Are offsets helping or deterring climate progress?

Louisa Casson from Greenpeace (now on an Antarctic expedition) explains her work looking into carbon offsets and how they have developed since COP26.  She also gives her view on the  development of voluntary carbon markets.

Here is some of Louisa's suggested further reading on the issue:

- Oxfam’s report on the use of offsets in net zero 
- European Climate Foundation CEO, Laurence Tubiana's commentary on offsets 

Find all our latest investigations, features and interviews at www.landclimate.org

Transcript

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Alasdair: 0:06

Hello and welcome to the Economy, Land and Climate Podcast. My name is Alasdair MacEwan and in this episode I spoke to Greenpeace's Louisa Casson to find out more about carbon offsets, and the growing concerns about their use.

Louisa: 0:19

You know, it's difficult not to see those vested interests of highly polluting companies who are keen to be scaling up this way out of directly reducing emissions at source. Brands have relied on offsets as part of their net zero plans. That's one of the questions they're being asked is, do you guys really want to be in the same club as the oil companies?

Alasdair: 0:41

I began by asking Louisa to explain her current work on offsets.

Louisa: 0:44

I have been looking into the kind of murky underside of the world of net zero targets. So I think, you know, we've seen over the last few years, this real flurry of net zero targets from both governments and big companies and you know, the question really now is not who's making the biggest pledge, but it's how are they going to deliver it? And, you know, we've started to see a real kind of growing hype around relying on offsetting, which is essentially when big polluters, whether governments or companies, don't want to just reduce their own emissions, but they prefer to pay someone else to try and make that problem go away. Obviously, this is a kind of big risk to tangible progress on actually reducing emissions. So I've been looking into both the kind of negotiations that are going on at an international level between governments on whether they want to allow and condone that within the kind of international climate regime, but also, you know, which are the companies that are really trying to drive this conversation and the tensions that we're seeing between some companies really wanting to focus on reducing emissions, and others looking for that way out to really preserve business as usual.

Alasdair: 1:54

Can you say a little bit more? Can you explain to us a little bit more about offsets and what they are and how they've come about?

Louisa: 2:01

Sure. So I mean, offsetting is nothing new, you know, and, you know, we see it in lots of different kinds of sectors. But, you know, when we're talking about climate change, you know, I think most of us think, oh, well, to tackle climate change, we need to be reducing the amount of carbon pollution that's ending up in our atmosphere, and is driving climate change. What some particularly big polluters are trying to do and, you know, they've been trying to do this for decades as well, is rather than actually cutting emissions at source looking at their supply chains thinking, how do we, you know, transition to zero carbon technologies? How do we get those emissions out of our supply chain, they might opt for buying offsets, and that can be a kind of all manner of things really, but it's basically paying someone else to try and deal with the problem. So it's kind of substituting I guess. Sometimes that might be, you know, say you have emitted 20 megatons, say, you try and find projects that are not going to emit 20 mega tons. And so that might be that, you know, a project has said that they were going to pollute that much, but then they've made a decision not to, and you're you're kind of payment is the sort of proof that that stopped them polluting. Or it might be that it's more of a kind of nature based project where that kind of provider might say, well, we're going to plant this many trees, and that will absorb that 20 megatons of carbon. So that kind of cancels it out in, you know, that's the kind of theory anyway, so you can see from a kind of accounting perspective, that theoretically, there's a kind of, there's a calculation that's going on there. But the problem is, most of the time, it doesn't actually work in practice, you know, those original emissions, which are ending up in the atmosphere, they are driving climate change. However that kind of substitution, offsetting is working, there are so many issues there with actually the credibility of - is an equivalent amount of carbon being reduced or removed from the atmosphere? And then all kinds of other issues around like, what is that project looking like? Is it relying on huge amounts of land to plant trees? Are those trees actually in line with native biodiversity or are we seeing huge monocultures? What's that land being used for and who is using that land already? Who has rights over that land that might be undermined? So you can see there's all sorts of issues so it becomes a sort of pretty complex world, but one that is is fraught with lots of risks, and ultimately, can provide an incentive against decarbonisation, and against that transformation, of business models and economic systems to actually be consistent with the 1.5 degree limit of global temperature rise.

Alasdair: 4:48

Some people have made positive comments about offsets, saying that it can provide incentives for companies and for countries to decarbonise. Maybe we could go into that after. What's the scale of offsetting now? And where is it going?

