Stockholm (NordSIP) – The market for carbon credits has been under fire since the beginning of last year, when certificate providers Verra and South Pole came under fire for their methodologies and practices. Now a meta-analysis from the Science Based Targets initiative (SBTi) has warned that the entire carbon offset industry might be ineffective, risky for corporate carbon mitigation and damaging to the efforts of climate change mitigation.
Beyond its importance as condemning the carbon offsets industry at large, the publication of these findings is notable because it contradicts the position of the board of SBTi, which in April 2024 controversially argued that carbon offsets could be used as a tool to fight climate change.
The Background
The publication of the report was accompanied by a discussion paper on the alignment of corporate value chains with global climate goals. The two documents serve as research input for an ongoing revision the SBTi Corporate Net-Zero Standard Version 2.0, announced in May 2024.
These efforts are also the latest in an ongoing struggle within the SBTi regarding whether carbon offsetting products are useful in the pursuit of In a statement dated 9 April 2024, the SBTi Board of Trustees had declared: “While recognising that there is an ongoing healthy debate on the subject matter, SBTi recognises that, when properly supported by policies, standards and procedures based on scientific evidence, the use of environmental attribute certificates for abatement purposes on Scope 3 emissions could function as an additional tool to tackle climate change.”
SBTi staff, particularly those working within the organisation’s Scientific Advisory Group (SAG) and Technical Advisory Group (TAG) seemed surprised by the Trustee Board’s statement. They complained that not only were they not consulted, but that this was also a breach of SBTi governance guidelines. In a jointly signed letter to the Board of Trustees, 46 staff members called on the 9 April statement to be withdrawn, as well as the resignation of CEO Luiz Fernando do Amaral and those board members that had supported the move.
At the time, Carbon Market Watch (CMW) warned that the decision undermined the SBTi’s credibility. “This decision defies both good governance and science. If it is not reversed, it will strip the SBTi of its ‘science-based’ nature and will mark a step back for voluntary climate initiatives globally,” CMW Executive Director Sabine Frank said on this occasion. “By granting excessive flexibility to companies, SBTi will lose its raison d’être: promoting robust and effective corporate climate action.”
The SBTi Study
The SBTi considered three main themes in its review the effect of carbon offsets. The first theme focuses on whether carbon credits can help achieve CO2 emission mitigation outcomes. The second theme considered the implications of corporate use of carbon credits for the purpose of offsetting. The last theme considered the legitimacy of offsetting claims.
Following a call for evidence between 21 September and 24 November 2023 that saw the SBTi receive 111 unique pieces of evidence on carbon offsets, the initiative identified 71 evidence submissions as relevant under the three themes. The evidence consisted of case studies or examples, commentary, legal or regulatory analysis, literature review, news coverage, report or white paper, statistical information or survey or pool published in peer/reviewed journals or by a governmental organisation. To this extent, the SBTi study can be considered a meta-analysis of the existing literature available.
The SBTi found 41 evidence submissions relevant for the first theme, 31 evidence submissions that were pertinent to the second theme and 19 evidence submissions relevant to the third theme. The evidence were classified by risk of bias or irrelevance.
Ineffective, Risky and Damaging
The results of the SBTi analysis were damning on all three fronts. Regarding the first theme, the SBTi found that “the empirical and observational evidence in Tiers A and B (those with less risk of bias or irrelevance) suggests that various types of carbon credits are ineffective in delivering their intended mitigation outcomes. Evidence in Tier C (those with higher risk of bias or irrelevance) shows more mixed results. There was no evidence submitted that identified characteristics or operating conditions associated with effective carbon credits and projects,” the SBTi report warned.
The SBTi also found the use of carbon credits to be a risk. “The evidence suggests that there could be clear risks to corporate use of carbon credits for the purpose of offsetting. This includes potential unintended effects of hindering the net-zero transformation and/or reducing climate finance. BVCM¹ and contribution claim approaches may represent preferable models for accelerating net-zero transformation and increasing climate finance,” the SBTi report continued.
The SBTi meta-analysis finds no legitimacy to the claims that carbon offsets can help mitigate climate change. “All Tier A evidence challenge the legitimacy of offsetting claims, arguing that treating carbon credits as fungible with other sources, sinks, or reductions of emissions is inadvisable, illogical, or damaging to global mitigation goals. Two of the three Tier B evidence submissions oppose offsetting claims and 10 of the 12 Tier C evidence submissions directly oppose offsetting claims, with the other two not taking a strong stance either way. A number of evidence submissions highlight that the quantity and diversity of claims has created confusion amongst corporates and other actors,” the SBTi report added.
Reactions and Next Steps
In parallel to its efforts, the SBTi also commissioned Evidensia², to conduct its own systematic assessment of evidence from peer-reviewed scientific literature. After narrowing down a population of 10,267 articles to 489 relevant articles, Evidensia found that “only five papers strictly met all inclusion criteria and one additional paper provided comparable data to assess the effectiveness of carbon credits in comparison to other emission abatement strategies by the same company/group of companies.” Given these limitations, Evidensia argued that “A systematic review of results cannot be conducted on such a small sample of papers as it would not produce a strong synthesis basis to draw robust conclusions.”
CMW welcomed the publication of these studies.“This paper sets the record straight for SBTi, and is proof that SBTi staff are performing high-quality, unbiased work. It is a clear rebuttal of the Board’s April statement, where specific individuals tried to bulldoze through a proposal that did not have any internal support from SBTi staff or advisers,” explained Gilles Dufrasne, lead expert on global carbon markets at CMW. “The board should be guided by the staff, themselves guided by science, to take the right decisions about the role of EACs, not the other way around. Some certificates can play a positive role in corporate decarbonisation, but carbon offsetting is not one of them,” Dufrasne adds.
Following the publication of this report, the SBTi is expected to publish a Draft of Version 2.0 of the Corporate Net-Zero Standard in the last quarter of 2024, after which it will open a public consultation on the new standard.
Footnotes
¹ Beyond Value Chain Mitigation (BVCM) is a type of mitigation where companies purchase and retire carbon credits that relate to activities that occur beyond their value chains as a supplement to reducing their own emissions, and make either compensation or contribution BVCM claims relating to those actions. BVCM is an alternative to “offsetting” and “insetting”. Offsetting is the practice of companies purchasing and retiring carbon credits from activities that occur outside of their value chains as a substitute for reducing their own emissions (scopes 1–3). In insetting, companies purchase and retire carbon credits that relate to activities that occur within their value chains
² Evidensia is a curated public platform sharing high-quality research and insights on market-based sustainability action with an independent governance structure. It was founded in 2019 by ISEAL Alliance, Rainforest Alliance and WWF with the support of the Global Environment Facility.
