The UK’s voluntary carbon markets “aren’t working” due to variable standards and insufficient governance of carbon credits, the Climate Change Committee (CCC) has warned today.
In a new report, the government’s independent climate advisers explain how carbon credits and offsets often lack integrity and can mask insufficient efforts from firms to cut their own emissions at the source.
They deliver less than claimed, and may push out other environmental objectives in the rush to capture carbon – potentially delaying the net-zero transition.
However, the CCC also said that current shortcomings can be overcome with stronger governance to ensure high-integrity carbon credits.
Businesses also need clearer guidance to encourage them to cut their own emissions first and foremost, before turning to offsets.
Reacting to the CCC’s report, IEMA’s Director of Policy & External Affairs, Martin Baxter, said: “Use of voluntary carbon credits in a net-zero transition might be necessary for emissions in certain industrial processes for which absolute zero emissions is not technically feasible.
“However, focus needs to be on action to reduce absolute emissions – as per IEMA’s GHG Emissions Management Hierarchy – and offsetting should be seen as a last resort.
“For organisations that do offset emissions on their journey towards net zero, it is critical that carbon credits are of high quality, demonstrate additionality and performance, and are underpinned by high levels of governance.
“At the moment, variable standards, poor governance and the way that some organisations use carbon offsets has the potential to undermine the net-zero transition.”
Given better governance and standards, the CCC said that voluntary carbon markets can help deliver finance and funding to areas that need it and make a positive contribution to net zero.
It highlighted the Woodland Carbon Code and the Peatland Code as leading examples of good governance, and said that using these more widely can direct private investment to new forestry and peatland restoration – two of the largest policy gaps in the government’s current Net Zero Strategy.
To raise standards, the CCC is calling on the government to:
• Provide a clear definition of a ‘net zero business’, which can be used reliably. Beginning to reduce emissions and using carbon credits to cover the rest requires another term, such as ‘offset zero’ or ‘on the pathway to net zero’.
• Use the forthcoming ‘net zero transition plan standard’ to require UK businesses to disclose their reliance on carbon credits and improve transparency.
• Continue work to improve existing standards for carbon credits in the UK, and to influence and advocate for stronger global standards.
“Businesses want to do the right thing and it’s heartening to see so many firms aiming for early net-zero dates,” said Chris Stark, Chief Executive of the CCC. “But poor-quality offsets are crowding out high-integrity ones.
“Businesses face confusion over the right approach to take. There is a clear need for government to make standards stronger and point businesses towards an approach that prioritises real emissions reduction ahead of offsetting.
“Those businesses that choose to support the economy-wide transition to net zero should get the credit they deserve.”
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