Louisa: 5:02

This question of scale is really what's what's crucial here. You know, while we know that, all the IPCC pathways that keep us below 1.5 may rely on a certain limited amount of carbon dioxide removal at a certain stage when we are having those tricky residual emissions when we've tried to reduce as much as possible, and you're still having some sectors where the technology is not available in time. Right now we're seeing, particularly from a number of big banks, and big oil companies and other big polluting sectors, they're really trying to promote offsets and hope them. So we're seeing industry led groups like the task force for scaling voluntary carbon market, something that the UN climate envoy Mark Carney was involved in, you might remember him from a few years ago, when he was the governor of the Bank of England started talking about how climate change is a financial risk, and that seems really important for galvanising the conversation around climate change being something we all need to think about, including if we were serious, big bankers. He was involved in that alongside you know, many other big logos. And about a year ago they started saying, we need to be scaling up this market, we need to be scaling up a voluntary carbon market - so a market based on offsets, available to corporates - and you know, we need to be seeing that market scaling up to the value of $100 billion every single year. So we need to be seeing that kind of really significant scaling up because at the COP26 Climate Conference that just happened in Glasgow, the rules around carbon markets that governments were going to use, potentially with some involvement of the private sector as well, those were one of the the kind of main issues for negotiations.

Alasdair: 6:38

You mentioned Mark Carney's Task Force, and also the changes at the COP. Could you just say a little bit about where you think the development of carbon markets is now or the development of offsets is, in terms of quite a specific policy timescale, and where you think it might go, and then maybe a little bit about where you think it should go?

Louisa: 7:00

What's actually happened is we've seen in the few weeks after COP26, a lot of contested interpretation. And these are really complicated rules. You know, as the texts, the drafts were coming out in the middle of Glasgow, you saw little groups of people huddled around trying to find space, you know, ideally, near a plug but often people just gathered on the floor, looking through these kind of really long documents, trying to decipher some of these rules. So you know, we heard certain groups who would be calling for one thing as their main priority, but then would be able to work with a country who might be on a totally different page from them on another issue, because, you know, we saw, particularly I think, the sort of conversation around finance, and especially the lack of attention there has been on adaptation finance for countries in the Global South, that that was a kind of overarching political tension, at COP26. Because there is a provision in what's known as the Article Six rules, which are the rules around carbon markets, to provide a certain amount, quite small amount of financing, towards financing adaptation finance, that was kind of caught up in that overall discussion. When we heard people like Mark Carney talking about $100 billion market for voluntary carbon markets, it's hard not to hear that echo in the 100 billion dollars climate finance pledge, that promise that was broken by rich countries to poor nations, you know, promising that would be the level of climate finance that we would be provided by 2020, which hasn't materialised. And, you know, they're still short, they're saying hopefully, we'll meet it in a few years time. But that's really kind of affected the overall discussion. What we did see coming out of COP26 was there were some rules that were agreed, but as I said, you know, how much they are able to actually set high standards and limit the amount of offsets making sure that actually no emission that could be actually reduced at source is substituted with something that may not actually be removing or reducing carbon. A lot of that is still to play for and I think we saw countries like Switzerland pulling together press conferences in the closing days of COP26 and saying, these rules and are now set, it's good to go, we're really keen to be using carbon markets, we're having these bilateral deals. There's still quite a lot that needs to be discussed in the technical negotiations over the next year about more of a global carbon trading mechanism. And I think a big discussion around COP26 was around greenwash, whether that was Fridays for Future activists like Greta Thornburg, whether that was the Indigenous leaders who were much more prominent and really helped give that sort of moral authority to the discussions around COP and the gulf between where we needed to see action and where it fell short. So I think this will continue to be a contested space, and the highly technical and complex rules that were agreed are still up for interpretation really. And I think that whether we see a lot of movement in the voluntary space, particularly when you've got big finance, we've seen the UK Chancellor, Rishi Sunak saying he wants to make London the global offsetting hub. How that plays out versus the pretty slow negotiations that we see at the UN climate talks... I think it's definitely an issue to carry on watching and to carry on engaging in because ultimately, what's at stake is how fast we really see incredible action to reduce those emissions. And are we actually, you know, legitimising a way to delay or undermine that concrete progress. And we know we just just don't have time, you know, anything that is undermining that pace of change is a big risk to all of us.

Alasdair: 10:43

So you sound quite skeptical about offsetting, I guess your fear is that it's slowing decarbonisation, existing decarbonisation. Can you say a little bit more about that? You have already said a lot, but I just wondered, do you think that there, for example, in the development of the voluntary carbon markets, do you think that there may be just wasn't that much thought, or sufficient thought about how it was developed? Or do you think that there are genuine interests and established interests which are wanting to hide behind offsets? Or is it combination?

Louisa: 11:21

you look at their list of originators, and it's impossible to ignore that BP - a massive oil company - is one of those originators. You look at who were the members who were involved from the start, and it's names like Shell, it's big airlines like EasyJet, you know, it's difficult not to see those vested interests of highly polluting companies who, you know, are keen to be scaling up this way out of directly reducing emissions at source brands have relied on offsets. And as part of their net zero plans, that's one of the questions they're being asked is, do you guys really want to be in the same club as the oil companies? I think we are seeing a lot of brands wanting to have that kind of gold star, saying look we're carbon neutral already. And, you know, I can see that in terms of making that point to their customers, they want to show that they're making progress. And that is harder when you're talking about the percentage reduction of actual emissions reductions. But I think we're also seeing quite a lot of consumer skepticism around kind of, here's a net zero burger, or net zero bacon or things that you can instinctively feel like, what's the catch here? So I think there can, you know, there's been a sort of underestimating of actually how much people really want to engage, and actually are going to ask those questions. So I think, you know, anything that seems sort of too much like a sort of silver bullet, there is that degree of skepticism around it. And people are asking those questions of companies about what are you really doing? You know, you can't simply just make it look like we can carry on in exactly the same way. Because we know that this is a big problem, we know that this is a big challenge.

