Putting Trust in Carbon Offsetting
28 February 2023
This article is an adapted version of one previously published on Business Weekly.
When the footballer, Ben Mee, moved last year from Burnley to Brentford, he took the initiative to make the transfer carbon-neutral. He offset the emissions associated with the transfer by paying for the planting of 20 trees a month for the next year. A small but significant gesture. A few months later Nottingham Forest FC decided that, rather than travel by coach to play at Blackpool (a distance of 136 miles), they would fly there and back instead…..and send the team coach as well to take the players from the ground to the airport after the match! There was no report of any efforts made to offset the increased carbon emissions.
This example demonstrates that if we are to cut global emissions by 50% in the next ten years and reach net zero by 2050, more companies and industries as a whole are going to have to commit to carbon offsetting as a tool, alongside reducing emissions where possible, in helping to achieve those objectives. It should not be for individuals within a company or industry, however high profile, to lead on carbon off-setting initiatives.
But let’s take a step back and ask whether there are any issues of trust that may be inhibiting the growth of carbon offsetting.
As a reminder, carbon offsetting involves the purchase of carbon credits to compensate for, or offset, the carbon dioxide and other greenhouse gases (GHGs) emitted as a result of the activities of an individual or organisation. One carbon credit gives the holder the right to offset one tonne of GHG emissions. These carbon credits are generated by various climate action projects (such as those involving tree planting, or technologies for carbon capture, use and storage) and are then made available for purchase through brokers, traders and retailers in what is known as the ‘voluntary carbon market’.
For any business that is looking to offset its carbon emissions, there are several points at which an element of trust is required:
● How much do you really know about the relevant climate action project? Are they really planting those mangrove trees in Madagascar? If they are, surely it takes time for the trees to grow before they start to absorb carbon dioxide from the atmosphere?
● Who verifies the issued carbon credits and confirms that each credit does actually represent one tonne of GHG emissions?
● How do you know that a carbon credit has not already been ‘sold’ to someone else and used to offset their carbon emissions?
● Does all of the money that is paid for the carbon credit actually get invested in the relevant climate action project, or only a percentage?
These are just some examples of points where there may be trust issues. The good news though is that various programmes and initiatives are underway to address some of these issues:
● Organisations such as Verra and Gold Standard are setting and applying standards and best practices for climate action projects against which they must be certified before carbon credits can be issued, or continue to be issued, relating to the relevant project. Verra’s ‘Verified Carbon Standard’ programme has now seen over 1 billion carbon credits issued across nearly 2,000 registered projects. The standards applied have some common elements but we do not yet have an accepted set of global standards.
● The Integrity Council for the Voluntary Carbon Market has been set up as an independent governance body for the voluntary carbon market. It aims to set and enforce definitive global standards so that high-quality carbon credits channel finance towards genuine climate change projects. It will shortly be issuing its ‘Core Carbon Principles’ and ‘Assessment Framework’ following the public consultation that launched last year.
● International initiatives are trying to ensure greater co-operation and sharing of data between existing registries which record carbon credit transactions. These are intended to ensure, for example, that there is no carbon credit ‘double counting’ for the same project being recorded on different registries; and also that carbon credits once used must be ‘retired’ or removed and cannot be resold. The aggregation of data should be further enhanced shortly by the new platform of the Climate Action Data Trust which will create a decentralised record of carbon market activity, the aim being to “avoid double counting, increase trust in carbon credit data and build confidence in carbon markets”.
Despite lingering trust-related concerns, the global voluntary carbon market was valued last year at over $2 billion and is forecast to reach $50 billion over the next few years. Clearly there is a strong demand for carbon credits and this is likely to increase as ongoing programmes and initiatives begin to address residual trust concerns.
And, just in case you were thinking that Premier League clubs have no interest in carbon offsetting, there is increasing evidence to the contrary. Manchester United last year offset the carbon emissions generated by air travel on its pre-season tour of Thailand and Australia by investing in a re-forestation project in Australia. Other Premier League clubs have committed to achieving net zero by 2040 by signing the UN Sports for Climate Action Framework. Planting trees and forests is certainly on the agenda for many clubs, but it will be a while yet before we see a ‘Nottingham Re-Forest’ FC.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at February 2023.