The Funny Thing about the Voluntary Carbon Offset Market

October 10, 2022

Kathryn Thomsen, Carbon Offset Manager, Environmental Commodities Operations
Kathryn advises Schneider Electric’s sustainability clients and teams on carbon offset strategies to achieve greenhouse gas reduction targets. She specializes in navigating the evolving voluntary carbon market.

sun coming through trees in forestWhat’s all the buzz about carbon offset quality lately, including the highly publicized piece by John Oliver on a recent episode of “Last Week Tonight”? His show certainly brought some laughs — even to those of us who advise companies on navigating the complexities of the voluntary carbon market every day. In that way, our chuckles weren’t a knee-jerk reaction to half-truths, but rather something closer to job-related gallows humor.

We face daily challenges navigating a very opaque and rapidly evolving global carbon market while helping our global clients answer these types of questions:

  • What defines high-quality carbon offset?
  • How do we buy carbon offsets and what do they cost?
  • What type of carbon credits should we buy and how do we identify the most effective offsets?
  • If we buy carbon offsets, can I make claims against my net-zero, carbon-neutral, or science-based targets? 
  • What is the difference in avoidance/prevention offsets and removal offsets? 
  • How do we avoid greenwashing in our efforts to follow suggested practices?
  • What’s the difference in compliance and voluntary carbon offsets and are these interchangeable?

The short answer is a combination of three truths:

  1. Greater due diligence is a necessity.
  2. A more comprehensive consensus of what constitutes quality offset criteria is required.
  3. Greater transparency is imperative to operate the voluntary carbon market now and into the future.

Those of us working directly in the industry — many for nearly 20+ years — understand these basics are key to a constructive discussion on ways to improve the voluntary carbon market. Registries such as Verra and ACR highlighted well-informed details missing from the John Oliver piece

To be fair, even half-truths still contain some truth. It’s no secret the Voluntary Carbon Market is not perfect, but it has evolved with significant growing pains over the past two decades. Some of those imperfections will remain in the absence of global policies and consistency in governance. However, we can also look to guidance from emerging initiatives, such as the Integrity Council for Voluntary Carbon Market (ICVCM) developing quality standards and new rating services that are privately owned, or publicly available (Carbon Credit Quality Initiative).

Our sustainability teams work every day to advise corporations large and small on the winding road of decarbonization, and the development and achievement of their net-zero targets. Our environmental commodities team advises on carefully planned carbon offsetting approaches recommended by NGOs, Science-Based Target Initiatives, and Oxford Offsetting Principles among others.

As an example: a promising trajectory follows these steps:

1.  Avoid new emissions through low-carbon operations.

2. Reduce existing emissions through greater efficiencies.

3. Replace fossil fuels with renewable energy.

and finally,

4. Offset residual emission that cannot otherwise be reduced.

The challenges we face in evaluating, advising, and implementing are both improving transparency and educating the public on the greater good that can result from high-quality carbon offsets. In fact, the fully baked truth is that carbon offsets are designed to unlock much-needed investment to accelerate the market adoption of new, additional greenhouse gas emission reduction technologies and activities. This works, with the consistent flow of capital investment, carbon credit funding, market transparency, and projects developed with high-quality criteria.

Meeting net-zero targets by 2050 requires the continued pursuit of all flexible mechanisms, including the global carbon markets. We need all types of greenhouse gas emission reduction projects deployed — avoidance, conservation, nature-based solutions, and new carbon removal technologies. This is more easily accomplished with robust carbon markets spurred on by collaborative efforts. And even well-meaning comedians can have a role to play.

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