Offset quality is not the issue
We have said it before: carbon offsets are not a climate solution. To stay below 1.5 °C of warming requires everyone to reduce their emissions. Offsets—used in place of emissions reductions—are not compatible with a 1.5 °C world.
The Science-based Targets Initiative (SBTi) corporate net zero standard integrates this understanding of carbon offsetting: on the pathway to a 2050 net zero target, offsetting is not allowed. SBTi comes up with a new term—‘beyond-value-chain mitigation’—for corporates that want to green their image through supporting climate mitigation, not by offsetting but with a positive contribution. The focus of the SBTi net zero target is on within-value-chain emission reductions—with all companies reducing their own emissions in line with their share of the remaining IPCC carbon budget to stay below 1.5 °C of warming.
Carbon markets aren’t fit for purpose – when economic transformation and large-scale mobilization of climate finance is what’s needed.
In the face of ongoing challenges to credit demand, including from the SBTi standard requirements against offset use, the carbon-offset market is in self-preservation mode. Working diligently to put lipstick on the carbon market pig are the Integrity Council for the Voluntary Carbon Market (IC-VCM) and the Voluntary Carbon Market Integrity initiative (VMCI). The private organizations are writing rules to improve market ‘integrity’ and credit ‘quality’ and are seeking recognition of their work from intergovernmental bodies, such as the International Organization of Securities Commissions.
Last year CLARA wrote an open letter to the VCMI during their consultation process “to call attention to critical failures of integrity within the initiative.” We are slightly encouraged to see that the new VCMI Claims Code of Practice requires companies that are attempting to make green claims to first demonstrate progress towards their near-term emission reduction targets and then use carbon credits only in relation to ‘beyond-value-chain mitigation,’ aligned with the SBTi net zero standard.
We say ’slightly encouraged’, as it is clear there are much better and much more important ‘beyond-value-chain’ climate investments to be made than in carbon credits, which are overwhelmingly derived from avoided emissions and emission reductions projects, and where an unknown amount of revenue ends up in the hands of market intermediaries. The carbon market is not fit for purpose, where the massive transformations needed in economy and production require large-scale mobilization of resources across the globe. In a new report, New Climate Institute lays out the arguments for ‘Shifting voluntary climate finance towards the high-hanging fruit of climate action’ and away from carbon credit trading.
But that all seems to be too difficult for some corporations. In 2020, Amazon proudly announced it was joining SBTi. In 2023, it says it can’t manage the new methodologies for 1.5°C aligned target setting that SBTi has developed under the net zero standard. Reaching net zero requires reducing emissions as close to zero as possible—under the SBTi framework, this means a 90% emissions reductions by 2050 for most companies. For Amazon, it seems the solution is not emission reductions, but ‘credible’ offsets.
Whether they intend to or not, IC-VCM and VCMI are shoring up a carbon market for corporates like Amazon that want to carry on emitting beyond their allotment of the 1.5 °C budget and use offsets to claim they will be net zero sometime in the future. The problem is not the credibility of the offset credits they are planning to buy. It is the unviability of their path to net zero. The great hand wringing over credit quality obscures the real challenge of reducing global emissions to near zero, Amazon included.