The urgency to quickly put society on the trajectory towards net zero greenhouse gases emissions is now there for all to see.
Science speaks up: the latest report from the Intergovernmental Panel on Climate Change (IPCC) made clear that human-induced climate change is already affecting many weather and climate extremes in every region across the globe, as heatwaves, heavy precipitation, droughts, and tropical cyclones. We are currently on track for overstep by far the “safe limits” of 1.5°C and 2°C above pre-industrial levels defined by the IPCC and the Paris Agreement. Deep reductions in carbon dioxide (CO2) and other greenhouse gas emissions are needed to prevent global warming from exceeding those limits. The IPCC states that “limiting human-induced global warming to a specific level requires limiting cumulative CO2 emissions, reaching at least net zero CO2 emissions, along with strong reductions in other greenhouse gas emissions”. The IPCC defines net-zero as that point when anthropogenic emissions of greenhouse gases to the atmosphere are balanced by anthropogenic removals over a specified period. In 2015, with the Paris Agreement, governments committed to achieve this balance by the second half of this century.
How to translate this cumulative, global mission into feasible strategies for states, regions, companies and even individuals, is the greatest challenge we face.
At Carbonsink [ed: the author's company], as well as at other carbon managers, we guide companies to design and pursue a business strategy in line with the best available climate science (now increasingly required by investors and consumers). Risks can be turned into opportunities, always pursuing positive impacts for ecosystems and people.
According to current definitions, companies (or other actors, such as public entities) reach net-zero when they reduce emissions according to science-based pathways and balance any remaining emissions through like-for-like removals (for instance, permanent removals for fossil carbon emissions). Balancing the remaining emissions could happen either within the value chain (insetting) or through purchase of certified carbon credits (offsetting). Carbon neutrality is a step towards net-zero, in which CO2 emissions attributable to an actor are fully compensated by real, verified and exclusively claimed CO2 reductions or removals, such that the actor's net contribution to global CO2 emissions is zero. Carbon neutrality can be applied also to products or events.
Behind these apparently simple and concise sentences there are thousands of scientific papers, data processing and analyses ongoing (for instance, the Science Based Target initiative, or SBTi, is developing a Net-Zero Standard expected this autumn). I don't pretend to explain every aspect of this complex, rapidly evolving issue here, but let's clarify a few important points. For the time being, there is no such a thing as permanent removals available at the scale required, leaving aside cost constraints and potential side-effects. Moreover, there are no mitigation activities that can compensate tout court the billions of tons of carbon that are emitted into the atmosphere every year.
This is to say that drastic reductions in emissions are a priority, for which it is necessary to have ambitious long-term strategies, short-term objectives, and review mechanisms, and to act as soon as possible.
The sooner we start reducing emissions, the more chance we have of avoiding dangerous tipping points in the climate system and reducing the dangerous effects of global warming.
Having said that, it is undisputed that a certain percentage of emissions cannot be avoided. Arguably, the percentage of unavoidable emissions is going to constantly decrease as mitigation efforts and technologies become more widespread and effective. In the meantime, and without wasting time, resources, research and innovation must be directed towards all those activities that make it possible to reduce, avoid and remove emissions. Possibly, also contributing to other fundamental objectives of sustainable development, such as access to water and energy, the protection of biodiversity, the reduction of hunger and poverty.
For this reason, in the transition to net-zero, compensation plays a complementary but important role, both through certified carbon credits from voluntary carbon markets and insetting projects within the value chain. The voluntary carbon market is an available and functioning mechanism to channel funding towards mitigation activities (which either avoid, reduce or remove emissions) and benefit ecosystems and communities. Voluntary carbon markets are tools and as such they must be considered, both when navigating a complex marketplace in search for high-quality credits, as well as when integrating offsetting activities within corporate climate strategies should be sounding, transparent and up to the crucial challenge we face.
In a context of great evolution, it is important to refer to institutions and rely on operators that guarantee transparency and consistent methodologies, for choosing high quality credits and projects that produce clear climate benefits, maximise co-benefits and ensure rigorous environmental and social safeguards. In fact, here lies the highest potential of carbon credits: to empower companies in taking responsibility for their unavoidable emissions, supporting the global climate transition and contributing directly to the Sustainable Development Goals (SDGs).
Many international efforts are ongoing to scale up voluntary carbon markets and guarantee that these frameworks bring about real impacts and benefits. The Taskforce on Scaling Voluntary Carbon Markets (TSVCM) and the Voluntary Carbon Markets Integrity Initiative (VCMI) are currently the two main catalysts of action, but the constant work of carbon standards and organizations, such as the International Carbon Reduction and Offset Alliance (ICROA), Gold Standard and Verra cannot be overlooked.
The TSVCM this summer issued a set of recommendations for the development of Core Carbon Principles (CCPs), a threshold standard for determining quality carbon credits. It will be the task of a soon-to-be-formed governance body to define and adopt the principles (and to define so called “additional attributes” that differentiate credits according to their characteristics). But the TSVCM recommendations already contain many of the criteria that standards and operators in the carbon management sector consider fundamental for a sound carbon contract. According to TSVCM, mitigation actions that can generate carbon credits must be additional, permanent, leakage accounted for and minimised, based on realistic and credible baselines, monitored, reported, and verified, real, and do no net harm.
As regards the use of carbon credits, work is also underway on this to update guidelines for companies and other actors.The recent VCMI proposed “Ten Principles” for both the supply-side and demand-side of voluntary carbon markets, built upon the work of several other organizations and initiatives, as the Science Based Targets initiative, the Natural Climate Solutions Alliance, the Oxford Principles for Net-zero Aligned Carbon Offsetting, the Greenhouse Gas Protocol. The VCMI proposes voluntary climate action to be science-based, comprehensive, equity-oriented, nature positive, rapid, scaled-up, transparent, NDC-enabling, consistent, collective and predictable (see graphic below).
Following a global consultation phase, the VCMI is expected to launch the final report ahead of the COP26 climate conference this November in Glasgow. Other advancement and updates are expected also from other networks and initiatives, such as SBTi. It is an exciting time to work and operate in such a crucial field, and a crucial time for companies that are designing their climate strategies towards a net-zero, sustainable and prosperous future.
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Andrea Maggiani is the founder and CEO of Carbonsink, an Italy-based consulting firm specializing in corporate decarbonization and climate risk management strategies. Andrea Maggiani has over ten years of experience in climate strategy design, carbon finance mechanisms, and carbon project development.