any conclusive evidence to counter the peer-reviewed research results of actual scientists.Your response seems like unsubstantiated damage control in the aftermath of a massive over-issuing scandal facilitated and enabled by your organisation and those supporting it.You intentionally misrepresent the methodologies and conclusions from the referenced studies in the hopes that many will not read or fully understand them.Again, you do not provide any verifiable counter-evidence of why they, according to you, “reach incorrect conclusions because they rely on synthetic controls that do not accurately represent the pre-project conditions in the project area, as the studies’ authors themselves acknowledge.”Your assessment of pre-project conditions is highly subjective, as those seeking carbon credits through your method can bascially make up any story to suggest the possibility of immediate deforestation threats.You do not address this with reliable and verifiable data of your own. You merely say “Recently, Verra has made baselines more responsive to unpredictable local changes that impact deforestation rates.”, however the studies in question are based on your existing and flawed baselines
Why is “synthetic control” in scare quotes? Synthetic control/quasi-experimental design is a well-established, credible impact evaluation method. It’s almost like you’re attempting to discredit peer-reviewed research? Now that’s disappointing.Site-specific drivers of deforestation/counterfactuals are massively prone to gaming – consciously and unconsciously. We explain the phenomenon here, provide guidance on under what circumstances site-specific counterfactuals are appropriate, and also show how avoided loss counterfactuals in biodiversity offsets in Australia are routinely overestimated.
What are the CARBON STANDARDS and their role in CARBON MARKET? (Verra, Gold Standard, American Carbon Registry, etc)
A carbon standard—or GHG crediting program—refers to the complete set of rules, procedures, and methodologies according to which certified carbon credits are generated and issued.
Carbon standards both certify carbon projects and programs and facilitate the trade of carbon credits by helping convert GHG emission reductions and removals into tradable carbon credits and keeping track of transfers and retirements for each unit.
Carbon standards are developed and governed by standard organizations—typically international non-governmental organizations (NGOs), and validation and verification is usually outsourced to third parties.
The main carbon standards include the Verified Carbon Standard (VCS), the Gold Standard (GS), the American Carbon Registry (ACR), and the Climate Action Reserve (CAR), but new carbon standards are emerging as well – as for example Plan Vivo or ART-TREES.
Carbon standards vary in their approaches, methodologies, and requirements, but given the voluntary nature of this market, standard organizations have the potential to safeguard the quality of VCM carbon credits.
#carbonmarkets #projects #quality #goldstandard #vcm #ipcc #unep #undp #unfccc #wbg #adb #parisagreement
There have been a few HUGE (and quite frankly, overwhelming) climate change related stories in the news over the past couple of weeks, which you should know about. Here’s a quick run down of a few of them:
With around 35,000 climate activists protesting the expansion of a lignite coal mine in Lützerath, Germany (the most polluting form of coal), Antonio Guterres also slammed fossil fuel expansion at the World Economic Forum Annual Meeting as “inconsistent with human survival”.
This statement is in line with a report released by the International Energy Agency (IEA) last year which stated that we need to ensure that NO new oil and gas development takes place, if we are to have a chance at staying within a global average temperature rise of 1.5°C.
Meanwhile, I’m sorry to tell you that the Met Office suggest that the global shift to an El Niño climate pattern later this year could pave the way for the world to breach 1.5°C of warming for the first time NEXT YEAR (2024).
With this in mind, some BIG reports have dropped:
It’s been revealed that many banks are STILL investing heavily in fossil fuels despite signing up to net zero pledges via the Glasgow Financial Alliance for Net Zero (GFANZ). At least 56 banks which have publicly pledged to net zero, have provided $270bn to 102 fossil fuel companies for their EXPANSION, according to Reclaim Finance – ONG.
An investigation by The Guardian, DIE ZEIT and Source Material has revealed that more than 90% of rainforest carbon offsets by Verra, the biggest provider of carbon offsets are worthless. Given that many organisations are relying heavily on offsets, rather than decarbonisation (such as Shell who are set to spend $450 million on carbon offsets via the same company…), it really throws into light the weakness of relying too heavily on carbon offsets to get us out of this mess.
⚠️ One more thing… in a shocking conflict of interest. the President of COP28 i.e. the person in charge of presiding over this years international climate change talks, has been revealed as Sultan Al Jaber, who also happens to be the head of UAE’s national oil company.
SO, what can we do about it? What are your opinions?
I am aiming to start sharing more information on impactful things that we can do to try and change this over the next few weeks and months. But the most important thing is don’t give up. Every fraction of a degree matters.
With everyone freaking out about nature-based solutions, fearing criticism of them potentially “invalidating” carbon markets at a crucial time when we need all hands on deck (Verra Sylvera et al), I’ve gotta say:
It’s an unparalleled public information good to reveal that carbon sequestration activity might be 70-90% bullshit. We should not fear this. We know trees trap carbon, this is just feedback telling us that we’re doing it wrong.
The only thing I fear is collective action problems and the institutions who ossify around them preventing the emergence of clean epistemologies and the territories that must be governed by them.
In other words, you should only be defensive of this criticism if you have something to lose. But depending on the level of organization (neighborhood, business, nonprofit, city, state, country, WORLD) we all have something to lose.
So I’m not terribly concerned if 70-90% of the market activity to date in the VCM was fud. That doesn’t invalidate the fundamental facts on the ground – merely our process of navigating those facts to date.
And if you built a business on shaping those facts, well, I think your defensiveness is natural and I hope that we all aren’t bullied by it into making further suboptimal choices.
2030 is around the corner – the clock is ticking.
no entity alone, whether it’s Verra or someone else, is the entire VCM itself. We should be very suspicious of anyone who tries to position the VCM itself as being on the line under this scrutiny, when merely true criticisms are levied against a few institutions with poorly aligned incentives
Well said and also let’s stop with the carbon obsession! It is not even on the top three challenges of plantery boundaries! We can sequester all the carbon in the world and still fuck up water, soil and biodiversity. REDD+ projects regardless of their carbon sequestration have other co benefits, such as stopping deforestation and restoring habitats yet everyone is stuck on the carbon accounting.
with the risk of tipping towards whataboutism: can we just make sure that we keep the Hashtag #greenhushing trends in the discussion? And here is another input for your cocktail talks: Bertrand Piccard says rightfully: “if we talk about problems we create problems, if we talk about solutions we create solutions”
The Guardian published an article this week that raised concerns about the effectiveness of rainforest carbon-offset projects, known as REDD+ projects, in reducing deforestation and carbon emissions. REDD+ projects are part of the Voluntary Carbon Standard and aim to protect and restore forests in order to reduce carbon emissions. However, the Guardian article suggests that the methodologies used in these projects are fundamentally flawed and lead to inaccurate conclusions.
This is a serious concern, not only for companies that depend on carbon offsetting as part of their net zero and biodiversity strategies, but for the planet as a whole. Deforestation and biodiversity loss are major global issues, and it is crucial that any efforts to address them are based on sound science and accurate data.
As the CEO of DGB Group, a carbon project developer with a long history of working to protect and restore nature, I feel compelled to address the concerns raised by the Guardian. Furthermore, I want to provide some context to carbon offsetting and the voluntary carbon markets.
