The long-awaited hopes of experts to reignite trust in the faltering carbon offset market were dashed this week with a set of standards that failed to meet expectations. Releasing new rules on how companies finance their emissions, a global oversight body must still confront much unease amongst industry and environmental groups alike if they hope for any breakthroughs.
After three years and extensive effort, the Integrity Council for the Voluntary Carbon Market unveiled their much-anticipated guidelines on Thursday – unfortunately, to a lukewarm reception. We must look beyond traditional methods if there is any hope of keeping up with our ever-increasing ecological crisis. Years of carbon offsetting have proven it is not enough when battling climate damage, something Danny Cullenward from American University made abundantly clear: “It feels like far too little, too late”. William McDonnell, the influential chief operating officer of Integrity Council, outlined a progressive path forward. He voiced his commitment to upping ambitions and elevating standards in this ever-evolving market.
Backing the Boom
In 2022, the booming market of offsets created more than $1.3 billion in revenue to be invested into protecting forests and transitioning to renewable energy sources – equating to 170 million tons worth of CO2 being kept out of our atmosphere. With credits exchanged on a voluntary basis between sellers and buyers, it has never been easier for individuals or organizations alike to invest in sustainable practices that are good for both people and the planet.
Double counting of carbon offsets has been a common theme in the greenwashing narrative. However, according to data from BloombergNEF – recently highlighted by Bloomberg Green’s investigations – the retirement of credits fell for the first time since 2019, likely due to investors refusing fraudulent claims and genuinely understanding their environmental impact. The result must be more transparency when it comes to offsetting corporate policies.
The Integrity Council’s much-anticipated core carbon principles (CCPs) have been released. However, they need to deliver on the common goal of identifying and excluding offsets which contribute little to reducing emissions. Instead, this guidance calls for standards setters such as Verra and Gold Standard to do their own diligence in determining what earns an offset classification. This task is sure to be more challenging than anticipated, which further muddies the water and adds to the complexities instead of helping to simplify standards for market participants to understand.
Required Principles
The International Carbon Bank has outlined ten core principles to tackle climate change and environmental degradation. These principles focus on improving governance, reducing emissions’ impacts, and promoting sustainable development – concepts that are widely accepted but should be implemented more diligently. Nevertheless, the guidelines continue beyond the status quo, wherein lies a requirement for organizations or individuals using carbon credits to reveal their identities publicly in addition to publishing calculations for how those credits were earned. It is an ambitious attempt at preventing double-dipping of credit payments while ensuring transparency throughout the process.
Despite facing scrutiny for reportedly flooding the market with worthless credits, Verra is throwing its weight behind a new set of guidelines from the Integrity Council designed to restore transparency and order within carbon credit markets. Annette Nazareth – chairperson of The Integrity Council – echoed this sentiment in a statement hailing these rules as “a crucial turning point” that accelerates us toward an environment where buyers have improved ease of use when seeking genuine emission offsets.
Despite a promising first step, the recently released guidance documents on green financing still need to include crucial safeguards that could ensure funding is directed to both environmental projects and those doing the work. Most notably absent are regulations for managing and revealing project earnings – an area of concern following revelations majority of proceeds got diverted through intermediaries’ profits.
Juerg Fuessler, managing partner at INFRAS and a member of the council’s expert panel, voiced that while recent guidance is heading in the right direction, it still needs to be made clear. He believes more decisive action will benefit companies across Switzerland. Switzerland aside, the world needs clarity on universal guidelines if we are to address a global problem; it will require global inputs and an agreeance on what global standards should look like.
Reflective Predictions
The carbon credits and offsets market kicked off in 2020, with Mark Carney’s $100 billion prediction for its annual worth. Now we wait to find out if that number is too optimistic. Will these ambitious predictions come true, or are they merely a distant dream? According to Pedro Martins Barata from Environmental Defense Fund, it all depends on whether this innovative market takes hold across global markets.
The Carbon Pricing Leadership Council published a set of policy recommendations on Thursday to address flashpoints such as the use of credit for both countries and companies. They also promised more guidance this year concerning criteria for evaluating specific offsets, but some experts remain unconvinced about their efficacy. Gilles Dufrasne believes that offsetting itself is an inadequate approach, calling it one “filled with irreconcilable logic”. Thus, he has suggested that we should abandon the concept entirely.
Our Take
From an OceanBlocks’ perspective, we are optimists and see that there is more common ground than disparity; we also believe that the global carbon market is in its fledgling stage, which will have its teething problems. Nevertheless, there are steps we can take to prove the provenance of all we do to make things more transparent, and lessons learned must prove to strengthen guidelines instead of abandoning them altogether.
Conclusion
For those corporations interested in the factual protocols and proof mechanisms of blockchain and want to understand how OceanBlocks is approaching this problem, please reach out to discuss our ground-breaking approach to generating factual carbon ledgers and becoming part of the OceanBlocks ecosystem of change. We welcome engagement, the right-fit partnerships and aligned technologies to support our progress in the market to become a market leader in factful carbon offsets.