Carbon neutral certifications are multiplying under the government’s Climate Active program. Mother Nature is not necessarily impressed.
Surely on this final stretch before global warming gets our society into an irreversible headlock, the last thing we need are questionable carbon neutral claims.
Their existence not only undermines the climate leadership of organisations with high-impact carbon neutrality positions, but they also tranquilise climate-conscious consumers with false assurances.
And yet they are flourishing under the government’s recently rebranded “Climate Active” Carbon Neutral Standard, touted as a unique government program enabling Australian organisations to work together “to do their bit” on climate change by creating certified “carbon neutral” products, services, events, buildings, precincts, and business operations.
The basic premise is for a participant to reduce emissions (if possible), then purchase carbon offsets to “neutralise” their remaining annual emissions profile and receive a Climate Active trademark certification in the process.
But Climate Active has a design quirk that allows participant to claim carbon neutrality based entirely on historical carbon offset purchases. By doing so, it renders numerous certifications relatively pointless from a climate science perspective.
What does the climate science say?
The IPCC’s 2018 special report on climate change (SR1.5) blared that the predicted physical impacts of climate change are now much worse than conventionally understood. In this light, it emphasised the absolute need to realign our efforts to meet Paris’ target (keeping warming to 1.5 degrees Celsius).
And putting paid to conventional wisdom that we could start slowly and progressively ramp up ambition, the party-pooper UNEP “Emissions Gap” report recently frames this decade as a “critical period”, clarifying that emissions must immediately start dropping 7.6 per cent each year to reach the 1.5C limit and to avoid triggering devastating ecological tipping points like runaway Artic sea-ice melt.
Before the COVID-19 crisis, GHG emissions were rising unabated, and there was little hope of a swift reversal in emissions as noted by a report released last year by US-based environmental groups finding that the world’s top 33 banks had committed $1.9 trillion (USD) in fossil fuel financing since the Paris Agreement was adopted (2016-2018).
So the predicted dramatic drop in emissions this year is arguably a silver lining to the COVID crisis. But this silver lining risks turning into another thick black caking with COVID stimulus funding already threatening to fuel a new wave of coal-fired power builds across the globe.
Where climate science collides with Climate Active
Against this fairly hopeless backdrop, the science says that if an organisation wants to go out and certify itself as carbon neutral, its certification needs to prevent emissions growth this decade if it’s to be of any benefit to the climate, and help us meet our Paris goals.
Which is why it’s unfortunate that Climate Active doesn’t actually mandate that participants implement emission reduction initiatives, instead offering certifications to organisations that merely purchase carbon offset units. And because Climate Active then also allows organisations to purchase historical offset units created as far back as 2012 or 2013, the associated emission reductions that a business is claiming often also occurred several years ago.
In other words, if a business’ emissions continue unabated now, and they’re using offsets created when Julia Gillard was PM, then it’s a fair bet that their annual carbon neutral certification isn’t preventing emissions growth to atmosphere this decade, and therefore isn’t supporting the Paris objectives.
But what if the purchase of 2012 vintage offsets helps project developers finance new offset projects that draw down emissions in this decade? The simple answer is “what finance?”. Mix the GFC with the European debt crisis (among others) and international offset prices have crashed. In fact, old vintage international credits are so cheap that some third-party brokers are almost giving them away. So regardless of whether the overseas project developer is still solvent, the peanuts paid to a third-party broker won’t mean much on the ground.
Of course, what’s missing from the Climate Active Carbon Neutral Standard are rules that disallow the purchase of historical offset units unless the purchase costs clearly support the forward expansion and creation of new emission reduction projects in this critical decade. Otherwise, Climate Active’s website claims that organisations are reducing “their climate impact to zero by becoming carbon neutral” is misleading; for many certifications that statement is simply not true.
Doing it the right way
Perhaps it’s no surprise that Climate Active certifications don’t necessarily support the Paris Agreement objectives. After all, the current Coalition government condones the use of Kyoto carry-over credits, and its pledged 2030 emissions reduction target is woefully inadequate, but I won’t bore you.
Whatever the government’s position on Paris, and however it designs its programs, organisations participate at their peril. It’s a risky game to publicly support the Paris Agreement but then create a carbon neutral position that undermines an organisation’s public messaging on Paris alignment.
And yet, high quality carbon offsets can still form part of an effective carbon neutral position. That’s not only because they can drive real emissions reductions in this critical decade, but by virtue of the fact that they’re usually harder to source and unlikely to be the cheapest offset option, they force organisations to first look for emission reduction opportunities that transform their direct operations and supply chain before pulling the offset purchasing trigger. This helps organisations to proactively manage transition risks by keeping their operations at the leading edge of low-carbon technological disruption.
It’s important to reiterate that there are genuine leaders with high-impact Climate Active certifications, so let’s not throw the baby out with the bathwater. But for any organisation with a Climate Active carbon neutral certification, the basic question must be “does your certification support Paris by preventing the accumulation of GHG to the atmosphere in this critical decade?”
And because investors and other stakeholders are now asking this same question too, participants need to make sure their certifications are truly green to avoid delivering any red-faced responses.
Evan Stamatiou is a director at Carbon Risk Management.
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