Carbon offsetting needs ‘major course correction’, say academics
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Academics behind an update to the ‘Oxford Principles for Net Zero Aligned Carbon Offsetting’ have called for a “major course-correction" in carbon markets and offsetting practices through regulation.
The authors of this year’s revision to the 2020 principles said evidence continues to cast doubt on the integrity of many carbon credits used for offsetting and argued most offsetting which occurs today is not net zero aligned. As well as offsets lacking credibility, the researchers found that the supply of credible removals was “still far from sufficiently scaled”.
Regulation is now urgently needed, the authors say, calling on governments and standard setters to steer the market away from “low-quality credits and low-integrity offsetting strategies”.
“The vast majority of current offsetting approaches are not getting us any closer to net zero emissions, and trust in the concept of ‘offsetting’ has been so badly damaged that some organisations are moving away from using the term at all,” said Injy Johnstone, research associate at the Oxford Sustainable Finance Group in the Smith School of Oxford University.
“This update clarifies the core ‘Oxford Offsetting Principles’ and provides much-needed guidance for companies, cities and other non-state actors to develop offsetting strategies that are genuinely aligned with achieving net zero by 2050 or sooner,” Johnstone added.
The most significant updates to the principles include:
reinforcing the urgency of reducing emissions;
re-emphasising the need to close the carbon removal gap;
highlighting evidence showing that nature-based systems are critical for addressing climate change;
defining terms to reflect new international guidance on net zero and nature commitments and claims;
clarifying the durability risks and co-benefits of different types of removal and storage; and
recognising the value of mitigation efforts outside of organisational net zero targets.
The revised principles aim to "correct some critical carbon market failures”, said Kaya Axelsson, co-author and head of policy and partnerships at Oxford Net Zero.
She said it was little known that “hardly any of the carbon market removes and stores carbon at all”, with the majority of carbon credits being for avoided emissions, which are "often over-credited or have trouble proving that they had an impact beyond what would have happened anyway”.
The ‘Oxford Offsetting Principles’ are:
cut emissions as a priority, ensure the environmental integrity of credits, and regularly revise as best practice evolves;
transition to carbon removal offsetting for any residual emissions (away from emissions avoidance or reduction) by the global net zero target date;
shift to removals with durable storage and low risk of reversal; and
support the development of innovative and integrated approaches to achieving net zero.
Last year, the Integrity Council for the Voluntary Carbon Market launched its own 'Core Carbon Principles' and a programme-level assessment framework, outlining disclosures and sustainable development for high-integrity carbon credits.
The voluntary carbon credits market is young – estimated at just $1bn to $2bn – and has struggled with reputational issues, exacerbated by a journalistic investigation that accused the main ratings agency, Verra, of grossly exaggerating the amount of carbon credits being generated by the projects it rates.
Despite these widespread concerns, a handful of pension funds have started allocating to carbon credits. The pension funds of Essex, Leicestershire and the City and County of Swansea invested in the Stafford Capital Partners’ Carbon Offset Fund early last year. The Stafford Capital fund invests in timberland and natural forests and claims to generate about 30m of verified carbon credits for investors. Master trust Cushon has also bought voluntary offsets, at its own costs, to remove residual emissions.
Would your pension fund consider investing in carbon credit funds?