While DGB’s focus is on different categories of carbon dioxide emission reduction and removal projects, the Guardian’s reporting brings disrepute to the voluntary carbon market — to the detriment of genuine initiatives and nature conservation projects. Why are these journalists so negative about efforts to protect and conserve forests?
#vcm #carbonmarkets #carbonoffsetting #carboncredits Verra Sylvera emsurge Everland
The much-awaited State of CDR report is out! https://lnkd.in/gWGgHZQp It covers the topic from a number of angles, deployment, innovation, policy, public perception and more.An interesting data point is that the world already restores 2 billion tonnes of CO2 per year through forestation. But only 1% of that is sold as carbon credits. (Note that emissions from land use is net-positive overall though. But restoration and emissions happen in different places, by different actors.)The report cites www.cdr.fyi data (the google sheet before the website), but the removals from “Novel CDR” they report are much higher here than at http://cdr.fyi, why? The main difference is that we (CDR.fyi) track *sales* of removals. We have found zero sales of BECCS-credits for example. Another difference is that for Novel CDR, *gross* removals are reported. I haven’t seen any BECCS projects report net negative emissions, (but maybe they do). Many of the operational ones are from ethanol plants with quite a lot of emissions.
In the last 48 hours I received many messages about my thoughts on the explosive announcement by The Guardian and DIE ZEIT about the quality of carbon credits by a prime verification organisation.
Since the launch of Plan A we have been weary to promote to our clients offsetting (aka the retiring of carbon credits) as the sole counter action to the result of their carbon emission assessment, as this negates the fundaments of climate science which bluntly tells us we need to alter our behaviour as businesses, reduce emissionseric, and take all possible action to eliminate our negative impact on the planet, before we can finally compensate by purchasing credits to “nullify” the rest of our emissions.
In the investigative piece which shook the Greentech and sustainability world in the last 48 hours, the key challenges related to the offsetting industry are rightfully exposed:
-archaic approach to impact assessment that is not data- or tech- driven, which makes the results traceability in some cases impossible
-human element not accounted for in the assessments, leading to human rights issues
-decades of development of this industry for it be now overloaded by demand it cannot satisfy
Only recently the German court banned the “carbon neutrality” (aka neutralising at full your emissions by retiring carbon credits) label under the pretext it was confusing consumers as the standards to make such claims were not unified. While we try to fix the offsetting industry by aligning standards, educating consumers and investigating deeper existing carbon credits, we should focus on what will at scale address climate change which is actual decarbonisation, rather than only compensation.
I stand with honest project developers, who have been working hard on implementing natural solutions to tackle climate change, but the system as a whole needs to be fundamentally revamped. In the meantime – direct decarbonisation for the win.
#sustainability #climatechange #greentech #data #data #tech #science #development #project #quality #developer #humanrights
Let’s stop spreading misinformation. Investigative journalists are not scientists. They have never used a methodology- they don’t understand the very technical details of the entire validation and verification process. Nor do they understand it was always the intention to use jurisdictional and national baselines – which are only being developed now to be used in the VCM.Credible rating agencies and Verra have already discredited the approach used in this study.Unfortunately showing good projects doesn’t sell papers.
Indeed, in addition to the dubious quality of carbon credits it can also be an excuse not to fundamentally rethink the way we manage our economy to stay within the planetary boundaries, not just carbon but also the other ones. The essence is how we can provide for the basic human needs (shelter, food, mobility etc ) for 8 billion people with the boundaries of our planet. This requires rethinking the way we use materials (including fossil fuels) to use less, longer, cleaner (regenerative) and cycle at the end. These are the principles of the circular economy.
Globally, coastal ecosystems contribute over $190 billion annually to blue carbon wealth. Financing their restoration could result in 380 million TCO2 of sequestration and a return of $11.8 billion in carbon finance by 2040. This is equivalent to the annual emissions of nearly 82 million gasoline-powered passenger vehicles.
It is unsurprising then that blue carbon is reaching the attention of leaders at the highest level, with the UN Secretary-General Executive Office flagging it as a top priority for ocean work in 2023 and its on its way to being a key discussion point at #cop28.
While private sector actors increasingly demand carbon credit investments to protect or restore blue ecosystems, the supply of these credits is lacking, leaving the opportunities for blue carbon untapped.
As the World Economic Forum‘s Annual Meeting takes place this week in #davos this and other discussions are taking an increasingly #naturepositive approach.
According to WEF’s #globalrisksreport 6 of the 10 most significant risks in the next 10 years are related to nature – it’s time to put nature at the center of the agenda – and carbon is just one part of the discussion.
It’s truly inspiring to see leaders at the highest level recognizing the potential of blue carbon and the need for its preservation and restoration. The private sector’s growing interest in carbon credit investments in blue ecosystems is a positive step forward, but as you mentioned, the supply of these credits is lacking. It’s crucial that we continue to explore and tap into these opportunities to protect our oceans and coastal areas. Thank you for shedding light on this important topic.
Important discussion at #wef23 on voluntary carbon markets and fundamental root causes limiting market use. Top 5 issues identified by the new report include:
1) no clarity on how carbon credits can be used on the road to NZ (2023-2030)
2) no industry specific pathways for carbon credit use in hard-to-abate industries
3) lingering collective ambiguity around what defines a high-quality carbon credit
4) lack of clarity on what claims corporates can legitimately make for carbon credits
5) no common language/rules with “the judges” on credit for compensation action
PIK – Potsdam Institute for Climate Impact Research
#carbonoffsets: greenwashing or crucial for #netzero? While companies should not use carbon offsets as a substitute for making real #emissions reductions, they should still be encouraged to buy offsets, argues PIK Director Johan Rockström in the Guardian.
The market is unregulated, totally agree. I would also highlight that the term carbon neutrality or now even environmental neutrality is totally misunderstood, unregulated and thus misused. Compensating emissions somewhere else than where they occur can hardly lead to real physical neutrality. The SBTi does (correctly in my opinion) not allow to claim net zero or carbon neutral status already before 2030 as it can only be a long term target while for now we should put focus on deep emission cuts and be honest with the emissions caused. This starts with transparent reporting…
This latest rainforest offsets headline has created quite the stir. If you want to understand the discussion without going through all the related posts, stories, and papers, we’ve pulled it all together into one page! https://bra.in/9j4k5g
With the industry reacting today to the Guardian’s investigative report into Verra, Earth Blox CEO and net-zero scientist Dr Genevieve Patenaude calls for increased collaboration in #carbon reduction. Read more on the blog https://lnkd.in/e8aEiuwP
Thank you and I agree. I am not a climate scientist myself, but coming from a financial practitioner and accountant perspective. The investigation could be a prompt to find/act on tangible carbon reduction solutions, new additional oversight, fixing weaknesses, etc. However, this situation seems to repeatedly descend into defensiveness. i.e. ‘he said, ‘she said’. Collaboration is two way, per this blog, I hope it increases.
