Why we can’t rely on a new voluntary carbon offset market run by business
The outcry following the news that polluting businesses are involved in setting up a new carbon offset body, with the aim of building the voluntary market for carbon credits, shows the need for stronger public oversight of this practice.
It has been described as a “trader’s charter” designed by and for those who want to continue to pollute. The new umbrella body for overseeing voluntary carbon offset markets, proposed by the Taskforce for Scaling Voluntary Carbon Markets (TSVCM), has been met with dismay by environmental campaigners, many of whom see trading carbon offsets as a dangerous distraction from the serious business of kicking our fossil fuel habit altogether. The problem is, the new body is designed to rapidly grow the carbon offset market but without properly considering what realistic role, if any, offsetting should play in keeping global heating to 1.5oC.
Last year, Green Alliance proposed a solution to this: a strong public body mandated by government, which we suggested could be named the Office for Carbon Removal. It would provide robust oversight not just of offsetting markets but also the overall role of carbon removal in reaching net zero, ensuring it is not used as an excuse to avoid action to reduce emissions.
The ability to offset is limited by capacity to remove carbon
To prevent the worst impacts of global heating, which we are already starting to experience in many places around the world, there is little doubt that we will need to remove existing carbon dioxide from the atmosphere, as well as rapidly curtail further emissions. Suggestions for doing this include nature-based solutions such as planting or regenerating woodland, and more contested engineered solutions, such as bioenergy with carbon capture and storage (BECCS) or direct air carbon capture and storage (DACCS). Carbon offsetting is a market mechanism which enables money to flow between polluters and those providing carbon removal or avoided emissions.
However, offsetting is not the only way that carbon removals can be allocated and funded. Indeed, as we have argued, leaving it completely to the market has significant downsides. First, the ability to remove and store carbon from the atmosphere is limited by the amount of land and energy available to do it, both of which are resources already under severe pressure. We currently have no mechanism for deciding which businesses and sectors should be allowed to continue to emit and offset with carbon removals, and which need to reduce their emissions to zero. Businesses are therefore setting decarbonisation plans on the basis they can use carbon removal capacity which may not actually exist. This risks locking in a high carbon economy that cannot reach net zero.
Second, carbon removal options come with very different costs. Highly polluting industries, including oil and gas and aviation, are significant early movers in the voluntary carbon offset market. They are channelling large amounts of money towards nature-based solutions like tree planting. Credits from these schemes are an order of magnitude cheaper than the expected cost of engineered carbon removals, and carbon in these projects takes a long time to be sequestered. This means the early movers are locking up the cheapest forms of carbon removal for decades into the future, making it much harder and more expensive for arguably more essential and poorer sectors, such as agriculture, to reach net zero. And, as the pandemic has shown, we can survive without flying, but we can’t live without food.
Third, some carbon removal options have the potential to cause significant environmental damage. BECCS, which involves burning biomass such as wood or energy crops and pumping the emitted carbon dioxide underground, is of particular concern because of the enormous pressure it could put on land if done at scale, driving greater deforestation and biodiversity loss, and creating a ‘carbon debt’ because of the time it takes for biomass to reabsorb carbon dioxide. Working out how much carbon we can sustainably remove and store is an urgent priority. An Office for Carbon Removal could provide oversight of new technologies as they emerge and ensure wider sustainability constraints are factored into policy for rolling them out.
Strict oversight is necessary
It is not enough to simply focus on trying to make voluntary offsetting more robust for investors, as the TSVCM governance proposal is doing (a task that has failed with all previous schemes, including the mighty UN Clean Development Mechanism). It is vital that strict limits are put around how and when carbon removal can be used, and under what circumstances and with what constraints ‘offsetting’ should be used as a mechanism to achieve it.
The availability of carbon removals and offsetting markets is currently slowing progress in reducing actual emissions. We are at a crucial stage where all the effort must go now into making sure the country can meet its legally binding target of reaching net zero. Voluntary market-based efforts like that proposed by TSVCM cannot deliver that certainty. A body along the lines of an Office for Carbon Removal is needed soon to make sure carbon removals are credible and contribute positively to meeting net zero in a sustainable way.