If your company is committed to achieving net zero carbon emissions, meeting that commitment will require purchasing carbon credits. Although the first steps should be to reduce your Scope 1 and Scope 2 greenhouse gas emissions as much as possible, a manufacturing facility cannot get to zero without some offsetting.
Carbon credits and markets are far more complicated and controversial than I realized. That’s a key takeaway from an event I attended during Pacific Northwest (PNW) Climate Week, “No Credit Goes Unturned? Tracking and Verifying Nature-based Credits.”
Before getting into the controversies, let’s start with some definitions.
Nature-based Carbon Removal
Nature-based solutions are what they sound like, taking advantage of natural processes that remove carbon from the atmosphere. This contrasts with technology-based solutions that use human-built equipment or chemical processes not found in nature.
The scope goes beyond protecting forests or planting trees, though those are the most common nature-based removal processes. Regenerative agriculture practices, including crop rotation, planting cover crops, and minimizing tilling will sequester more carbon in the soil than conventional practices.
Carbon Accounting
Traditional carbon accounting methods are based on tracking how many tons of carbon dioxide (CO2) are removed from the atmosphere or how many tons of CO2 emissions are avoided. To clarify, units are in CO2 equivalents (CO2e). For example, methane (CH4) has a global warming potential that is around 25 times that of CO2, so each ton counts as 25 tons of CO2e.
Counting tons of carbon isn’t the only way to measure impact. Some experts advocate for a contribution-based method. That approach tracks money invested into carbon removal markets and can include everything from paying farmers to plant cover crops to funding startups that are developing technological solutions.
Additionality
Additionality is the concept that something that would have happened regardless of carbon credit purchases doesn’t count. For example, protecting forests that are already legally protected doesn’t qualify a company for credits.
Other cases aren’t as obvious, complicating verification. As a result, there is sometimes disagreement over what actions count toward a company’s carbon credits.
Verifying Carbon Credits
Several panelists bemoaned the bureaucracy required to verify carbon credits. They mentioned creating multiple 200-page documents to explain and justify each credit buyer’s claims. The documents for each project answer questions like:
- How much carbon will the project sequester or avoid emitting?
- What would happen if the project didn’t exist?
- What are the consequences (positive and negative) of implementing the project?
- How long will the proposed carbon sequestration last?
Accurate measurement can be straightforward. Projects that bury dead trees deep underground can calculate how much those trees weigh and how much carbon they contain. There’s high confidence that the trees will remain buried indefinitely.
The impact of other projects is harder to quantify. Fires, floods, or human intervention can re-release carbon sequestered in soil, for example.
Could all the time and money spent researching and writing lengthy reports be better used elsewhere? Perhaps. But credit buyers need data to make informed decisions. Making verification less stringent increases the risk that questionable projects get approved.
There needs to be a balance between making the hurdle so high that companies avoid carbon markets altogether and making it so low that high-emitting industries can too easily claim net zero carbon emissions.
Future Directions
Ideally, carbon removal projects will be effective in removing the quantity of carbon from the atmosphere that they promise, reporting will be transparent without being overly cumbersome, and the scale will meet global need for decarbonization.
This is wishful thinking, especially when it comes to scaling. Companies are already reluctant to invest the money needed to buy enough carbon credits. Costs range from $2-20/ton for nature-based projects to $500/ton or more for direct air carbon capture. Whether that sounds like a little or a lot depends on context. For example, garbage collection and disposal costs $150-300/ton.
Stories questioning the legitimacy of forest-based carbon removal projects create confusion, not action. Concerned about being taken to task for buying ineffective offsets, some companies have stopped their carbon credit purchase programs entirely. Instead, we need more efficient and effective ways for buyers to vet carbon credits.
The newly announced Carbon Crediting Data Framework (CCDF) from the Rocky Mountain Institute (RMI) offers one answer. The CCDF is an open-source toolkit designed to standardize data collection and interpretation so companies looking to buy carbon credits can more easily make informed decisions.
To learn more about carbon markets, see this video below from Elias Ayrey, Chief Science Officer at Renoster.
