While the race to achieving net zero is on, we need to focus on acting.
The recently rebranded Climate Active initiative is one pathway for organisations to go some way towards reaching the Paris Agreement targets. But there is room for improvement.
The program requires participants to measure their carbon footprint, reduce greenhouse gas emissions where possible, and offset residual emissions that cannot be reduced.
But once an organisation achieves that “carbon neutral” status, many think that it has reengineered itself so that it’s no longer contributing to climate change. That’s not necessarily the case.
Contrary to popular belief, going carbon neutral is far more technical and complex than the catchy, but dumbed down, “measure, reduce, offset” rhetoric suggests. We must avoid simplifying the transition to a low-carbon economy with vague claims of carbon neutrality. That talk won’t get us anywhere.
Instead, the development of the carbon footprint, emission reduction activities, and the choice of carbon offsets needs to be robust.
So, how do we do that?
Move away from the market-based reporting approach
Climate Active recently asked stakeholders whether a market-based approach to reporting grid-purchased electricity is necessary.
Many Climate Active participants are supporting their carbon neutral claims by purchasing large amounts of renewable energy credits (or RECs) in the form of GreenPower, renewable energy power purchase agreements (PPAs), or the voluntary surrender of large-scale generation certificates (LGCs). These organisations claim the RECs cancel out the scope 2 component of their carbon footprint.
There are three key issues with this approach:
- It breaks the causal link between an organisation’s activities and related GHG emissions;
- some renewable energy projects selling LGCs into the voluntary market would have been built regardless, so the revenue from the sale of LGCs helps a renewable energy project developer’s financial performance, but it’s not really funding additional emission reductions; and
- a focus on the market-based approach is to the detriment of other, non-electricity related emission reduction strategies.
Instead of the market-based approach, we should focus on good quality carbon offsets. Ideally, offsets would relate to the organisation’s activities and fund actual, calculable emission reductions.
We should also be considering the entire array of emission reduction strategies to make fully informed choices.
What makes a good quality carbon offset?
In the context of Climate Active, carbon offsetting refers to the purchase and surrender of sufficient carbon offset units to compensate for an organisation’s unavoidable GHG emissions.
Of course, Climate Active offers guidance on eligibility requirements and eligible offset units. However, no guidance is provided on what makes a good quality carbon offset.
But carbon offset instruments are becoming more complex. They originate from a great variety of project types and activities, ranging from the installation of wind turbines and solar farms, to fuel switching in the industrial sector, forest management, and energy efficiency projects. This complexity means it’s sometimes difficult for the Climate Active participant to understand what they are actually buying… or offsetting.
There is also increasing risk of double counting. Under the Paris Agreement, countries formulate their own GHG emission reduction targets (Nationally Determined Contributions, or NDCs). Many offset projects may fall within the scope of the host countries’ NDCs. The risk is that emission reductions may be counted towards a country’s NDCs, while the corresponding carbon offsets have actually been sold internationally. However, Climate Active fails to give any guidance on how to avoid offset projects at risk of low environmental integrity.
For some carbon offset projects, there are inherent concerns with respect to additionality, calculation and permanence of emission reductions, leakage risk, and other negative externalities.
This is particularly true with sequestration projects. A common criticism of sequestration projects is that vegetation and soils are susceptible to fires, pests, and illegal logging. Wind farms and other technological changes, by contrast, could be considered more permanent.
Interestingly, while Climate Active does allow the use of vegetation-based sequestration projects, it doesn’t allow the use of temporary certified emissions reductions (CERs) and long-term CERs, which are not that dissimilar.
As such, using sequestration offsets alone may not be effective in mitigating climate change, especially if it’s a direct substitute for avoiding or reducing emissions.
Similarly, many renewable energy projects, such as large-scale wind and solar, can be considered common practice as they are in many sectors and regions, including China and India. In light of environmental and public health issues, as well as commitments under the Paris Agreement, more governments are mandating renewable energy targets or at least supporting the uptake of renewable energy (through feed-in-tariffs, for example) to address climate change, energy security and air quality.
And, for the very common large-scale wind and solar projects, the possibility to earn income through the creation of carbon offsets on the rate of return is generally minimal, and additionality is difficult to demonstrate with high confidence.
The way forward
The question of offset quality is of widespread interest to participants, investors and stakeholders and was brought up in a recent article on The Fifth Estate. We know we need to make some changes, but what?
The Climate Active initiative needs to develop some clear guidance on what makes a good quality offset and how participants can demonstrate additionality and high confidence in their compliance with the quality criteria. They also must encourage participants to not only purchase carbon offset units that were created from 2013 onwards, but to use offsets that were created within the last three to five years.
But this isn’t only the responsibility of the Climate Active initiative. Conducting offset quality due diligence is everyone’s responsibility, and inevitably contains elements of subjectivity and varying risk tolerance. But attention must be paid to additionality questions.
Won’t somebody please think of the emission reductions?
While the Climate Active Standards (yes, there are five, but they all say the same thing) state that participants must develop and maintain an emissions reduction strategy, there is no requirement whatsoever to actually achieve emission reductions. Instead, the language uses the insipid “could”, “should”, and “may”.
There is much talk about climate science, reaching the Paris Agreement targets and of tackling climate change, but activities are mostly limited to buying carbon offsets and ticking that yes-I-want-Green Power box.
It’s not enough action.
That’s not to take away from the exciting projects that have eventuated at some participating organisations. But if we want to move away from indulgences reminiscent of medieval times – absolution from carbon sins and reduced time in customer boycott purgatory – we must commit to emission reductions that are more than just contractual agreements.
We have to change how we get our electricity and how much electricity we are consuming. We need to expect participants to show that electricity consumption has decreased year-on-year, or at least not increased, and to prove they’ve achieved annual absolute scope 1 and 2 emission reductions as the result of energy efficiency and/or emission reduction activities.
We could also consider aligning with the Science Based Targets initiative, which is fast becoming the standard methodology for organisations because it offers a logical pathway to emissions reductions while still giving flexibility to respond to climate change risks, stakeholder expectations and the necessity of building a resilient business.
Other voluntary programs have also established such requirements. It doesn’t make it easy to achieve those reductions but achieving carbon neutrality should be more than just doing what is necessary to meet a voluntary program’s minimum requirements.
We can do more
Carbon offsets, used responsibly, can be an effective tool to achieve net-zero by 2050 and to cut emissions in half to maintain a 50 per cent chance of avoiding the worst effects of climate change.
But carbon offsets alone are not enough. Priority needs to be given to actual emission reductions within every organisation.
Alex Stathakis is director and founder of Conversio Pty Ltd, a Brisbane-based carbon and energy management consultancy.
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