How Carbon Credits Could Really Help Fight Climate Change


Jhe market for carbon offsets is booming and a series of efforts have emerged to set rules and standards that will tackle their often dubious reputation. A global agreement on these rules is crucial to achieving a net zero future and essential to help avert impending climate catastrophe.

Carbon markets should be a fire hose to direct money where it is really needed in the climate crisis. But that will only happen if we rethink how we use carbon credits. Instead of looking at them as a way to eliminate climate “sins”, we should focus on the results we are trying to achieve. This is because different results require different incentives.

There are three main outcomes that carbon markets could address to enable meaningful climate action:

  • Reduce emissions as quickly as possible
  • Protect natural carbon sinks
  • Remove carbon dioxide from the atmosphere

These give rise to three different forms of carbon credit. let’s call them reduction, protectionand deletion. Many people still consider them interchangeably, as a generic “compensation”. But only by differentiating between them based on their distinct outcomes can we effectively steer carbon market money in the right direction. It is useful to consider them one by one.

Reduce emissions by 50% by 2030

First, there is the goal of rapidly reducing fossil fuel emissions in all regions of the world and in all sectors of the economy, reducing those emissions by 50% by 2030. This is where “discount credits” can help.

Reduction credits involve determining the amount of CO2 that will be emitted by someone who burns fossil fuels, and then paying them not to. This is the world of many traditional offsets – converting coal-fired cookstoves to solar or developing a wind power plant to replace hot coal. These are cheap ways for a company or organization to claim “carbon neutrality,” essentially funding someone else’s greenhouse gas emissions reduction.

But from a climatic point of view, this only has a partial effect; if I emit a metric ton of CO2 and pay someone not to emit their ton, my ton is still in the air. Also, since they are generally cheap (less than $20 per metric ton), they can be a license to continue polluting – a company may be tempted to simply buy a load of credits rather than invest in pollution reduction. its own broadcasts.

However, reduction credits can help reduce global fossil fuel emissions by funding clean infrastructure, especially in the Global South. Countries that have contributed the least to climate change are already the hardest hit by its impacts and have the fewest resources to develop resilient, low-carbon infrastructure. And develop as they must. Building the right incentives around discount credits could direct money to where it’s needed most to help transform the world’s infrastructure from fossil to clean.

Protect natural carbon sinks

Second climate outcome: protecting natural carbon sinks, while promoting biodiversity and wildlife and supporting the communities that live there and around them.

For this, we need “protection credits”. They would give credit for preventing the release of one metric ton of carbon from an existing natural sink. As with reduction credits, it does not make sense to use them as “offsets” because they do not neutralize existing emissions. But it is still essential to invest in the protection of natural stores of carbon such as forests, as well as peatlands, which represent only 3% of the Earth’s surface but currently store twice as much carbon as all forests. of the world together.

Such credits already exist on the carbon market but are generally grouped together with reduction credits, which does not favor one or the other. Separating them gives us the opportunity to judge the quality of credits by what we are trying to achieve. If we focus on protecting existing carbon pools, then the highest rated credits could go to the largest natural carbon pools and those that promote biodiversity. This approach makes it easier to reward good behavior, i.e. people who are already protecting their forests, rather than just those who otherwise threaten to cut them down. It could also make it easier to direct money to frontline communities that live in and manage environments high in natural carbon.

Remove CO2 from the atmosphere

The third valuable climate outcome that carbon markets can help achieve: neutralizing emissions for which we do not yet have solutions or which will ultimately be impossible to prevent. For this, we need “moving credits”.

These already exist, although they represent only a few percent of the current carbon market. They involve paying someone to remove CO2 from the air and store it permanently in a safe place.

Unlike reduction or protection credits, removal credits truly neutralize emissions. If I put out a metric ton and pay you to take out a ton, that puts you back to zero, because what goes up comes down. And with many high-quality deletions currently costing north of $300 per metric ton, they’re not a cheap solution, which means that unlike reduction credits, deletion credits can’t be turned into permission to pollute.

The problem is that the carbon removal industry is not big enough to make the transition to a net zero world. The IPCC says the use of carbon removal technologies is already “inevitable” if we are to meet our climate goals, and that by 2050 we will need to remove and store 5-16 billion tonnes a year. Today, we barely manage 100,000 tonnes of quality removals per year. In other words, we need to scale a massive industry from almost nowhere, and quickly, and in the process reduce costs as has happened with solar and wind. This is where moving credits can help. If we set the right criteria and rules, they can direct capital to high-quality carbon removal projects, those that store carbon safely and sustainably, helping to reduce costs and scale quickly.

Making sense of Net-Zero

This is just a high level framework. Each of these categories will require its own clear set of rules, metrics, incentives, targets, and definitions of how they count against a company’s net zero calculations. This is particularly important for the protection and reduction categories, because even calling them credits means that many people are now using them as part of a claim to be “net zero”, even if they don’t neutralize shows. Instead, elimination credits, which can truly neutralize emissions, could be counted towards an individual’s or company’s net zero goal, with the protection/reduction seen as contributing to the net zero for the world.

Another implication of the categorization we propose here – reduction, protection, and removal – is that different types of nature-based solutions would fall under different types of credit instead of being lumped together in an unhelpful catch-all category. For example, restoring degraded forests would be considered removal, while protecting those that are still intact but vulnerable would fall under protections.

Credits are not the only way to get money where it needs to go: other financial mechanisms are available to support climate solutions. And let’s not forget that the ultimate goal is to rebalance carbon flows, and this requires serious and aggressive decarbonization first and foremost. But it’s hard to see how we can stand a chance of averting climate catastrophe without also creating a functioning and credible global carbon market, which focuses on desired outcomes and creates incentives to direct money in the right direction. . Thinking about carbon credits in reduction, protection and removal categories, with separate incentives for each, would be a good first step.

Gabrielle Walker is the founder of the climate consultancy Valencia Solutions and the non-profit association Rethinking moves.

Bruno Giussani is the world curator of efile and co-founder of his climate initiative, TED countdown.

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