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Review and Response: Why carbon offsetting undermines climate targets
This article reviews and responds to the joint statement: Why Carbon Offsetting Undermines Climate Targets. The original statement could be access through here.
Consensus
Focus primarily on GHG reduction within companies and countries' own boundaries, including the phasing out of fossil fuel production, transport, sale, and use.
Difference
S1: Offsetting could delay climate action
R1: Opening up to 100% carbon offsets will encourage governments and organizations to select the lowest reduction/removal options globally. It will foster private funding for the place that could most effectively reduce/remove greenhouse gas emissions, some of which may be in the Global South. While the high emitter governments and organizations may not prioritize the emission reduction in their scope at the initial period, they will gradually face the rising price problem, as the statement mentioned in S3 that only so many quality credits that could be developed.
S2: Carbon offsetting inherently lacks credibility
R2.1: “Carbon credit projects deal with unknowables and have to guess the key parameters.” This is true, as in the past, our traditional market did not factor carbon pricing into our system; there are huge research and funding gaps that need to be filled to have exact information to predict/understand the complex open ecosystem. Nonetheless, if we discourage the projects, we will never have the chance to improve our human understanding of our natural ecosystem.
R2.2: The quality problems regarding financial additionality, unrealistic baselines, leakage potential, non-permanent carbon removal, and social harms without local community consent are the topics the industry is working on to improve. Various standard bodies have revised and updated their methodologies to reflect the quality problem.
We should not consider the above problems will never be fixed. Instead, actively engaging with public consultation to improve the validation and verification process to ensure the project registered withholds high standards is a more active and positive movement.
S3: There are only so many “quality” credits that could be used as offsets
R3: S3 mainly talks about nature-based carbon credit solutions, regardless of reduction and removal types, which will face the limitations of our land use. The statement might be true, but for two reasons, it is not a problem.
First of all, there is a huge funding gap to protect and regenerate our natural ecosystems. When developing carbon credit projects, we are closing up the required financial shortfall.
Secondly, if the land is all used, the price of carbon credits will rise to the point where governments and companies will shift their focus from buying carbon credits to internal decarbonization since the cost is lower.
S4: The climate funding gap will not be solved by offsetting
R4.1: The current secondary carbon credit market price signals the market consensus of supply and demand. The low-cost options reflect the results of the past 20 years of not integrating carbon pricing into our global capital market. It’s not misleading, it points out that we need to change our financial system.
R4.2 Disincentivizing the climate investment for net-zero transition depends on how many percentages of GHG emissions are allowed to be offset.
It’s not an “either…or” problem; it’s about the degree. Lower transition costs with carbon offsets would encourage net-zero transition in a smoother path.
R4.3: In a capital market, without market demands from users, there will be no producers, not to mention pollution. Nonetheless, most producers are organizations with more resources than individuals. Accordingly, we should encourage organizations to focus on internal decarbonization rather than pursuing low-cost carbon credit projects.
To be noticed, it does not mean organizations should be responsible for Scope 3 emissions. People who benefit from using the products and services shall pay the environmental costs to encourage the net-zero transition with market demands under the capital market mechanism.
At the end of the day, climate change is not a single stakeholder problem. Rather, it is a problem that all stakeholders need to act on with different responsibilities. Avoiding the “either…or” attitude will foster the progress of the net-zero world.