Alasdair: 12:53

Can you explain a little bit the difference between being carbon neutral and say being carbon negative?

Louisa: 12:59

So you know, I think we are seeing a lot of the term carbon neutrality being bandied around. And you know, that has kind of been used by some companies, I think, as a sort of substitute for the word net zero, so it's about getting those emissions to zero. But maybe some of that is not actually by reducing emissions totally to zero, that's kind of made up. When we're talking about negative, it's meaning that actually more carbon is being reduced or removed than is initially polluted. But again, you know, a lot of this is pretty obscure, there's not a load of transparency. So I think, you know, a lot of the questions that come up, which, you know, are pretty basic, it's is that sort of one tree planting project, is that being counted by multiple different organisations to try and make up for their emissions? We've seen examples where the Dutch government was relying on the same plantation as Shell, the company, were to both make up for their emissions and you think - there's only a set number of trees there. And there's also questions about how long are those trees going to be allowed to grow and stay standing, or how much carbon is really being absorbed at what rates? And how fast to make up for carbon that's already been polluted?

Alasdair: 14:11

What do you see as the solution, then to this?

Louisa: 14:14

Well, the science is really clear that we need to be having global emissions by 2030. And the clock is ticking. So that really needs to be the absolute focus. You know, I think there are very, very few governments, if any, additionally, with companies who could say we are doing absolutely everything we can to decarbonise and so finding, how do they go further and faster? That's the kind of key political deal at the heart of the Paris agreement. And as we see that kind of spilling out into the global economy, is how do we continually step up so that actually we're going to be in line with that 1.5 degree limit, which we know there is such a gap towards meeting? So while it's important to have that momentum building with net zero targets, as we get closer and closer to 2030, we need to make sure that we're getting on track with that 1.5 degree limit, rather than trying to sort of fudge the calculations and do something that simply looks good. And that might involve, you know, a lot of research and innovation into ways to decarbonise industries that have been seen as hardest to decarbonise [when] all the technology isn't immediately available. But we are also seeing some leadership from certain sectors, you know, a lot of the construction industries, things like cement companies have often been seen as well, that's going to be really, really difficult. Maybe there will be, you know, a very limited reliance on carbon dioxide removal in the future. But actually, [with] some of them we're already seeing developments and kind of striding forward and saying,'actually, no, we're planning to do this by reducing our own emissions', that standard and that kind of normalising that actually, net zero means decarbonisation. And that was a message that, you know, so strongly from youth activists to Indigenous leaders, even to the UN Secretary General in Glasgow, who announced this group of experts, who are going to be bringing additional scrutiny to this maze of corporate commitments that we're seeing around net zero, and the work that they will do over the next year to really kind of set that standard high and make sure that this is about keeping below 1.5 rather than simply an easy ticking a checkbox, which actually does very little to tackle the climate crisis.

Alasdair: 16:18

Arguably it looks like the offset market might be growing. Would you like to see the offset market abolished?

Louisa: 16:27

There needs to be that conversation around carbon dioxide removal. And you know, that that is going to be very difficult. That, you know, yes, nature is really doing an amazing job in in trying to kind of absorb carbon and store it away, but a lot of those ecosystems are under severe stress, because at the moment, you know, there is quite a small pie of carbon dioxide removal. And far too many people are trying to cut themselves a large slice, and there simply isn't enough to go round, particularly when we look at the amount of kind of issues there are already with things like land rights, where is that land coming from? Because I don't see it just lying around spare. So I think, you know, again, sort of listening to land defenders, who already facing so many different pressures on their lands.

Alasdair: 17:10

I was going to ask you, if you had a message for Mark Carney, what would it be around voluntary carbon markets?

Louisa: 17:17

I think it's interesting that in the week after COP26, Mark Carney came out saying, well of course offsets only should be used for residual emissions. That's quite different to what he was saying this time a year ago, with these kind of huge projections, these billion dollar estimates. So you know, that's much closer to what the scientists are actually saying. We are still seeing, you know, it feels like a lot of companies all believe that they have those residual emissions. So I think we need a serious conversation about what do residual emissions actually look like? He's a very influential figure, so we need to see, you know, figures who can get the climate crisis really encouraging that scaling up, you know, he needs to be calling on the financial sector where he has that sway, to make sure that they're no longer funding new fossil fuels, and then also trying to claim net zero, that's clearly incompatible.

Alasdair: 18:11

My thanks to Louisa Casson for her time. If you'd like to know more about this subject, we'll soon be publishing some further reading on our ELCI website. Also, do check out our site for more in depth articles on these kinds of topics. Thanks for listening.