How to use the offset industry to get out of offsetting. Letter to John
Dear John, I am the long tail of responses to your excellent piece on Carbon Offsets.
First off, thank you for reminding us that we cannot offset our way out of climate change. Waiting two weeks to respond has given time to look at other responses to your intrepid journalism. The responses fell into a few camps:
- The members of the carbon offset industry who just thought you were wrong, didn’t understand, lacked nuance and were being misleading. See Verra, Sylverra.
- The members of the carbon offset industry who took it as a call to make improvements on all of the things you are calling out.
- Those who applauded your art at uncovering a complex subject and mostly agreed with you.
For the record, you weren’t wrong. You might not even know how right you are. However, you can’t just yet throw out the baby with the bathwater. Count me in the second and third camps.
Founding and leaving a carbon market was the best thing I could do to see that climate impact could not be achieved unless a few key criteria upstream of carbon markets were met (more on that later). In fact, the muck and murkiness behind carbon offset markets make jumping to them first literally the worst option of any climate finance. They become the easy button when in reality, there is no easy button.
I agree with you that a carbon offset market is an illusion. Over time, this should make buyers participating in these markets more scared than they are that the things they are buying are even real: did paying for the offset make an actual difference, and can people trust it? Sometimes yes, mostly not. What happens when people understand that companies are not really trading what you are saying you’re trading? This is fraud. Worse, suppliers of credits are signing up for nefarious schemes that they don’t understand that will leave them left holding the bag after investors have made their money.
When the market is set up for systematic over crediting and leakage the buyers and sellers might benefit, but the climate does not. Any carbon market is at risk of producing snake oil. Market instruments have literally accelerated the rate of destroying old growth forests and additional carbon growth in the name of decarbonziation. Do we really want this? Thank you for helping people see the value of pumping the breaks and asking important questions.
Carbon markets are merely derivatives of improving something that already exists. They are full of complicated assumptions. Derivatives get further and further removed from the actual outcome and real thing that causes them. As currently designed, the voluntary carbon offset markets are taking off as siloes that do not provide any ounce of utility to science, or more generally, the public who are affected by the amount of carbon in the atmosphere.
My hope is that in less than 50 years, carbon markets will be mostly obsolete because we don’t need them. They are a blip on the history of ideas humans tried and evolved through to create better market instruments as we transitioned off fossil fuels. However, carbon exuberance is not going away. And if we do want to turn back the temperature we need every tool at our disposal that is able to provide useful information to track the impact of our actions.
The MRV discussion
This is where there is actually a huge benefit of a desiloing MRV (Monitoring, Reporting, and Verification). MRV is the backbone of the carbon offset industry and is the system of rules that provide for independent and ostensibly trustworthy systems. Unfortunately, the industry is evolving with a black box built on a house of cards.
Last month, I participated in an Air Miners Panel on MRV. I made a call for more holistic solutions. I pointed out some implications below.
What does this mean to an MRV Start-up?
There are many companies out there building MRV or MRV compatible approaches. Although I think the arrow to creating offset markets is misguided, I don’t discount any of their important work and recognize that they may not pivot their business model just from reading this article. Here is a list of criteria that any MRV for carbon offsets system can follow. In so doing, they will be working toward appropriate and useful technology the world needs to act more quickly and effectively.
- Make more than just offsets. Listen to what people who most need the catalytic finance want. Connect to other asset classes related to land supply chains, valuation, risk, and insurance. We recently produced a framework for Designing Quality Assets (summary doc here, framework here). Use this to consider how your use case provides qualitative and quantitative quality to the different asset actors.
- Increase the level of understanding of people who can comment and participate in any methodology. In video above I point out a framework from surveillance capitalism: who knows, who decides, who decides who decides? Given the gravity of the issue, we need more people to know, decide, and even understand who the decision makers are.
- Integrate into scientific understanding. Today, all of the data from the voluntary carbon registries is useless from a global perspective to understand any level of efficacy. There are myriad scientists who are on the leading edge of new discovery that do not link back to these market instruments but remain disconnected from these instruments. Improving the calibration and validation to publicly available data sets through MRV tools would be a huge benefit to society.
- Apply sustainability metrics to production. The more that the data collected relates to the interventions or activities being made, the more MRV tools move into the background via APIs to support business intelligence. This will provide actual value to someone able to deliver an environmental action.
What does this mean to a Chief Sustainability Officer?
If you are a chief sustainability officer, scratching their head, trying their best to ensure good corporate stewardship and have historically used offsets to be part of a portfolio there are a few things you can do.
- Forgive yourself. Did someone sell you snake oil or something you didn’t understand? Use your past experience to inform the portfolio of strategies you deploy understanding the costs and benefits. However, learn from the coming wave of litigation.
- Educate yourself about what’s working and how it works. Understanding the language of benchmarking and baselining and material flows of your business will help you understand where the levers even exist, contextually, to make change.
- Create durable pathways by integrating environmental data into decision making seamlessly into your reporting strategies. When linked to procurement and investment decisions it is stronger than when it comes from a marketing budget. Don’t fall into the trap that John lays out of “making big claims, while doing very little.”
- Establish and join working groups to ask honest questions and figure out the pathway from standard to Standard. Use this to create fair and transparent rules that can be dynamic and responsive.
Have a voice and stay in touch!
We are participating in the public response to the Integrity Council for Solving Voluntary Carbon Markets. We are encouraged by these efforts that, while promoting an imperfect solution, at least at this point, do their best to listen. They are accepting public comment until September 27.