The wildly debated The Guardian analysis that more than 90% of rainforest carbon offsets are worthless left me struggling for a response. The best I have found is from my friend Diego, founder of Pachama, who knows more about this than probably most other people on this beautiful planet.
So I’d like to share Diego’s words here:
“Anyone who follows the public discourse on carbon markets has seen the latest reporting drawing attention to an essential discussion on baseline integrity for rainforest carbon projects. Rather than reacting to sensational claims, I want to offer a broader perspective on the challenges and opportunities of this sector.
Reading only headlines would leave one with a gross misperception about the state and potential of this space. While it’s true that there is an alarming number of projects that are over-credited, there are plenty of projects operating today delivering a measurable impact on the ground and the atmosphere. Under Pachama’s rigorous evaluation standards, we found dozens of projects that are correctly credited, sequestering millions of tons of CO2 and effectively protecting millions of hectares of rainforest truly under threat.
Carbon credits, properly designed, represent a critical solution. A mechanism to drive funding to projects that sequester carbon from the atmosphere while regenerating nature and providing an income to vulnerable communities, allowing those who emitted that carbon to take responsibility for their impact while they decarbonize, it’s essential to reach planetary net-zero emission. Enhancing crediting integrity is fundamental to making this work at scale.
Digital technologies are foundational to enabling a standardized, high-integrity carbon crediting system that can scale and not be gamed. That is precisely what Pachama has been working on since day one. We have been developing new tools and models harnessing satellite data and artificial intelligence to establish algorithmic, dynamic baselines, remote sensing based carbon stocks, jurisdictional risk maps and transparent data auditing systems.
We, together with many other new groups, are working tirelessly for progress in carbon markets because we know the enormous potential of new technologies and the urgent need for carbon sequestration and nature restoration at scale.
We are in a planetary emergency. We must act now. Onwards.”
So in other words: Mobilizing capital for carbon offsets makes sense as one tool to fight the climate catastrophe, but of course it needs to be done right. Plus, if I may add this, carbon offsetting is only one tool, and we must urgently decarbonize our economy (the topic I am working on with my World Fund)
Carbon credits in forests are very difficult to secure over the long term (external effects: drought, fire, insects) and to measure fairly.Nevertheless, many projects make sense because they protect ecosystems, restore them, or make them more climate resilient.The solution should rather be that we look less at the (calculated) CO2 sink performance and in the worst case rather compensate the footprint instead of reducing it. Instead, the focus should be on the ecosystem services that we maintain or improve. So far, these cannot be expressed so nicely in tons, but it would be more honest and would invalidate the eternal greenwashing accusations.
We’ve seen The Guardian’s investigation into rainforest carbon offsets and understand that it raises questions and concerns.
The world’s forests, particularly biodiverse tropical rainforests, are vital to maintaining a healthy planet. But they’re at a critical point.
It’s widely acknowledged, including by the Guardian’s environmental editor, that carbon finance has a large role to play in preventing deforestation. When done properly, it provides crucial funding to genuinely impactful, high-quality forest protection projects.
The investigation focuses on two key issues relevant to forest protection credits: baselining (estimates of background levels of deforestation) and leakage (generating emissions elsewhere). In the examples the investigation cites, these key variables have been inaccurately handled by some REDD+ project developers, leading to overcrediting.
Overcrediting is a known challenge in the market, and there are many other examples of this. It’s an area that the market is working hard to address. But there are numerous examples of high-quality projects that are having a positive impact on the environment and local communities.
The report underscores the importance of ensuring that carbon offsetting projects are genuinely impactful. At Ecologi, in addition to our robust in-house due diligence processes, we work closely with organisations like Sylvera, the leading carbon intelligence platform. Sylvera independently verifies each of the forest protection projects Ecologi supports, taking baselining and leakage into account, as well as other important quality indicators. You can read their take on the Guardian investigation in the comments.
The main carbon standards, like Gold Standard or Verra, are continuously updating their methodologies to match the latest science and address some of the flaws pointed out by the investigation. Ecologi only buys newer vintages (recently updating our policy to only purchase credits that are less than 5 years old), to ensure that our credits are of the highest quality.
We also select projects based on our own climate impact regionalisation strategy, which directs funding towards places with the greatest potential impact, and prioritises areas at greater risk of degradation. So of the 200+ projects our team looks at each month, we only fund a carefully chosen handful.
Carbon finance has a key role to play in the protection of forests from deforestation, as well as providing critical funding to other vital climate solutions. The Guardian article highlights some of the known challenges of certain REDD+ projects, which are being rectified. What’s most important right now is for the industry to keep evidencing impact as best as it can, and hold specific projects to account that fall below the required standard. There are so many high-quality, impactful projects out there. It’s essential that funding continues to flow into these projects.
After becoming carbon neutral through Ecologi only this month, I was concerned by the article. Thanks for addressing it Elliot, it’s reassuring to hear what you’re doing to make sure projects on your site are following the latest guidance
The Sharm el-Sheikh #COP27 outcome for #carbon markets under the #ParisAgreement #Article6 was….well, mostly a non-outcome, with key decisions postponed to Dubai next year.
🎙But as discussed in my talk with Roger Hirst at The Big Conversation last week, existing carbon markets operate at the national and regional level: high-level UN decisions about global climate change mitigation are not price drivers in these emissions trading systems #ETS (trading in emission permits #allowances). It is domestic climate #ambition #NDC and regional factors like relative fuel/renewables prices, rather than UN-level rules, that affect carbon markets on a day-to-day basis.
🏦 Prices in these markets, especially the European Emission Trading System #EUETS, have been holding up during the #energycrisis – this shows once again that long term energy security and climate ambition are two sides of the same coin.
😤As for cooperation between countries and for the rapidly-evolving voluntary carbon market #VCM (trading in carbon #offset #credit #ITMO), punting decisions to the next COP is frustrating. Corporates intending to use carbon credits to offset their emissions, and poorer countries who want to attract corporates’ money to fund mitigation projects, are unclear how attribution or “credit” for that mitigation will shake out. We at Refinitiv, an LSEG business Carbon Research and other experts are combing through the final texts on trading mitigation outcomes to see what they imply for countries, companies, and environmental integrity.
🌏The Article 6 architecture goes to the very core of the Paris Agreement – ambition and finance – and must be built to last. In a trade-off between fast and right, right wins; the rules have to be unambiguous and transparent. #COP28 it is then…
Carbon offsets shouldn’t be controversial, they can change how we price climate projects, writes Tommy Ricketts of BeZero Carbon
“In time, carbon ratings can provide a tonic for a key market failure: the lack of correlation between price and quality”
Good to see some balanced coverage on this! Completely agree, until it can be reduced, credits have a valuable role to play. ‘Everyone agrees reducing emissions must be at the top of the priority list for corporate actions. But for those emissions that can’t readily be reduced, effective carbon credits are critical.
The IPCC has just released its latest report from the third working group which identifies political, economic and technological options for mitigation of anthropogenic climate change.
Our team has put together a short summary of some of the key facts of the report:
In the short term, how we generate energy will matter. We need a transition from fossil fuel without CCS to very low or zero-carbon energy sources such as renewables or fossil fuels with CCS and the use of carbon dioxide removal (CDR) methods to offset the remaining greenhouse gas emissions. Wind and Solar energy must grow by about 20% each year until 2030.
