As climate change becomes an increasingly tangible concern, reducing carbon emissions (or achieving net zero emissions) is quickly becoming a priority. In this series piece we unpack the realities of carbon offsetting - the good, the bad, and the ugly - to show how it can (and can’t) be part of an impactful sustainability strategy for your company.
Last week we showed that some offsetting schemes are better than others… but are even the best schemes good enough?
Countless companies, across industries from food to beauty and beyond, describe themselves as “carbon neutral” or “net zero”. While these buzzwords may reflect ambitious green intentions, they don’t always reflect ambitious action. “Net zero” can merely mean that business-as-usual emissions are being offset (perhaps using poor quality carbon credits) while the company has not made any efforts to directly reduce their own carbon emissions. In this way, offsetting acts as a “fig leaf” for industry and the carbon market, by allowing climate inaction to continue.
Now that we know more about the limitations of offsetting, it’s time to step away from “net zero” as the ultimate goal for industry. Offsetting should be seen as a way of mitigating unavoidable emissions: We must prioritise pushing towards actual zero emissions by improving industrial practices, with offsetting being a tool for “mopping up” all remaining emissions. In other words, offsetting should be happening in addition to, not instead of, direct emissions reductions.
Economic incentives must shift to align with desired outcomes. The rationale behind the carbon market is that companies will choose to invest in offsetting (i.e. buy more credits) because it’s cheaper than paying fines for exceeding their carbon allowance. The desired overall effect is reduced net emissions. However, When offsetting doesn’t fulfil its promises, all it does is make it cheaper for excessive emissions to continue, while reducing the incentive to invest time and money into improving industrial sustainability practices.
To be clear, this is a systemic problem. It’s not fair to point the finger at companies who have turned to a solution which seems cost-effective, simple, and legitimate. The issue is that carbon offsetting frequently isn’t legitimate, and the carbon market needs to reflect that. With regards to the carbon credit market, as long as the “trade” part of cap-and-trade continues to be like the Wild West, these problems will continue.
On the flip side, the “cap” part of the cap-and-trade framework is still valuable. Within this system, the amount of carbon credits supplied each year can be reduced over time to keep up with targets (as per EU strategy). Setting a carbon limit, and gradually reducing it, remains an effective means of reducing carbon emissions long-term, rather than swapping carbon credits which may represent theoretical and potentially fraudulent emissions reductions. Carbon offsetting should only ever be a secondary strategy, coming behind efforts to minimise outright emissions.
Overall, it is wildly unrealistic that offsetting could provide a major solution to the vast issues we are facing, namely: undoing the effects of ongoing mass industrial emissions. This is because offsetting only succeeds under very tightly controlled conditions, and very rarely at scale. Offsetting simply can’t achieve as much as we wish it could. Instead, the best approach to reducing mass industrial emissions is to prevent them from being emitted (to the extent that it is possible) in the first place.
About the author:
Helena Maratheftis writes regular content for Converge. She is a creative with an academic background in biology (BA) and the environmental sciences (MSc). Her special interest lies in science communication.
Converge, an AI-based construction technology company, has raised over GBP 15 million to digitise, optimise, and decarbonise construction materials and processes responsible for 11% of global CO2 emissions. The round was led by mission-aligned investor OGCI Climate Investments (OGCI CI), a specialist decarbonization investor, with the participation of TO Ventures, and existing investors.
In this final chapter of our series, let’s take a look at how Converge fits into the sustainability picture, helping your company to move beyond offsetting and towards a greener future.