Carbon offset credits: a call for revolution not reliance

The objective of climate summit COP26 was to keep the goal of limiting global warming to 1.5°C alive, and campaigners, scientists, and activists attending the summit in Glasgow made sure that the consequences of not achieving that goal were widely publicised.

Following the end of the summit which overran by one day, an agreement, known as the Glasgow Climate Pact, was reached. Nearly 200 countries agreed to the pact, which demonstrated a commitment to achieving what was agreed, including meeting again in 2022 to reassess reduction plans. Criticism of the pact says that it doesn’t go as far as we must to limit global temperature rise (only achieving 2.4°C) and there was disappointment over the change in phrasing from “phase out” to “phase down” coal.

Article 6 and carbon markets

The pact will implement Article 6 of the Paris Agreement of 2015 which allows countries to meet their targets in part through the purchasing of carbon credits to offset their emissions. Carbon offset credits have had a controversial past and the effectiveness have come into question. Article 6 sought to set a framework to underpin the integrity of the global carbon market but until COP26, several talks had broken down; what was achieved in Glasgow were the definition and agreements of a new set of rules put in place for the trading of carbon offset credits.

What are carbon offset credits?

Simply put, one carbon offset credit signifies one tonne of carbon dioxide equivalent (CO2e) being permanently removed from the earth’s atmosphere or preventing the same amount of harmful greenhouse gases being emitted into the atmosphere in the first place. They were introduced as a means for businesses and organisations to balance their carbon footprint, because even with a stringent net-zero strategy it would be difficult for an organisation to totally eradicate emissions. By investing in projects that focus on carbon storage or reduction (such as solar arrays or tree planting), they can counterbalance the impact of their remaining emissions.

Sounds good, right?

Carbon credits and greenwashing

In theory, yes, they sound great, but they have been misused under the modern-day practice of ‘greenwashing’, which refers to the belief that a company is doing more towards carbon reduction than it is. Many companies have claimed green credentials to boost their brand and underpin their claims of sustainability and commitment to creating a better environment, when all they have done is ‘substantiated’ those claims by purchasing carbon credits. The purpose of net-zero is to eliminate or reduce emissions, not simply offset them and carry on with business as usual.

Rules and regulation

There has been a need for rules relating to the global carbon market for the last six years, and this was finally achieved at COP26. Negotiators closed a deal that would provide a framework for the trading of carbon credits and would potentially release significant funds for projects such as the construction of renewable energy plants and investment in carbon capture technology.

The two-part framework includes:

1. A central system for public and private sectors where 5% of profits from offsets would benefit developing countries
2. A system to allow countries to trade credits that will not face tax

While the talks and outcome are seen as positive, there is still controversy surrounding the framework and a concern about a reliance on offsetting.

Action for businesses

The level that the summit talks were held at could possibly create a bit of distance for us mere mortals. They were held at a global, international level, rather than domestic and local. But the message from COP26 and the UK government’s net-zero strategy is clear; it’s crucial that all businesses need to be fully aware of their carbon footprint and have a stringent action plan for how they are going to reduce emissions (with the goal of elimination) from their operations and supply chain.

Businesses and organisations can expect to be held increasingly accountable for their action, or inaction, as greenhouse gas reporting becomes stricter, and the best way to ready ourselves for it is to have our own net-zero plan in place. Once a company has calculated its carbon footprint across the three scopes of: direct emissions, emissions to do with purchasing electricity, and indirect emissions (that relate to the value or supply chain of the company but that is not controlled by them), then the first step is to reduce emissions as far as is practicable and only then consider carbon offsetting to reduce the footprint to zero.

To receive future blogs about COP26 and net-zero, follow us on LinkedIn.

Start reducing your carbon emissions today

For help with your net zero strategy and reporting readiness – call us now on 0151 601 3476