AFOLU mitigation options, if implemented sustainably, can reduce GHG emissions on a large scale. That includes conservation, improved management, and restoration of forests and other ecosystems. But also that diets and lifestyles need to be changed, with huge scope for major carbon savings.
There is another way that scientist are proposing to remove CO2: technology in form of the work of machines that remove carbon directly from the atmosphere. This is currently still seen as controversial as the technology is new and currently very expensive.
Read the full Report here: https://lnkd.in/efnh3QAm
And make sure to follow Planetly by OneTrust as we always keep you informed on climate matters and most importantly climate action that is being taken!
Let’s take climate action together!
#climatechange #climateaction #sustainability
“Carbon offsets are bullshit.”
If you haven’t yet, you should dedicate 10 min of your time to watching John Oliver from Last Week Tonight Show discuss the controversy of Carbon Offsets.
The comedian claims that offsets don’t deliver the emissions savings promised and that companies use offsets to obscure the true climate impact.
Nobody believes offsets are the only solution, and companies relying only on them to reduce emissions face great reputational risks. Above all, despite not being perfect, they provide a framework for financing innovation in carbon removal technologies and for projects that reduce emissions and support communities.
If you want to learn more about the subject, you can read:
– Verra‘s response to John Oliver https://lnkd.in/e-umkRa2
– My article to understand compliance and voluntary carbon offsets markets https://lnkd.in/dUAhUs8s
Why you should consider adding carbon credits to your climate action plan
Organizations must purchase carbon credits as part of a larger, comprehensive climate action strategy that begins with emissions reductions. #wef23
Carbon Direct comments on REDD+ credits, avoided deforestation…
Despite the challenges in the voluntary carbon market, at Carbon Direct we view carbon credits—carbon removal credits, specifically—as one tool for our clients to help scale carbon management in a manner consistent with #IPCC recommendations.
Our Chief Science Officer, Dr. Matthew Potts, provides context for the “sticky challenges” that exist across many segments of the carbon credit market and how they inform our client work at Carbon Direct. https://lnkd.in/gqjunKJs
A historic milestone was met on December 1st when it was announced that #Guyana was the first country to get issued carbon credits under the new high-integrity carbon standard
Most serious companies in the world have committed to go carbon neutral. A lot can be achieved by looking into every aspect of the company value chain and replace fossils with renewables for example. But there will always be a rest which needs to be compensated with carbon credits.
I am proud to work with Carbon Neutral Royalty. It offers high quality carbon credits for business, and through that it channels money to mangrove ☘️ restauration in Asia, clean cookstoves in Africa and a lot more.
Please contact me if you wish to be connected to Carbon Neutral royalty. ☀️
Putting carbon credits on blockchain won’t solve the problem alone: Davos
Putting carbon credits on the blockchain is a step in the right direction but not the end-all solution to climate change, says blockchain executives during a panel in Davos.
Anyone who follows the public discourse on carbon markets has seen the latest reporting drawing attention to an essential discussion on baseline integrity for rainforest carbon projects. Rather than reacting to sensational claims, I want to offer a broader perspective on the challenges and opportunities of this sector.
Reading only headlines would leave one with a gross misperception about the state and potential of this space. While it’s true that there is an alarming number of projects that are over-credited, there are plenty of projects operating today delivering a measurable impact on the ground and the atmosphere. Under Pachama’s rigorous evaluation standards, we found dozens of projects that are correctly credited, sequestering millions of tons of CO2 and effectively protecting millions of hectares of rainforest truly under threat.
Carbon credits, properly designed, represent a critical solution. A mechanism to drive funding to projects that sequester carbon from the atmosphere while regenerating nature and providing an income to vulnerable communities, allowing those who emitted that carbon to take responsibility for their impact while they decarbonize, it’s essential to reach planetary net zero emission. Enhancing crediting integrity is fundamental to making this work at scale.
Digital technologies are foundational to enabling a standardized, high-integrity carbon crediting system that can scale and not be gamed. That is precisely what Pachama has been working on since day one. We have been developing new tools and models harnessing satellite data and artificial intelligence to establish algorithmic, dynamic baselines, remote sensing based carbon stocks, jurisdictional risk maps and transparent data auditing systems.
We have been using these tools to evaluate legacy projects highlighting the truly impactful ones, but also to help start a whole new generation of tech-driven, highly impactful projects; and most importantly to help redesign the system from scratch.
We recently published our Project Evaluation Criteria, explaining how we use technology to scientifically validate projects’ quality. We also launched Pachama Originals, our effort to help start new high-quality projects. And more recently we announced our work piloting a DMRV (Digital Monitoring, Reporting & Verification) Platform to help registries automate data collection and auditing to ensure consistent integrity of carbon accounting. We will be publishing soon more scientific findings that we hope will contribute to the overall progress of the space
Pachama has never shied away from this conversation and we welcome new scientific studies and responsible investigative reporting. We, together with many other new groups, are working tirelessly for progress in carbon markets because we know the enormous potential of new technologies and the urgent need for carbon sequestration and nature restoration at scale.
We are in a planetary emergency. We must act now. Onwards.
I want to bring everyone’s attention to a wave of new news articles and scientific studies that have come out today describing various malfeasance with Verra projects. An inescapable finding is that a lot of Verra carbon offsets (most?) aren’t actually offsetting anything.
I’m proud to have been a small part in these. Much more detailed content will be coming out in the following days. I urge anyone who cares about carbon #offsetting, #forest #conservation, or just #climatechange to read through these and have a long think about the system Verra’s created
Consider the ramifications for the climate if 70% of the pollution that we think we’re wiping off the books is actually going into the atmosphere.
Consider the ramifications for forest conservation if your project can’t be financially viable unless you inflate the numbers by 70%.
Consider the ramifications if people lose faith in offsetting and our best way to combat climate change is thought of as a scam.
Rather than quibble about whether it’s 70%, 75%, or 90% of credits that are bad, we should be taking up pitch forks. The situation isn’t this bad because “it’s a complex issue”. The situation is this bad because Verra’s created a system that incentivizes rigging the numbers. It’s a system where everyone has a financial incentive to look the other way, and there’s no incentive akin to ‘bug bounties’ for anyone to find problems with projects.
Once again I find myself quite upset today.
I just reviewed a #carbon project that’s likely receiving more than 30x as many credits as it should. It’s actually got a reasonable reference region, but ridiculous baseline math. It uses logistic regression to claim that 96% of the area would have been deforested. The #deforestation rate in the reference region is actually a steady 0.09% according to Global Forest Watch. So in actuality it would have taken 1000 years for this project to be deforested.
Worse yet, the project’s received 46 million credits and has spent a total of $80,000 on community education and healthcare. This despite the fact that it’s taking place on community land. Most of the project’s “cobenefits” are focused on teaching community members to keep bees for earning income from honey.
Hmm, credits for honey.. sounds a bit like trading beads for land!
