A call for a global carbon offset banding system
September 20, 2021
September 20, 2021
The system would clearly display offsetting performance and quality against carbon reduction, neutrality, or net zero declarations
The concept of environmental performance rating is not new. We’re familiar with letters and colors indicating different energy performance ratings (light bulbs, appliances, and vehicles). We also see energy performance certificates of homes rating their annual carbon emission performance. All around us are examples of how regulation has differentiated between good and bad environmental performance.
For nearly two decades now, the voluntary carbon offset markets have been offering to remove greenhouse gas (GHG) emissions through a variety of projects for a simple low-cost payment. Theoretically buying one tonne of carbon offsets would see your money go to a project that either avoids one tonne of carbon emissions somewhere else or removes one tonne of carbon from the atmosphere.
But the reality is that avoidance and removal are far from the same thing, not all carbon offsets are equal. So how do you know if your investment is credibly achieving your desired outcome—i.e., to reduce your impact on the planet—or improve current conditions?
There are very few carbon offset providers that clearly define the comparative quality and value of their products. Often, they don’t provide a clear accounting and guarantees of permanence of the project and emission removal.
The Oxford University Principles for Carbon Offsetting is one source that clearly differentiates between lower value carbon emission avoidance projects and higher value carbon removal projects. Avoidance projects do not permanently avoid GHG emissions nor reduce current concentrations in the atmosphere, whereas removal projects do remove carbon from the atmosphere and lock it away for good.
These principles provide a clear and simple structure from which to create performance banding for carbon offsetting projects (see image below). We are calling for such disclosure and the establishment of a carbon offset banding system (COBS) so that offset buyers clearly know what they are getting and the public knows what government or business entities are effectively doing to meet their commitments. Like commercial buildings in some jurisdictions around the globe where energy performance certificates must be clearly displayed, the same requirement could be applied to governments and businesses working toward their net zero goals.
Based on the Oxford Principles, a simple banding system—like environmental performance labelling—would help clarify things. It would allow offset buyers and organizations to clearly display their offsetting performance and quality against their carbon reduction, neutrality, or net zero declarations.
Since the early 2000s, many organizations have seen a competitive advantage to being green. Benefits include lean and secure supply chains, efficient systems, and protection from carbon taxation. Customers, investors, stakeholders, and employees are now looking for private and public sector leadership to help reverse harmful impacts to our planet. As individuals become more environmentally conscious, opportunities to work for or support green companies will be far more attractive and important.
But green actions speak louder than words. Lack of transparency still allows for greenwashing.
Greenwashing can be defined as organizational disinformation to present an environmentally responsible public image without performing anything meaningful. Corporate and governmental responsibility and reputation is a key driver for climate recovery actions. Commitments are very clear about how being green is critical to avoid reputational damage.
As the impacts of climate change fill our daily news headlines, the pressure is on companies and governments to uphold environmental pledges and improve standards accordingly. Credible performance on climate-related commitments can materially impact public perception of governmental leadership and corporate stock value. A clear environmental performance banding of carbon offsets projects is essential.
A simple banding system—like environmental performance labelling—would help clarify things. It would allow offset buyers and organizations to clearly display their offsetting performance and quality against their carbon reduction, neutrality, or net zero declarations.
A marketplace awash with cheap carbon offsets that provide no or little GHG removal or permanent benefits is driving a race to the bottom. It’s not tackling climate change.
A world where cheap certified carbon avoidance offset credits are readily available, that meet the criteria for carbon neutrality standards such as PAS 2060, will direct investments away from the more expensive carbon removal projects.
These issues need to be addressed at COP26 because there is an intrinsic link between how Article 6 of the Paris Agreement is implemented and evolves in terms of who pays for these projects, versus who benefits from them. We need more and immediate investment in carbon removal, but they need to be the right kind to make a difference.
The starting point is for offset providers to provide clear science-based evidence of project delivery and the nature of the offsets they are selling. We’ve set out how applying the Oxford Principles for Offsetting toward a carbon offset banding system is a good starting point.
Without a transparent system, the “wild west” of offset providers is likely to grow. They’ll be able to tout green routes, which may eventually run into ethical disclosure issues. A simple taxonomy of what good offsets look like could easily avoid such situations—for the benefit of a company’s or government’s green credentials, the environment, and for people.
Let us to move to a future where offset providers clearly display a range of targeted options across the banding spectrum. Then private and public entities buying offsets can clearly see the type of offsets in which they are investing. It allows providers of ecosystem restoration and nature-based-solutions to enable projects in the upper bands that materially and measurably support reduction of GHG concentrations and generate additional benefits that sustain quality of life. We need measures to remove carbon, in addition to offsetting current impacts, in order to avoid further environmental degradation.
We can do this now. We need to start today!