What’s happening? A group of more than 80 non-profits, including Greenpeace, Client Earth and ShareAction, have issued a statement urging carbon offsetting to be excluded from voluntary and regulatory climate transition frameworks. They argue that 78 companies are responsible for over 70% of historical greenhouse gas (GHG) emissions and must reduce their emissions without relying on carbon credits. Their letter outlines four key concerns about carbon offsetting, suggesting that it delays climate action, lacks credibility, insufficient high-quality credits and creates a misleading perception of cheap abatement options. They also warn against creative accounting and distractions from real emission reductions and that concrete measures are needed within global value chains. (edie)

Why does this matter? The group’s letter is in response to what they describe as a “growing push” to allow carbon offsetting as a way for companies to address their emissions. In particular, they point to the Science Based Targets initiative’s (SBTi) announcement that it plans to permit the use of carbon credits to tackle Scope 3 (indirect) emissions, with a draft of the new rules expected imminently.  

Mixed reception – Some welcomed SBTi’s intention, suggesting that it could create new demand for offsets and boost investment for climate projects following a downturn resulting from a series of scandals and lawsuits that created nervousness among buyers. Others, such as the above group, have slammed it, including SBTi staff and advisors who called for the statement to be withdrawn and for CEO Luiz Amaral to resign. Indeed, last week it was revealed that Amaral intends to step down at the end of July, although he cited personal reasons for the decision.  

A murky market – The SBTi said that it would not be involved in validating the quality of carbon credits, believing that other entities are “better positioned” to undertake such activities. For example, the Integrity Council for the Voluntary Carbon Market’s (ICVCM) Core Carbon Principles (CCP) is a global standard to identify carbon credits with a verifiable climate impact. However, recent research by non-profit CarbonPlan found that some credits carrying CCP labels failed at “additionality” – measuring whether extra funds generated resulted in changes which would not have otherwise occurred – potentially rendering them “environmentally worthless”.

Splinter groups – In a move which critics argue could lead to market confusion and a compromise in carbon offset standards, Amazon has just become the first major company to step away from the ICVCM’s standard, which was heavily funded by founder Jeff Bezos. Instead, the online retail and cloud-computing giant is backing an alternative standard called Abacus, which it developed in partnership with carbon registry Verra. Claimed to be more ambitious, the framework verifies the quality of reforestation and agroforestry-based carbon offsets and would help Amazon hit its target of becoming net zero by 2040. Other major tech companies, including Alphabet, Meta, Microsoft and Salesforce, have said they intend to purchase up to 20 million tonnes of Abacus-certified or other types of nature-based removal credits.  

Scale-up challenges – In a separate development, the voluntary carbon removal market is also facing challenges. For example, Running Tide, one of the 800 carbon removal tech start-ups funded by Stripe’s public benefit company Frontier, announced its closure last month. Despite Microsoft having paid to have the firm remove 12,000 tonnes of CO2 via its sequestration technology – a process of sinking algae and limestone buoys into the ocean – it was unable to find further buyers to scale up. Nan Ransohoff, Stripe’s Head of Climate and leader of Frontier, said that currently “there aren’t really mechanisms that reward early buyers for paying higher prices for early-stage carbon removal companies”, which has made the market for them “really small.”