So where did the rest of the half a billion dollars that this project has earned for phony credits go? I assume into the pocket of our favorite unicorn (I.E. billion dollar company) project developer, South Pole.
All opinions are my own. And my own opinion is that everyone involved with this project should be arrested.
This is an interesting and complicated topic that is often asked of me. People always want forest #carbonoffsets to account for climate change.
In some cases I think the situation is cut-and-dry. I often discourage people from investing in carbon projects in areas of clear aridification and wildfire risk (like Northern California).
However, at a fundamental level, these systems are very complex, and we’re not always able to model their responses very well. If we look back at paleontology, we see species assemblages that are not seen in today’s forests. Stuff that would really boggle a #forest ecologist’s mind.
A process model like the one in your paper, even one as well tuned to a specific ecosystem like that one, is not going to be able to anticipate some of these changes. It’s not going to be able to anticipate new species being introduced, interactions between species leading to different dominance regimes, or human’s reaction to all of this.
So what does this mean for incorporating hypothesized #climate change into #carbon projects? The safest route is to make actionable decisions based on the elements that we are confident about, and assume something close to business as usual for elements that we’re not. We should err on the side of caution by accepting bad predictions more readily than we accept good ones (like productivity or rainfall increases). Otherwise we could end up issuing more credits where they shouldn’t or vice versa based on different people’s climate models.
This field gets into a lot of flack already for trying to predict the future of forests through baselines. People think we pull these numbers out of the air (sometimes we do). We need to keep our estimates as close to those matched by past observations as possible when it comes to decisions that could result in more credits being issued (such as growth models being altered through productivity forecasts).
I think we can agree on one thing, that carbon projects located in semi arid regions, where annual rainfall is the limiting factor for forest growth and interannual tree mortality, should absolutely be looked at from a climatology perspective very closely, with high risk associated with anything longer than a 10 year investment outlook. Remember that 40% of tropical forests globally are seasonally dry, and their near term future is tightly linked to accelerating climate change, that’s a big chunk of our historically highly productive forests.The good news is we actually have very reliable data from 40 years of satellite measurements that can tell us which areas are becoming more productive and which are drying out and changing to woodlands and Savannah’s, and we can measure these trends very accurately on smaller time scales like 3 to 5 year averages to get reliable intel on which way they are trending, more people just need to look at this information and I think carbon market players need to be providing these insights as a standard expectation for their clients.
My feeling is that the reason there is such a visceral rejection of carbon offsets is that we’ve botched them up. If the Guardian article and others had been reporting that only 10% of offsets weren’t genuine, we all probably wouldn’t be up in arms against the idea.Our problem is that we’ve let a very small group of financially motivated people control the market and set the rules. This is something that can be changed, and offsets can be a realistic way to deal with emissions.I think we need to be realistic about this. Some people may be able to dramatically reduce their emissions, just as some may be able to commit to vegetarian diets. Most of us living in the developed world though are not willing to make the level of sacrifice needed to genuinely counteract climate change. Calling on people to do that without giving them an alternative is nothing but wishful thinking. Calling on people to stop deforestation without giving them a strong financial incentive to do so is also wishful thinking.
So I believe strongly that offsets need to work, since we don’t live in a communal utopia where everyone will make the right choices. We just need to claw back this excellent technique from those who have ruined it (Verra mostly)
I wanted to put together a quick post on how I’m feeling about some reactions that I’ve seen to the recent Guardian article on carbon offset quality.
This is the Guardian article for those maybe not tied to social media 24/7:
Think this is a bit disingenuous Elias, the reason our response to the Guardian piece was focused on the Guardian piece is precisely because it was a specific response not a general market diagnosis!We’ve gone on record for years in Bloomberg and others with our view that the minority of credits are delivering the claimed impacts. That is not exactly pulling punches and it hasn’t been a universally popular message as you might expect.Why we saw the article as irresponsible is that, and I think we’re aligned here, we need to fund forest preservation and restoration (and myriad other levers of sequestration and mitigation) at a massively increased scale.With independent data providers making quality transparent, buyers can do this confidently. But be realistic, especially new and potential buyers ( basically all businesses) see that headline and think, no I won’t participate, *it’s all fraud* whereas that isn’t true.I think maybe a philosophical difference is we see that our job is not to criticise standard x or y, it’s to help those actors who want to ensure the climate impacts they are funding are really happening. If the market is a voting machine, and buyers care about impact, then the quality will improve.
This news implicitly states that Earth Observation is the key tool in assessing the state of the sector, its projects, and improving them. And this is a good news for us. Period. Having said that, I would not play the game in an effort to ridicule or demonize Verra’s efforts (imperfect, indeed) in leading the economy into one that is more environmentally friendly and equitable.
Funding Cleantech Companies with Carbon Credit Pre-sales?
We are making significant headway in innovation around clean technologies. Whether it is carbon capture, new batteries, motors for EV’s, or new mitigation methods, entrepreneurs are making things happen. However, often the business models of these nascent ventures don’t provide the kind of risk/reward ratio interesting to alternative asset investors.
Many of them have turned to the pre-sale of the carbon credits to be granted later to sustain their teams through the development process. This is a complex process, and few if any really understand the ins and outs of pre-sales. However, the value of these credits is great enough to provide more than adequate funding to good, well managed startups.
For many who would like to be involved in these transactions the risk attributes are just too high. And, coming out of that world, I cannot say that I blame anyone for thinking so. To increase the funds available to early stage cleantech companies, we must understand and reduce the risk involved in these transactions.
I wanted to elaborate on the various classes of risk in these trades:
Financial Risk (aka pricing risk) –
Variability in carbon credit pricing is, to put it mildly, extraordinarily high. I don’t see this changing for several years, no matter what happens at COP27, COP28, COP29…
The key issue here is that it makes no sense that a metric ton of carbon sequestered in California is not different from a ton of carbon in China, or Europe, or Australia. Given wind patterns that circle the globe, this won’t change. So why would a credit sold in California be priced differently than one anywhere else. Until that changes, pricing stability is a dream.
Regulatory Risk –
See last week’s article on VERRA and its processes. Many people believe that November’s COP27, will make some dramatic changes in Article 6. Many more do not. This uncertainty is not the fault of any early-stage company but impacts the willingness of others to invest their capital. Stability in the marketplace is a big help
Performance Risk –
We have discussed how seller reputation is more of an issue in this market than any I have seen before. Nature-based carbon projects take a long time to develop, and technology-based solutions can take longer. Can anyone really be sure that a startup will last that long. Successful angel investments return 40x, 50x or more to those willing to risk their capital. These projects come nowhere close.
ESG risk –
The ESG movement has almost nothing to do with E, S, or G. It is mostly about extremists looking to collect economic rents. Whether it’s a private party, an NGO, or a government, activists have placed themselves securely into this process with their hands out. We need real players in the market, doing real things and creating real good. And we need a method of rooting out the bad actors – permanently.
Now let us begin thinking about how to reduce the risk
We’ve all seen it: “John Oliver thinks carbon offsets are bullshit”.
Let’s not jump to conclusions.
