Takeaways from Bloomberg Opinion Piece Published in The Washington Post: Why All Carbon Credits Aren’t Created Equal
Link to Original Article by Lara Williams of Bloomberg published August, 14, 2023: Why All Carbon Credits Aren’t Created Equal – The Washington Post
As you may know, the voluntary carbon market (VCM) has slowed somewhat recently due to a variety of factors, from world events and interest rates to market uncertainty and increasing media scrutiny. That said, we believe that thoughtful action through the VCM plays a critical role in mitigating much of the damage being done to the environment. The key to continuing the progress that’s been made lies in an integrated and transparent approach to carbon credits and recognizing that all carbon credits are not created equal.
Because we know the VCM is complex and often confusing, our goal at ClimeCo has always been to share our knowledge to help educate and inform our clients and to advocate for the importance and meaningful impacts of these efforts. With great interest, we read the recent Bloomberg analysis published in the Washington Post and wanted to share it with you, along with some thoughts on three of its key points.
1. The article asserts, “Carbon credits offer an easy way for businesses to amp up their green credentials and funnel much-needed finance into environmental projects, often in developing nations.”
We believe that carbon credits are a great way for a business to go above and beyond what is required and to act on their concern for this pressing issue. Carbon offsets represent the best solution to advance the development of future environmental projects. Without a financial mechanism in this process, it would take years to secure the funds to develop new technology to decarbonize a hard-to-abate industry or replenish nature on a large scale. The word “easy” is not in proper context because the project development process is challenging yet rewarding, but not easy. Still, it’s ClimeCo’s job as leaders in this industry to make it easier to understand and to arm our clients with the information and insight they need to make relevant decisions on their low-emission journey.
2. The reporter also states, “Carbon credits are being traded as commodities. Instead of building trust and helping scale emission offset and removal projects, this approach is having the opposite effect and enabling poor-quality credits to tarnish the market.”
We agree that this is how many in the marketplace feel right now. They’re uncertain about making a carbon credit purchase, and their reasons vary from a slow economy to concerns about the media’s current negative focus on credits. The critical point is the VCM is an instrument that allows companies to do something, whether avoiding emissions permanently on a nitrous oxide abatement project or restoring nature while removing emissions on a nature-based project. Without the market, this wouldn’t happen today at the scale it needs to be done, and we don’t have the luxury to delay this type of effort.
Much of the recent scrutiny has been on particular projects and protocols. Questioning the impact or stringency of particular projects or protocols is entirely valid and should be followed with suggestions for improvements. Painting the entire VCM with the same brush is not valid.
The VCM encourages innovation and invention. It brings technologies and practices to scale. It allows portions of the economy that otherwise might not participate to become part of the solution to the most pressing problem of our time. It’s also, by design, a development initiative — working to develop best practices and impactful protocols to make a difference. It’s important to note that many of the compliance-offset programs most effective today used project protocols developed in the voluntary market as their basis.
That’s why we believe it’s critical to look for a partner you can trust — one who aligns with your values, understands the market, and upholds the highest standards of science and transparency in its carbon credit project development and documentation efforts.
You can learn more about our approach in the editorial series, “Transparency In Developing Carbon Credits.”
3. The writer also emphasizes that the VCM suffers from a lack of consistency and standardized rules and requirements: “Because the market is unregulated and completely voluntary, it’s been able to get away with a lack of scrutiny.”
There is always room for improvement, but waiting for the perfect plan isn’t an option when it comes to changing the direction of the climate crisis.
Although the VCM was not created by law/regulation like the compliance carbon market, it’s still a valid tool to keep moving forward until compliance regulation can be developed. The bottom line is that waiting is not an option. The VCM is evolving and will continue to redirect and refine itself as time passes and lessons are learned. Key participants in the VCM – registries, project developers, and independent verifiers — have strived to develop high-quality methodologies, projects, and credits based on current knowledge and will leverage future learnings for further advancement, with rating firms joining the effort to enhance accountability and standardization.
Whatever your current views of the VCM, what is abundantly clear is that an increasing number of companies are recognizing the need to commit to net-zero goals and science-based targets and taking action. While the VCM will be the market to help deploy the capital to finance decarbonization and mitigate unavoidable emissions, a more holistic approach to all aspects of corporate environmental footprints is necessary to address the problem fully, and time is absolutely of the essence.
Our future depends on what we do right now. ClimeCo’s team of environmental professionals is working every day to build a brighter future and a healthier planet. Our entire organization remains steadfastly committed to doing things the right way, fostering a deeper understanding of the VCM, being completely transparent in how we develop carbon credits, and sharing our knowledge to ensure that buyers feel confident in whatever project they choose to support. You can learn more about the VCM in our new VCM Guide.
We will continue to keep you posted on new developments and share our insights. As always, please get in touch with us if you have any questions or concerns.