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Are Carbon Credits Actually Helping To Cut Emissions?

Climate deniers are by no means a dying breed. In his controversial book Apocalypse Never that recently reached the top of Amazon’s bestseller list for environmental science, Michael Shellenberger apologizes on behalf of environmentalists for the “climate scare we created over the last 30 years.”  A big reason why the book has proven to be a big hit is because back in 2008, TIME magazine named Shellenberger a hero of the environment. Yale Review has described Shellenberger’s book as “deeply and fatally flawed”. In contrast, six leading scientists have described it as “cherry-picking”, “misleading” and containing “outright falsehoods”. Modern-day climate deniers fall into four categories: The shill, the grifter, the egomaniac, and the ideological fool. Tough to point where Shellenberger belongs.

Most scientists are, however, under no illusion that the climate crisis is one of mankind’s gravest existential threats. 

A good 50% of our present-day levels of greenhouse gases have been pumped into our atmosphere over the past three decades alone, and the levels keep rising. 

The evidence is irrefutable and growing: Wild-fires, heatwaves, rising sea levels, and extreme weather events are already wreaking havoc everywhere and could cost the global economy a staggering $1 trillion dollars over the next five years in crumbling infrastructure, reduced crop yields, health problems, and lost labor as per the Carbon Disclosure Project (CDP).

This reality is what has primarily been driving the ESG investment megatrend.

Large corporations know this and have been falling over themselves pledging to achieve net-zero or even carbon-negative status within our lifetimes

Their intentions might be good, but their oft-preferred route for achieving this goal--purchasing carbon offsets--is likely to fall far short of the ideal.

Source: United Nations Environment Program (UNEP)

Carbon offsets

Last year, online payment firm Stripe announced that it will pay $1 million every year for companies to take tons of carbon off the atmosphere. Stripe claims that it already fully offsets its greenhouse gas emissions and plans to invest in green projects that reduce emissions elsewhere. 

Microsoft has also set a goal to become carbon negative by 2030 by paying other companies to remove more carbon dioxide from the atmosphere than it emits. 

Related: Something Highly Unusual Just Happened To Chinese Crude Stockpiles

Meanwhile, ride-hailing firm Lyft has committed to full carbon neutrality by offsetting the carbon impact of every one of its rides. Last year, the company purchased more than two million metric tons of carbon offsets.

Media giant Sky has been carbon neutral since 2006, while multinational conglomerate Siemens and IKEA have pledged to become carbon neutral by 2030.

Sadly, fossil fuel companies - some of the biggest offenders as far as carbon emissions go--are conspicuous by their absence on this list of more than 100 companies that have committed to lowering their carbon footprint mostly using carbon capture and other technologies. But merely buying carbon credits in exchange for a clean conscience while these companies carry on powering their operations using high-carbon fuels will no longer suffice.

Scientists, activists, and concerned citizens are now questioning how companies are using carbon offsets as a free pass for inaction. The types of carbon offset projects that are implemented are diverse, ranging from forestry sequestration projects to energy efficiency and renewable energy projects. The world needs to lower annual emissions by 29-32 gigatonnes of equivalent carbon dioxide (CO2e) by 2030 to have a fighting chance to stay below 1.5°C. That’s ~5x the current commitments by companies, organizations, and governments. We need to lower our GHG emissions by 45% over the next decade if we are to avert catastrophic planetary changes. 

The sad truth is that trees planted today simply can’t grow fast enough to come anywhere near achieving this goal, and the majority of carbon offset projects will never be able to curb the emissions growth if coal power plants and gasoline vehicles continue to dominate.

This does not in any way mean that carbon offset projects should stop, on the contrary, we must continue to plant trees, protect forests and peatlands, and invest in renewable energy and energy efficiency projects. It’s only that it cannot simply be a one-for-one model: Assuming that a single tonne of sequestered CO2 is the price of one carbon credit, the buyer still needs to lower their emissions by 45% for the world to achieve its climate goals.

UNEP has warned that the biggest risk posed by carbon credits is that they tend to encourage complacency. According to UN Environment climate specialist Niklas Hagelberg:

“UN Environment supports carbon offsets as a temporary measure leading up to 2030, and a tool for speeding up climate action. However, it is not a silver bullet, and the danger is that it can lead to complacency. The October 2018 report by the Inter-governmental Panel on Climate Change made it clear that if we are to have any hope of curbing global warming we need to transition away from carbon for good: by traveling electric, embracing renewable energy, eating less meat and wasting less food.”

Renewable energy credits

Perhaps renewable energy credits, or RECs, are a better alternative.

Whereas a carbon offset represents an action that effectively sequesters carbon, RECs are like a property deed representing a part of a renewable energy source, such as a solar or wind farm.


Related: Norway Opens New Arctic Oil Blocks For Exploration

By buying RECs and pairing it with electricity from the grid, companies, and organizations directly support the development of renewable energy infrastructure. RECs provide access to alternative energy sources to areas that do not have the capacity to produce their own renewable energy.

However, RECs are not 100% foolproof either, since some organizations that sell them can simply continue purchasing electricity from public utilities with little regard to how it’s generated--as California’s UC-Santa Cruz students recently found out.

The only foolproof method to ensure that organizations are directly cutting their GHG emissions is to go the Amazon or Google way. 

Amazon has revealed plans to invest in four new renewable energy projects to support the company’s objective to achieve 80% renewable energy by 2024 and 100% renewable energy by 2030. Meanwhile, Google has signed up to $2bn wind and solar investments with plans to use the clean energy to power its massive data centers.

By Alex Kimani for Oilprice.com

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