Why We Mostly Agree With John Oliver About Carbon Offsets
The ‘Last Week Tonight with John Oliver’ show, as usual, sparked a heated debate around carbon offsets (Season 9, Ep 21). During his show, John Oliver pointed out that a lot of big corporations such as Ryanair, JP Morgan and Apple are pledging to reach net-zero emissions, but according to the Center for Sustainable Development of Columbia University, 66 percent of companies are relying on offsets to achieve their ambitious targets. Frankly, it is questionable whether we ought to completely rely on voluntary carbon markets to tackle climate change when it can have some major flaws.
Carbon offset (also known as a “carbon credit”) is an electronic and serialized unit that represents one ton of CO2 equivalent that is reduced, avoided, or sequestered from projects applying an approved carbon credit methodology.
To begin with, many companies are leaning toward cheap carbon offsets to make big claims while failing to cut their own emissions. Secondly, sellers are oftentimes unable to provide the additionality elements as they attempt to make money by doing the least amount of work. Thirdly, due to these factors and the fragmented nature of the voluntary carbon markets, most of the carbon credit transactions are facilitated by middlemen brokers who do not provide adequate levels of transparency and accessibility to ensure the quality of carbon credits being traded.
Additionality means that the project activity would not have existed in the absence of carbon market incentives and that the project reduces emissions and/or physically removes carbon from the atmosphere beyond the business-as-usual scenario. (The above glossaries are based on ‘WWF position and guidance on voluntary purchases of carbon credits’ released on October 10, 2019).
Of course, carbon markets that genuinely contribute to net-zero targets do exist. However, URECA largely agrees with many of the associated issues of voluntary carbon markets mentioned by John Oliver. In fact, we are working with the key stakeholders in the carbon markets precisely to address these flaws. Here is how.
Potential Issue No.1: Offsets can be a cheap way to make a big claim
Some of the largest corporations in the world are relying solely on carbon offsets instead of cutting their own emissions to meet their net-zero targets. For instance, John Oliver, during his show, refers to Ryanair, who started an initiative to allow customers to pay two euros to partially offset their flight emissions through reforestation projects in Ireland and Portugal. Sadly, it was revealed that the initiative offset merely 0.01 percent of the airline’s emissions. With such numbers, we surely cannot offset our way out of climate change.
To achieve net-zero emissions, corporations need to follow the GHG mitigation hierarchy, preferably using science-based targets (we’ll refer to these concepts in another blog). To cut it short, corporations need to initially decarbonize their operations (avoid, reduce and replace) before addressing their residual emissions through carbon offset projects. Having said that, corporations also need to give utmost importance to the integrity and quality of the carbon credits, especially being wary of inexpensive credits from projects that don’t provide additionality to the system.
For this reason, URECA offers individuals and businesses not only high-quality carbon offsets but also comprehensive consulting, accounting and mitigation solutions to ensure that the company has fully considered all of its decarbonization options. Our ethos is to provide high-quality carbon offsets to our corporate clients who have exhausted all of their mitigation options. If you’re curious about what makes a carbon credit high-quality, the next part is dedicated to clarifying that.
Potential Issue No.2: Sellers can get money for doing as little as possible
John Oliver also mentioned that, in 2020, JPMorgan Chase claimed that they achieved their goal to switch to renewable energy by purchasing more than 96,000 carbon credits that were used for protecting the Hawk Mountain Sanctuary. In reality, the preserve would have been protected regardless of carbon credits. Due to the lack of transparency, a considerable number of projects that would have happened regardless of any intervention are issued carbon credits.
Therefore, URECA’s carbon marketplace makes a point of selling carbon credits that create additionality among vulnerable communities. Offsets from URECA are potentially able to empower marginalized communities and create incentives to transition to cleaner energy in developing countries. Working with our partners, we provide full transparency on key criteria such as the additionality and permanence of the credits being traded on our marketplace allowing sellers and buyers to trace carbon offsetting projects and track verified emission reductions. This leads to a much more transparent marketplace which will be explained in the following section.
Potential Issue No.3: Brokers undermine the transparency of carbon markets
We think that John Oliver missed the fact that carbon offset registries are becoming progressively more transparent and frequently updating their verification/validation standards. One of the components that tend to undermine the transparency and accessibility of current markets is the prevalence of carbon offset brokers who merely facilitate carbon credit transactions in non-transparent ways for extremely high commissions. Some brokers hardly disclose any information about market prices, origin and quality of carbon credits, and deliberately hinder the development of secondary markets that could provide more transparency and price discovery for high-quality carbon credits.
To eliminate dubious middlemen, carbon markets need to further increase their transparency and accessibility. Fostering transparent markets means allowing buyers to trace and track credits while also enabling sellers to track prices and information of credit buyers. Furthermore, as more and more corporations are pledging to become carbon neutral, the demand for carbon credits will likely grow rapidly over the next decades. As a result, to keep up with demand, markets need to become accessible not only for corporations and advanced economies but also for the vulnerable and developing nations.
Hence, to drive more transparency and accessibility across carbon markets, URECA uses technology such as tamper-proof smart meters, AI verification and blockchain-based registries to ensure a full chain of custody and traceability of carbon credits. Moreover, it also allows anyone to become a carbon credit producer or buyer, removing the need for middlemen brokers.
Inevitably, we’ll need some form of carbon offsets to reach our net-zero targets and accelerate the transition to cleaner energy, especially for those who are most vulnerable to the impacts of climate change. However, there are still some limitations that need to be resolved. To be a part of the solution, URECA aims to be a trustworthy, transparent and accessible carbon marketplace that offers high-quality credits that create additionality and empower everyone, including vulnerable communities.