Voluntary carbon offsetting schemes eye further boost at COP27
Food and agriculture is the second biggest sector contributing to climate change behind the energy sector. It is common therefore for large food companies to turn to voluntary carbon credits, or offsets, to buy carbon credits to balance against their own emissions.
A company might, for instance, invest in environmental projects like land restoration or tree planting in other parts of the world to compensate for emissions they can't cut from their own value chains.
But while many companies regard offsetting as a useful way to compensate for volumes of carbon that cannot otherwise be eliminated, there are detractors. Critics such as Greenpeace call the use of offsetting a 'get out of jail free card', accusing larger, richer countries of using the voluntary carbon markets to effectively wiggle out of their domestic decarbonization responsibilities.
Demand for an international conversation around carbon credits continues to grow, according to Nick Nuttall, Former Communications Director and Spokesperson, UN Environment Programme and the UN Framework Convention on Climate Change.
He told a pre-COP27 media briefing on what we can expect at the upcoming climate negotiations that the voluntary carbon market now nears about 2 billion US dollars in market value. There is therefore significant opportunity for investments in projects across developing countries, he said.
“Voluntary carbon markets were given a new lease of life and clear political support by the adoption of what was known as the Article 6 agreement last year in Glasgow at COP26,” he explained. This agreement was an important step towards the establishment and scaling of a global carbon market by allowing countries to finance emission reduction projects in other countries. Nuttall added: “In terms of the anticipated topics happening at COP27, we should expect some discussion and some conversation of course around the carbon markets, especially as they pertain or relate to the issue of channelling finance to countries around the world to advance climate action, and fund mitigation and adaptation efforts.”
According to experts at the briefing, there is growing acknowledgment from corporates of the need to decarbonize their own value chain first before opting for offsets, which is helping foster trust in a sector that has been accused in the past of lacking transparency. Derik Broekhoff, Senior Scientist at Stockholm Environment Institute, noted that corporates have “tightened up” the offsetting criteria as they agree they cannot offset their way out of climate change.
“We're clearly all recognizing that we're in a transition period,” added Lina Barrera, Vice President, International Policy, Conservation International. She said more corporates are looking to looking to ‘pursue the highest possible standards’ when choosing offsets, helping to build building “the credibility and goodwill” of the sector.
Barriers to the voluntary market remain, however. For example, Article 6 does not make corresponding adjustments mandatory for all voluntary market initiatives. These help ensure carbon offsets are not double-counted when they are transferred or sold. A recent report from Dutch bank ING warned that if voluntary offsets without corresponding adjustments can still be used by companies claiming carbon neutrality, this “keeps the door open for greenwashing and eco-friendly marketing spin”.
Companies have to be very clear on what kind of claim they're making, stressed Barrera stressed. “Making sure you're not making claims that aren't really defensible is an important part of the credibility,” she said.
“You don't want companies saying ‘We're Net Zero now because we've contributed some funding to help a certain government achieve its objectives while that government is also claiming that towards its own nationally determined contributions… That’s a recipe for sowing a lot of doubt in the market.”