The concept of Offsetting is surely not the problem. It’s our execution that sins. Planting trees, protecting forests, or investing in renewable energy is good, and people should continue doing it, but they should not be able to claim the work of others. Hence in the video, he points the finger at the right problem: additionality – We need safeguards and protections to be sure that the money invested is doing something more for the climate.
Mark my words, there have been scandals and problems in the past, and there will surely be others but, should all dogs be euthanized because some bite?
A lot of effort has been made and is being made to bring integrity to the market: independent rating agencies, Code of Best Practice, constantly updated methodologies, and so on. A large community of scientists, companies and non-profits invest time and energy to move forward and try to solve these problems the best they can.
Now should we just throw it all away and give up on offsetting? What do we say to industries that have limited options to reduce their emissions, like aviation? Please sit and wait? It’s the same for an individual, some people do not have much of a choice: They must take their car to go to work, and they do not have the money to buy an electric one. If it’s done the right way, shouldn’t they have the possibility to offset in high-quality projects?
Accelerating investment in actual solutions with as much security and safeguards as we can is the way to go, and offsets are part of it.
Oliver uses pseudoscience and broad generalities. Using Hawk Mountain, as almost all detractors have, is a straw man argument that ignores the vast benefits of carbon projects. Simplistic arguments are easily refuted
I’m not against carbon removals, or tree planting, they are definitely a very important part of the solution, we certainly can’t offset our way out of this mess with avoidance. That being said, removal technology doesn’t exist at scale and there are no amount of trees we can plant that will make a difference either…. if we don’t figure out how to stop deforestation of our remaining old-growth forests. Just look at what’s still happening in both the Congo and the Amazon, this is why QUALITY REDD+ projects are still so important to incentivize better and more equitable land use.
Removals don’t exist at scale, so they cannot adequately finance the IPLCs who are the stewards of the forests in this article, which is key to the success of avoidance projects. Are there a few bad actors out there attempting to develop avoidance projects? Yes… this is the nature of a burgeoning market. There are also amazing, impactful existing and new projects that are setting the standard for best practices and high quality moving forward. We need to focus on regulation and enforcement of existing rules at this point to weed out the bad actors, and stop developing sweeping, unrealistically conservative policies for the entire voluntary market that also harm the great projects. This will only serve to render REDD+ in general non-competitive with extractive industry, which as we’re seeing is ever present. Quality REDD+ Projects are more important than ever!
Starting to do a deep dive into the nuances of tree planting. Great article from a collection of scientists called the 10 golden rules put preserving existing forests as the #1 rule. Makes perfect sense intuitively. Protect what we have and then do the hard work of planting, rewilding, and measuring thoughtful projects that work with local communities to plant native species.
Dear The Guardian. Let’s be clear. These markets are NOT (as you say) called ‘voluntary’ because they ‘…are not regulated by governments.’
No, they are ‘voluntary’ because those who supply credits to and secure credits from the market do so voluntarily.
For contrast, the EUETS, the Korean ETS, WCI sub-nationals California and Quebec, Washington state, and states in the RGGI program…these are all ‘compliance’ markets. Regulated entities in these programs are subject to government-issued/administered requirements to satisfy GHG reporting and reduction mandates — and are subject to consequential sanctions if they fail to do so. Further, credits and allowances (EAs) supplied to such markets must meet stringent government-issued/administered/enforced requirements re how such credits and EAs are created, quantified, recognized, banked, transfered, used, and retired.
And let’s also remember that those who supply credits to, and use credits from, the voluntary markets are subject to government oversight and potential sanctions — especially with respect to the claims and representations that they make — to their investors and customers as well as the general public (e.g., https://lnkd.in/grVqrGRj).
Let’s acknowledge that for us to have a reasonable shot at realizing a 1.5°C world, those charged with safeguarding our future — our governments — must actually require (not simply encourage) those who produce, sell, and use GHG-emitting fuels/services/activities — i.e., the very same governments, companies, and individuals — to prevent the release of and/or sequester (biologically and zero-carbon mechanically) an equivalent quantity of GHGs as that which has, is, and will be released.
Finally, until that happens — until our government leaders do what they have thus far been unwilling/unable to do (i.e., mandate what has been heretofore voluntary) — the ‘voluntary market’ — and those who are actually creating, verifying, auditing, registering, selling, and using such credits whilst they are also aggressively decarbonizing their operations and supply chains — may be the best chance we have.
So if you don’t like what you see, if you think the system must be improved, get involved. Instead of simply casting aspersions, offer constructive critiques together with workable, scalable, and consequential solutions. Work to achieve the change that you seek.
Yes, demand more rigour, quality, ambition, and scale from the VCM. But also hold yourself (as a voter) and your government officials accountable. Elect and appoint progressive leaders. And if you don’t see any qualified candidates, then run for office yourself, get elected, and deliver results.
Paraphrasing John Muir, any fool can torch a forest. But absent consequential and enforceable mandates, it will take a community — the global community — working in concert, to VOLUNTARILY stop deforestation, end the relentless destruction of our commons, and deliver the reductions necessary to achieve a 1.5°C world.
Firstly, you fall into a classic logic trap of assuming that we can’t be critical of a broken system without proposing a solution. This is absurd.Secondly, the problem here is that Verra itself is fundamentally broken. There are incentives at all levels (verra, pds, auditors) to issue too many credits. There are no checks or balances. So your case that we should “have a dialog and propose a better solution to Verra” is a non-starter. A new and better protocol is not going to prevent the fact that the rules are themselves not enforced. Projects like Brazil Nuts can choose to only verify portions of their project regardless of what the rules say. Working with Verra to reduce credit issuance is akin to working with a cigarette company to reduce smoking.The solution therefore is to propose and promote new ideas, but not with the same set of crooks who created this crisis over the past 20 years.Thirdly, Verra’s credits are increasingly becoming involuntary. Colombia and Singapore now accept them in lieu of taxes. CORSIA accepts them for airline emissions. We face a dire situation where even if everyone acknowledges that some alternative set of credits are better than Verra’s, people will be forced to use phony Verra offsets.
Ugh . . . the other scandal is that the carbon offset market is basically inaccessible for community and Indigenous-scale forest conservation projects, which have the highest social benefits. We have *got* to find new ways to encourage the private sector to fund forest protection. Despite deforestation representing 10% of global carbon emissions, it is not looking like the carbon market is going to be the answer – offset scandals like this scare companies away, and the Science-Based Targets don’t give any credit for forest conservation. In the Forest Conservation Fund we’re hoping that the new talk about nature positive will encourage companies to support high-impact community-led forest conservation for its own sake.
People (especially those whose work is connected to these carbon markets) keep trying to make the case that while flawed, offsets are all we have. That is utter non-sense. There are lots of reasons to invest in nature-positive actions and most don’t require that we let corporations off the hook for their bad deeds.It’s time to get past this false choice of “offsets or nothing” when it comes to attracting corporate resources for impactful conservation
This is a prime example of how the fixation on being ‘net zero’ or ‘carbon neutral’ overnight leads decision makers astray.
