Mitigation Hierarchy in Carbon Policy, A False Economy
The idea of the mitigation hierarchy as it relates to the climate and carbon spaces is not new.
For over 100 years, natural resource management has prioritised avoidance, reduction, and restoration before compensation. In the carbon market context, this is the concept of offsetting.
This has been the conceptual framework that many policy approaches are modelled on.
Granted, that hierarchy should be followed.
However, it is no longer a sufficient excuse in the stage the world finds itself in. These initiatives should be driven side-by-side, allowing communities, government, and project developers to protect and repair nature in a way that can be compensatory (for those decarbonising) alongside avoidance, reduction, and restoration policies that reaffirm the need to decarbonise the global economy responsibly.
Climate solutions will not be effective in a vacuum. A varied, multidisciplinary approach across the global economy is necessary.
At Sensand, we’re strong believers that there is a role for carbon crediting systems globally, and that they should play a central part in the policy broadly. This isn’t without acknowledging that there is a significant gap to bridge in the state of the market today and what it can be - transparency, accountability, inclusiveness, and free, prior and informed consent are key pillars that we need to climb further still.
Criticism from media, thinktanks, and policymakers of carbon crediting systems such as Verra, Gold Standard, Australia’s ACCU scheme are having the opposite effect to their intention.
To be clear, the intention behind the critique is good. However, perfect should not be the enemy of good in these crediting schemes. The work done to date by these NGOs has been, and will continue to, drive the way for the solutions to come - an example being the European Commission adopting a proposal for an EU-wide voluntary framework to certify high-quality carbon removals. Just recently in late February, the EU reached a provisional political agreement to bring this to fruition.
So, in the eyes of skeptics, what is wrong with carbon credits?
There are two key pillars of criticism that ring loudly in nature-based crediting schemes:
- Offsets are a cheap way of allowing environment-destroying businesses to continue their business as usual. Greenwashing continues to feature in news and media at a growing rate.
- Projects that generate offsets are not additional, and/or fail to deliver meaningful removals/avoidance, and are therefore a doubly-negative outcome in the market.
The definition of carbon neutrality
The solution to the first problem should be addressed by the governments and institutions that recognise what makes a ‘carbon neutral’ business truly carbon neutral. Using offsets to maintain a business-as-usual approach where decarbonisation is possible and achievable should not be praised. Voluntary carbon credits should complement a transitioning business and be used in businesses that have a verifiable plan to decarbonise. This narrow-minded view and interpretation of credit use is misguided, and undermines significant capital outlays that responsible, sustainable businesses make in doing ‘the right thing’.
‘The right thing’ can extend to performing project due diligence, such as leveraging experts and certifications to ensure high quality; or exploring the data that underpins the project’s crediting, considering the local environment factors that relate to the projects actual additionality. Assessing co-benefits that go to the community, economic, and social factors are also relevant factors.
Promoting transparency and disclosure
Policymakers could enforce transparency of the claims behind ‘carbon neutrality’ - an example process (though not enforced, nor mandatory) in Australia is CERT (Corporate Emissions Reduction Transparency) reports - which outlines commitments made by companies and the action and progress made. Further transparency on any credits/offsets used can further lend legitimacy to these schemes, and reward those who spend bigger on better.
Carbon credit pricing… from your coffee to used car
It is worth labouring the point that there is a significant stratification across the carbon market. Offsets and carbon credits can range from $1 a unit to nearly $1,000 in some methodologies given the varying quality, additionality, and permanence of different methodologies.
Using a broad brush to paint offsets as corporate greenwashing is a generalisation that can have disastrous effects on the industry, and work to undermine genuinely amazing projects preserving, restoring, and protecting nature across the world.