There are many examples where high-quality carbon offset projects are showing promise as forces for good. Take Rimba Raya, a US$5 million investment in an area of forest and peatlands in Central Kalimantan, Indonesia the size of Singapore.
By some estimates, the project has over the last 10 years avoided 130 million tonnes of carbon emissions – the equivalent of taking 13 million cars off the road – while helping to meet several UN Sustainable Development Goals around jobs and education.
But there are many examples where offsetting has, it is claimed, not delivered on its promises. Indeed, environmental groups often cite a famous project in Thailand where a power company burns waste rice husks generating carbon credits sold to companies in Japan to offset their emissions.
According to Carbon Trade Watch, rice husks are a source of fertiliser for local farmers who now have to buy expensive, petroleum-based chemical fertilisers, generating more carbon pollution overall.
There have also been renewable energy projects that would have happened anyway, programmes to conserve forests too full of loopholes to be credible and others where local communities have been shortchanged.
MARKETS CAN BE TUNED TO SUPPORT ZERO-EMISSIONS RACE
With the right rules, market mechanisms can achieve high levels of integrity that can help big and small companies get onto the low-carbon, net-zero pathway at speed and at scale.
Two new bodies – the private-sector led Taskforce on Scaling Voluntary Carbon Markets and its new governance body and the associated Voluntary Carbon Markets Integrity Initiative – have been charged with boosting the benefits and managing the flaws.
With smart guardrails and a few more things to do, the benefits of this race-to-zero can flow not only to investors taking the risk, but also to more developing countries and communities on the ground.