Carbon offsets are not only unreliable in their real-world impact – as this investigation by The Guardian, DIE ZEIT and SourceMaterial so drastically shows. They are also simply bad business. With ever-increasing emissions and limited global opportunities to ‘sink’ carbon, the prices for CO2-certificates will only keep rising. While the window of opportunity to get businesses on track for the 1.5 °C goal is closing.
Every day I speak to business leaders who are determined to be remembered as ‘the one who got the climate transition right’. But they are also increasingly concerned about getting embroiled in a greenwashing scandal. And rightfully so. Soon, the current confusion and chaos around sustainability standards will give way to standardization and transparency. Then we will all clearly see which companies had the ambition and determination, but also the patience and discipline to work on real transformation – sometimes even disruption – of their own business model.
The Financial Times Responsible Business Education Awards has recognized 2 case studies I have co-authored on Carbon Offsets and Greenwashing among the best for acquiring a practical toolkit to fight the world’s most pressing issues.
“As pressure mounts on companies to look beyond profit, business schools are responding with new courses and teaching. These awards, now in their second year, acknowledge those institutions, researchers and alumni whose efforts are to helping to recast business “
Read more about it here: https://lnkd.in/gBENWNtz
Greenwashing case study: https://lnkd.in/gEWfUmVn
Carbon offsets case study: https://lnkd.in/g2nFekGG
World Economic Forum 2023 #wef23
Landed in Zurich, and reached Davos on a beautiful day. It is 25 degrees Fahrenheit, sunny and gorgeous. Switzerland is probably the only place i feel closer to my home town Seattle in its beauty. The Infosys lounge at 91, Promenade is more inviting with a design refresh. As my cab driver with the multiple one way traffic signs parked 800M away i got down for a refreshing walk, with few residual snow from yesterday , to the Infosys lounge to collect my badge. People were enjoying skiing both cross country and downhill. Every year, i feel for not carrying my ski’s and staying a day or two more at Davos. I enjoyed Davos 2022 in beautiful May, but i have admit Davos in winter is my favorite depsite the weather.
The first striking thing is the growing India presence highlighted by the India booth. Most Indian states have invested in a conspicuous location. It is encouraging to see the healthy competition amongst the Indian states to attract the best businesses.
I have 2 personal goals for WEF 23. 1) To develop a sharper execution focus for our ESG priority on digital inclusion, and how can we leverage Infosys SpringBoard learning platform to reach more underpriviliged. 2) Develop a better sense of the changing business conditions and how can we stay invested with our clients and employess as we navigate a difficult 2023.
WEF 2023 theme is ‘Cooperation in a Fragmented World’. The topic is spot on in its relevance. The pandemic has further validated the interdependence of nations to solve issues and progress together. At a time with an uncertain business outlook, Russia invasion of Ukraine and other Geo political concerns, the world is more connected as well as fragmented at the same time.
I am excited for the opportunity to meet and learn from several leaders from our clients, partners and other non profit organizations to discuss business opportunities as well as to advance ESG priorities. I am most looking forward to host StreetChild and its leadership @ Tom Dannatt, Enrique Rodriguez and team to persuade companies and individuals to commit for providing every child a right to learning.
Nandan Nilekani’s panel on “You Need a Plan C – Staying ahead in 2023” and Salil Parekh’s panel on ‘ Digital Silver linings in a disruptive economy are two exciting sessions coming up in the Infosys lounge.
Our presence at Davos 2023 is completely carbon neutral, reflecting our net-zero perspective beyond the enterprise. All avoidable emissions have been offset with the use of sustainable methods and materials. For unavoidable emissions, Infosys invests in commensurate certified Gold Standard carbon offsets.
The battle against climate change is about to enter a promising new phase.
For decades, the world has struggled to dramatically increase clean energy production. Governments have announced goals, forged agreements, and launched initiatives. All are important, and we need more of all. But the scale of the challenge is so vast that meeting it requires the full participation not only of the private sector, too.
Business leaders recognize the financial imperatives of moving to a clean energy-driven economy and the business opportunities it presents – the problem is that they don’t know how to get there, because of a lack of data.
That’s about to change, thanks to a number of new efforts – including new initiatives to bring more transparency and accountability to corporate carbon emissions, carbon offset markets, and sustainable infrastructure, and the growing momentum around climate risk disclosure. The most valuable currency in financial markets is reliable data, and that’s certainly true in the fight against climate change, too. It’s one of the most powerful tools we have at our disposal, and we’re only just beginning to unleash its potential. #BigIdeas2023
We could save an awful lot of electricity if we ditched Microsoft’s cloud services and went peer-to-peer. We could save an awful lot of electricity by ditching that expensive Tesla and taking the bus or train, since both consume far less energy per passenger. We could save an awful lot of electricity by using our phones just to make calls, instead of buying a new one with the latest features, such as an AI that types “WTF dude” into social media, thereby reducing average IQ even more than we are already.Conclusion: Global warming is inevitable, because corporations put profits ahead of the planet, hence the number of SUVs on the road versus the number of people taking the bus. For as long as America remains in the hands of corporations and their lobbying groups, people might as well resign themselves to crop failures and less fresh water. This has been known about for some time, hence films like Soylent Green and Silent Running, so America has had decades to rein corporations in, but values corporate profits far more than it values the ecosystem.
Worth noting that people have been characterizing the “past” of carbon offsets as a “wild wild west” for more than 20 years, suggesting that things are better today. But they’re really not, and that’s what the key takeaway of the Guardian article ought to be. I’ve laid out the key takeaways here: https://bra.in/9j4k5g
Steve Zwick noted in another thread relating to the Guardian article that an important thing to understand is that lots of conversations and efforts are leading to ongoing betterment of carbon offset markets.
I’ve been thinking about that, and really have to disagree. We’ve been discussing exactly the same issues with respect to the holy triad of offsets – additionality, permanence, leakage, for more than 20 years. EXACTLY THE SAME TOPICS AND THE SAME ARGUMENTS!!!
Yet we still insist on talking about “testing” for offset quality, when that can’t actually be done for a “counter-factual commodity.”
We never talk about offset decision-making as hypothesis testing, the inevitability of false positives AND false negatives, and the need to decide which to prioritize.
We continue to act as if the problems facing offsets are “technical issues” that can be fixed technically. They’re not. They’re policy issues that require upfront decisions. How many false positives are too many? How much “additionality confidence” is enough? How long is long enough for permanence? How much “no leakage confidence” is enough.
Scientist Ken Caldeira has noted that there hasn’t been a fundamental advancement in climate science since 1979. Although it will come across as self-serving, I would suggest there hasn’t been a fundamental advancement in carbon offset additionality thinking, to tackle one of the triad topics, since a paper Derik Broekhoff, Laura Kosloff and I co-authored in 2006: A Statistically Driven Approach to Offset-Based GHG Additionality Determinations: What Can We Learn? Available here FYI: https://bra.in/2jrdW5
There is a bunch of stuff floating around post-Guardian article on VCM and generally Carbon Credits. There have been some great follow-ups / reactions by BeZero Carbon & Sylvera on a clickbait headline that The Guardian decided to go with, which IMHO misleads the reader completely.
