Greening the Future: A Bright Outlook for Carbon Offsets and Sustainability
By Jason Dodier, Skytop Contributor / February 23rd, 2023
Jason Dodier is an American international business professional and Co-Founder of the GRAIN Ecosystem, which aims to support project developers all over the world in sequestering as much carbon as possible to meet pertinent global climate mandates. Since the beginning of his career, Jason has lived in the United States, Middle East, and Europe, while performing a variety of functions in operations, business development, marketing, and sales management at Schneider Electric, SE. Jason is currently an ambassador across the sustainability space with a passion for information technology and education reform, leveraging his platform to curate powerful speeches and create deeper connections with leaders in his field.
He is currently based in New York City and is passionate about digital transformation, global travel, the future of education, and advising nonprofits and start-ups on their business models.
A Variety of Meanings
The terms “offsets,” “credits,” and “sustainability” do not have universal definitions and can be used to fit a variety of meanings. For some, carbon offsets and credits may refer to the use of renewable energy to supplant fossil fuels and slow carbon emissions. For others, these terms may bring to mind the ideas of carbon dioxide removals (CDRs), which aim at taking carbon out of the atmosphere rather than just avoiding emitting it in the first place. Sustainability, the larger umbrella term of the three, is perhaps the most discussed, yet least defined term. It can take on a plethora of meanings, ranging from small scale actions like individuals’ decisions to decrease use of unsustainable materials, to large scale change like corporations altering production cycles to reduce carbon emissions.
Added Stress
The unclear definitions of these terms are creating added stress on voluntary carbon markets that participants have to field against. We’ve seen the rise of bad actors in the space, such as companies that commit “greenwashing”. Greenwashing has become a popular buzzword which means that someone is making empty promises towards net zero or lowered emissions and sustainable production without any fruitful outcome. Some companies have, in this way, taken advantage of the unregulated voluntary carbon market. It has become too easy for corporations to distort their rapport with consumers through copious amounts of greenwashing and hollow commitments.
Due to this, faith in carbon credit companies, primarily the registries and companies that develop offset projects from both their shareholders and stakeholders, is dropping rapidly.
Demanding and Pleading
We know that modern consumers are demanding more, and pleading for greater change, but this demand has yet to be met. Without industry standards and clarity written into the fabric of these voluntary markets, it’s difficult for companies to supply consumers with the sustainability changes they are determined to see.
Their Own Narratives
Recently, journal sources have begun to propagate their own narratives on the issue. Bloomberg, for example, has come to denote offsets as “dodgy” and “junk,” referencing the sheer lack of regulation in the industry. This refers to the way that illegitimate groups are entering the space without providing viable solutions or pathways for fruitful carbon offset development. They beg the question: with such unclear definitions of what voluntary markets entail, how are consumers to place trust in the value of carbon offsets?
Without Standards
Well, Bloomberg is right in posing this query. Esoterism and opaqueness have historically prevented any tangible, well understood common value from being achieved through carbon credit projects. Without standards being set in an industry that has relatively recently been given greater attention, carbon credit developers are left alone in the project development process. On top of the lack of industry-wide cohesion, these developers deal with steep learning curves, endless paperwork, a lack of familiarity for offset specifications, and a difficulty streamlining their processes.
Innovations Behind the Scenes
Yet, this narrative and this “wild west” we see developers finding themselves in does not have to remain stuck in this condition. As Bloomberg and other outlets repudiate the strides of those in voluntary carbon markets, they neglect to realize the innovation that is happening behind the scenes. Not only that, they seem to place much of the blame for this issue unto the standard bodies, saying that they must provide streamlining and innovation. Contrary to this perspective, we must acknowledge that the standard bodies just write the rules and make the program rigorous as to deter any illegitimate groups from infiltrating the industry. In this way, the narrative must begin to change. Other solutions in the industry, including those that leverage software and online resources, are here to complement the processes instituted by standard bodies, not replace them. Consequently, carbon offsets will be able to produce greater benefits.
Understanding Definitions
To contextualize the current state of the voluntary carbon offset markets, we must understand the objective meanings of the primary components that constitute them. So, what are the definitions of the terms offsets, credits, and sustainability in voluntary carbon markets?
