Companies gobbling up carbon credits like never before
By Bloomberg NewsNews
Companies are buying carbon offsets like never before.
They’re also facing unprecedented scrutiny over whether helping to fund green projects elsewhere really makes up for their heat-trapping emissions.The most common offsets are based on avoiding the release of additional carbon dioxide into the atmosphere, for example by preventing deforestation or supporting renewable energy projects.
The other, much more expensive, option is to fund programs that actually remove CO₂ by planting forests or employing machines that capture greenhouse gas from the air and store them away.
Should companies be allowed to use cheaper “avoided emissions” to deliver on their promises to eliminate pollution?
The Science Based Targets initiative, a group of well-respected experts on corporate claims, says no. A company cannot offset its way to net-zero emissions because it undermines the need for investment in structural changes to cut pollution, recommends its guidance.
Instead, the group says, carbon-removal credits should only be bought once all other possible practical angles have been explored, such as switching to cleaner fuels or investing in new technology. Companies can still buy all the avoided-emissions offsets they want — they just can’t use them to balance their carbon ledgers.
That is too high a bar for some companies, which argue they should get some kind of recognition for purchasing offsets. If the credits can’t be used to improve their green credentials, then what’s the point of having them at all? That’s why some are advocating for a compromise. Maybe companies can use offsets to claim “carbon neutrality” rather than “net zero.”
The idea is backed by Mark Carney, the former governor of the Bank of England, who is spearheading the Taskforce for Scaling Voluntary Carbon Markets. The group’s final recommendations on July 9 suggested an offset buyer could be described as “carbon neutral” or “carbon neutral on the path to net zero.”
“There’s a difference between carbon neutrality and net zero,” Carney told members of the British Parliament earlier this month. “The company should be compensating for its emissions on that pathway to net zero as well.”
Yet the two terms are indistinguishable to anyone who isn’t familiar with the intricacies of carbon accounting — itself a nascent financial tool. The push to adopt the “carbon neutral” label is causing concern among climate experts, who fear it creates a watered-down definition for those who are more interested in greenwashing than genuinely seeking to reach net zero.
“There will be some companies that try to scrape by with avoided emission offsets,” said Eli Mitchell Larson, an Oxford University environmental scientist who sits on the taskforce. “There needs to be a term for them.” But both “net zero” and “carbon neutral” are defined by the United Nations and scientists as the balance of emissions with removals, he said, “so carbon neutral is technically just shorthand for net zero.”