However, aside from the headline, the one thing it does well is that it starts a proper dialogue among those who care about the market and its future.
VCM indeed needs discussion to grow from the current ~$2B into the $20B, $30B, or $50B that everyone is forecasting. But that discussion has to happen in a more constructive way without clickbait headlines.
While, indeed, one has to acknowledge that Carbon Markets are a wild wild west today, for me, it has some resemblance to the not-so-old crypto boom of ICOs in the 2017 period.
What can we learn from the early days of crypto retrospectively? There were a lot of scams and fraud on the “sell side.” Why? There were a lot of folks trying to be the “magico.” And some of those were, as we see now, with defo wrong intentions. And on the other side, “the buyer” those who got into a trap to buy into it – did little to no diligence.
So, how do we avoid the same mistakes in the Carbon Markets?
We need a backbone infrastructure stack in the VCM. We lack the ability to adequately -> define quality -> define risk -> define fair value / price
But the good part is that it is being built and fixed. Still, the majority that I will talk about below is forward-looking. But we are getting there. I am optimistic.
This is the super high-level mental model of what’s necessary for carbon markets:
1. Data -> We need adequate MRV systems
2. Quality -> We need an independent rating
3. Price discovery -> We need a place to transact where cpty risk is managed, and we got enough liquidity for adequate price discovery
4. Trust -> We need adequate custodian and audit services
5. Hedge -> We need insurance to mitigate the risk of under delivery
VCM will be part of the solution, I am certain. How we build it – will result in how impactful one is. Tech enables VCM at the core. There has not been a better time to invest in the space. And there has not been a better time to build in this space.
Ping me if you are trying to fix the above, we at Contrarian Ventures want to chat with you!
Below is BeZero Carbon rated projects breakdown, and it’s aint black or white how The Guardian paints. Some credits in the market have a higher probability of delivering a tonne of avoided or removed CO2e than others. Question is whether folks do diligence? They should.
#carbonmarkets #carboncredits #vcm
Bloomberg Green has investigated thousands of datasets from global companies that rely on purchases of some of the cheapest and least-effective carbon offsets in order to operate as “carbon neutral” businesses.
“Companies often find it cheaper to buy offsets rather than paying for the solutions that cut emissions. The cost of building your own renewable-energy capacity or retrofitting your buildings with better insulation is often far higher than buying offsets. And from an accounting perspective, the impact is the same. An airline that switches to sustainable aviation fuels, for instance, will probably spend much more to lower its own emissions than the cost of purchasing offsets generated by someone else.
That would be fine — if the offsets actually provided the promised benefit of reducing or removing carbon dioxide emissions.”
Financing a response to intersecting crises: urgent progress needed.
Our world faces a series of intersecting crises and there is little consensus regarding how the global finance and investing community can make a constructive contribution.
The agenda we propose is as follows
Making concerted progress on responding to multiple crises including the climate emergency will require more than techniques and individual actors operating in silos. We welcome initiatives and efforts on all these multiple fronts.
Public policy
Governments and public bodies ought to adopt fiscal policies in which “carbon taxes” are levied and proceeds used for mitigation, adaptation, and regeneration. Operationalizing carbon taxes requires that carbon budgeting is done in advance. The world will also need to arrive at a consensus on what is politically feasible. Public and independent bodies are key in pressing on with the ESG regulatory disclosure and standards agenda which seeks to influence corporate behavior via institutional investors. However, these efforts cannot be divorced from the mobilization and allocation agenda.
Advocacy
Public bodies and civil society play an important role in changing the norms and values in finance and investment and setting the social license to operate. It is important for society to make countries and firms that generate negative externalities for the planet increasingly untenable. Academic research scholarship that provides an evidence base of how harmful patterns are established and reproduced continues to be vital in changing mental models and eventually in shifting behaviors.
Market based
These include initiatives such as voluntary carbon credits and carbon offsets. As long as these are designed with intended beneficiaries in mind, with appropriate levels of transparency and monitoring, they provide another element of the toolkit. Recent discussions about applying similar approaches to natural assets are welcomed with all the qualifying comments regarding carbon credits. If anything, it is even more important to have participatory methods for nature-based financing so that the traditional stewards share equitably in benefits arising from any new arrangements.
Financing
Financial actors, especially banks and non-banking financial institutions that are proximate to large pools of capital have a critical role to play. If investing decisions continue to focus only on profits without pricing in environmental and social risks, capital allocation decisions will continue to be misguided.
Resilience Capital Ventures is excited about supporting and guiding the work of The Bahamas including its nature-based financing initiatives; sovereigns across the planet can take up the mantle in raising the bar with sustainable investment programs.
The carbon offsets process.
Considering the exciting news that #PIF partnering with #Tadawul to establish a Regional Voluntary Carbon Markets Company. many local organizations are looking to take advantage of this opportunity and offer Carbon Credits while reaching their environmental goals.
The UNFCCC IPCC said in April 2022 that nature-based solutions can remove 23.2 gigatonnes of carbon by 2030. Literally the largest carbon removal opportunity across all sectors! Yet it receives less than 1% of all climate finance! There is unfortunately still a lack of trust and knowledge regarding the carbon market, but I hope it will change soon
“The net zero building is the current and long-term holy grail of the real estate industry. Planting trees to offset carbon was by and large a fallacy, so we have to concentrate on buildings. Urban Sequoia, a project of carbon negative building is an example of companies taking the lead and developing innovative buildings without the client.
The “Triple Zero Standard” is the new paradigm in sustainable real estate. The construction industry is too reliant on concrete and steel. Companies need to be braver in trusting technology and innovation, and not wait for others to take the lead, concluded the experts at the Urban Land Institute (ULI) Poland PLACES + SPACES conference.”
Read the full report from the excellent recent “Developing a net zero building’ ULI Poland event in the link.
Mariel & Haan Communications Soren Rodian Olsen, MRICS Malgorzata Anna Poreba
So on one hand they are saying build with wood and on they other they are saying stop planting trees for offset. Interesting contradiction there.As regards Sweden and its 17% reduction due to prices I’m going to call BS on that one. 30% of Swedens electricity generation is nuclear and 40% is pure hydro, the prices are only high because of a badly designed pricing mechanism based on gas. Year to date September 2022 Sweden’s electricity generation went up 7% and its contraction never exceeded 6% in March 2022.If you want to worry look at hydro contraction of 3.7% this year, in Poland hydro shrank 14% year on year. Forget the Russians, watch the weather.
Analysis published in The Guardian yesterday claimed that 94% of REDD+ credits do not represent genuine carbon emission reductions. While we agree that, unfortunately, a minority of credits are high quality, their claim is overstated.Scrutiny is sorely needed; it’s a complex space and the work to assess quality is highly technical and resource intensive. However, misrepresentation of a consensus and repeating a flawed analysis are detrimental to the viability of a vital, yet nascent market.Forests need to be protected to deliver our climate goals. Of course, we should absolutely call out when this is falling short, but we must not sabotage the financing of projects that are delivering sound climate, social, and biodiversity benefits…even if well-intentioned.Read our analysis here.https://www.sylvera.com/blog/guardian-offsets-response