Offsets: Reductions and Removals
In terms of offsets, to define this term we need to look more closely at the two categories of offsets: reductions and removals. Reductions refer to projects that aim at changing current systems of production to no longer emmitt carbon, such as adapting from nonrenewable to renewable sources. Removals can be defined as any type of project that aims at reducing or sequestering carbon’s presence in the environment.
Credits
Currently, the voluntary carbon markets are disproportionately saturated by reduction credits: 97% of tonnes are avoidance offsets with the remaining 3% being removal offsets. The distinction between the two is that avoidance offsets focus on developing projects that reduce the business-as-usual benchmark for emissions per activity or product made, while removal offsets take emitted carbon out of the atmosphere.
Breadth of Removal Offsets
You may recognize avoidance offsets in the form of improved forest management. You may, however, not be aware of the breadth of removal offsets; this includes projects pertaining to biochar, reforestation, reduced soil tillage, avoided ecosystem conversion, amongst others.
Public Perception and Predicted Value
While the majority of the market focuses on carbon avoidance, many of the offsets delegated to the purpose have failed to live up to public perception and their predicted value. For this reason, Bloomberg and other sources tend to negatively connote them.
Ambiguity
This key distinction between avoidance and removal offsets lead to the next important point: a lack of understanding and a difficulty of execution has consumed the removal offset space, allowing this facet of voluntary carbon markets to be shrouded in ambiguity.
Lack of Organization and Due Process
To successfully pull together and develop a carbon sequestration project, project developers require cohesive documentation for investors, technology recommendations, mathematical data regarding project trajectory and outcomes, and, unique to removal projects, details on the permanence and life cycles of their projects. Consequently, there is a lack of organization and due process within the industry, at fault of these intersectional pieces that comprise it.
Standardized and Available
However, contrary to Bloomberg’s opinion, I would not claim removal offsets to be “dodgy” or “junk” in the same manner those terms had been applied to avoidance offsets. Rather, it appears that the removal offset’s potential is still untouched. Being able to tap into the more profitable, environmentally beneficial fruits of removal offsets requires connecting each piece of the equation. What this means is that project developers, investors, and equipment manufacturers need a platform upon which to easily streamline their development process. As such, this is where new innovative solutions in sustainability play a large role. Misinformation on how the realm of removal offsets has been developing has made it seem as though poor management and a lack of organization were the primary drivers of poor execution of projects. However, what we can see is that in order to rectify the narrative in this market, we need to make the entry barriers more accessible by allowing information about removals to both be standardized and publicly available.
The Conundrum
The way to best explain the conundrum that the innovators of removal offsets are trying to tackle is this: you are starting your own small business, you have to find an investor, fill out the right tax forms, find source products, learn to manage a business, be legally protected, amongst a plethora of other tedious details. Now imagine that, on top of this, you are working in an industry that has been bombarded by illegitimate parties and a lack of regulation, seemingly rendering all of your foundational hard work meaningless. This onerous process is made even more difficult when it is all done manually, which is typically the case. Yet, for project developers in carbon markets, this is a common occurrence.
Leveraging Software
Now, for removal offsets, attention has been directed to correcting this process by leveraging software to help project developers streamline and automate their development. By doing so, each key player of the equation can be more easily connected, thereby facilitating greater cohesion between different facets of the industry and a smoother development process.
Value and Intent
So, taking a step back to the narrative of these dodgy and junk offsets, it has become more clear that offsets are not inherently valueless or without good intent. Much of the misinformation throughout the industry seems to focus on failed project execution, but it lacks to highlight the new innovations that are currently being made to further pull together each part of the carbon markets.
An Effective Manner
Digital technology is at the forefront of the green revolution and it is the impetus for the narrative switch in carbon markets. In order to successfully sequester carbon and keep our environment protected, we need to branch together each piece of the equation in an effective manner.
Forming a Better System
The key to better offsets isn’t better, bigger projects. Rather, the key to offsets lies in forming a better system to enable project developers to have the resources they need and ease of access in order to carry out these important carbon projects.