Is there a role for carbon credits in a just transition to net zero? | TED Countdown Dilemma Series
Did you have a position on carbon credits coming into today? Tamara Toles O'Laughlin: Yeah. No, the position is no. John Kilani: There must be something important in carbon markets, otherwise, people would have given up long ago. Nat Keohane: So I came in today thinking, as a tool, carbon markets, carbon credits can be really valuable in creating the kind of economic incentives we need.
Julio Friedmann: Today, the carbon markets have no supply, no demand, no transparency, no regulation. Other than that, they're perfect. Donnel Baird: You buy a carbon offset from a forest but now the forest has burned down or they were going to chop the tree down but they didn't, and then they did.
Nili Gilbert: We know that we need carbon removals to scale dramatically. Al Gore: Different points of view can add to the collective wisdom. Inés Yábar: We'll work better if we work together. How do we generate those connections that together move us forward? James Dyke: The concern that I’ve got about net zero, you're probably going to disagree about this, it might be taking away some of the sense of urgency.
JF: We can be optimistic or we can be pessimistic. But the work looks the same. Is there anything that struck you about carbon credits or carbon markets that you want to talk about? AG: Well, I'll wait until the session is over to give us some considered opinions on that. [TED Countdown Dilemma Series] [Is there a role for carbon credits in the transition to a fair,] [net zero future?] Lindsay Levin: Throughout the world, we find ourselves faced with self-inflicted and interconnected problems that challenge our social fabric, our economic security, and the very ability of the Earth to sustain us.
We're certainly not short on ideas to address these problems. But we often get caught up in arguments against one another vying for supremacy instead of deciding on a course of action. So how can we move forward? It begins by acknowledging the difference between choices and dilemmas. Some decisions come down to choice. You weigh the alternatives, decide and move on.
But often, complex situations need both/and thinking instead of either/or. They require us to hold competing values together rather than make straightforward choices. We call these dilemmas. I'm Lindsay Levin, co-founder of TED Countdown. And this is why we launched our Dilemma Series.
To look at some of the thorniest issues in the climate space and see how, through deep listening and collaboration, we find pathways forward. In our first Dilemma event, we tackled the question Is there a role for carbon credits in accelerating the transition to a fair net-zero world? David Biello: First, let's start with some definitions. A carbon credit is a tradable permit that usually represents one ton of carbon, either not emitted or removed from the atmosphere. Carbon offsetting is the practice of buying carbon credits to compensate for carbon emissions generated elsewhere.
Carbon markets are where carbon credits are bought, sold and priced. Net zero refers to a theoretical state in which overall human-produced carbon emissions are equivalent to zero because any ongoing emissions have been compensated or offset by removals. LL: We're going to take you on a journey. We'll explore why so many people have lost faith in how carbon markets and net-zero targets operate in practice. We'll hear from people working in frontline communities to protect and restore nature and safeguard livelihoods.
And to close, we'll talk about solutions. We hope this film will speak to those working in sustainability and beyond. Whether you're directly able to influence the supply or demand side of carbon markets, or you're just interested in how we solve the climate crisis, these issues affect us all.
Let's start by hearing about some of the promises and pitfalls in a conversation between TED's David Biello and Gilles Dufrasne of Carbon Market Watch. DB: Now, carbon credits are being used as a big tool to neutralize otherwise growing emissions. Are they working? Gilles Dufrasne: So my short answer to this would be that they're not. First, because there is a major concern around the actual quality of those credits. They're each supposed to represent a full ton of CO2 that's been reduced or removed and permanently stored.
But in reality, many of those credits actually don't represent that full ton of CO2. In addition to that, many credits are used in inappropriate ways by companies. For example, a company that would make a net-zero claim, a carbon neutrality claim for a specific product, but with these claims actually only covering 10 or 20 or 50 percent of the total emissions of that company or of the good. And this ultimately is misleading.
It's misleading to the public, it's misleading to regulators, it's misleading to business partners. It gives the impression that these companies, this product doesn't have a net-negative impact on the climate, when in reality it certainly does. DB: So what does it mean when a company says it has neutralized the emissions from its products or activities? GD: Well, in most cases it means the company has purchased a certain number of carbon credits, but there is a lot of unclarity around the actual quality of those credits, what do they represent as well as the share of total emissions that's really being covered, that's really being compensated through the purchase of these credits. And this issue of clarity, of transparency. And so I think that's really something that we need to seriously address right now in the current context of a booming market where there is a lot of interest, a lot of investment in growing it quantitatively.
If we don't address the quality dimension of it, we're going to grow a system in which there's not going to be any trust or that trust is progressively going to erode and ultimately that will destroy the value of the system itself. DB: Sounds like something called greenwashing. Can you give us some particularly egregious examples of that kind of activity? GD: Yeah, I think, you know, carbon-neutral fossil fuels is an obvious one ...
(Laughter and applause) ... that many of you will certainly have had heard of. I mean, to me, it's just an oxymoron, it makes no sense. It is flawed conceptually and practically. At a conceptual level, it gives the impression that we can continue to burn fossil fuels in the way we’ve been doing it for decades -- exactly what has landed us in the crisis we are in today -- and that somehow, magically we can do this without having a net impact on climate. And that is fundamentally misleading, and it’s damaging. It is harmful to our collective willingness to adopt the behavioral changes and the costly investments that we need to adopt in order to transition to a safer planet. LL: While we can agree that cutting greenhouse gas emissions as soon as possible is our ultimate goal, the idea of net zero has inspired some pretty vigorous debate.
Here's Professor James Dyke of the University of Exeter with his concerns. JD: Within just a few years, net zero has become the anchor concept for the world's plans to avoid disaster. It sounds simple enough.
Its central premise is that the risks of climate change is that there is too much carbon dioxide in the Earth’s atmosphere. So it follows, we must stop emitting more and even remove some of it. Hopefully by the middle of this century, any residual emissions will be balanced by technologies that remove carbon from the atmosphere. But by introducing carbon removals into climate policies, we have set a trap because it is incredibly seductive to rely on carbon removals in the future instead of rapid decarbonization now.
It gives the impression we are acting, so businesses don't need to change their models and governments don't need to propose bold action. What this means is that it is now almost inevitable that we will be entering a warmer and more dangerous world. How did this happen? How did the idea of net zero become so compromised, so corrupted? A key moment for the development of net zero was the 2015 Paris Agreement. The overall objective of this landmark climate treaty was that global warming should be limited to no more than 1.5 degrees Celsius to reduce the risks of devastating impacts. Many scientists, including myself, were very skeptical that this was possible, given the absence of radical proposals.
But there was also a deep sense of responsibility to try to make the Paris Agreement work. They soon discovered it was impossible to get their models to decarbonize as fast as 1.5 required if one assumed continuous economic growth. The only way to make the models work was by introducing carbon removal.
More recently, attention has turned to DAC: direct air capture. This would strip out carbon dioxide molecules directly from the air and then pump them to underground storage sites. The technology is interesting, but attempts to scale up DAC face two fundamental challenges. First, the process is extremely energy intensive, requiring significant amounts of electricity and sometimes natural gas to run.
Second, safely storing carbon dioxide is not a trivial enterprise. It's likely to be the case that every carbon storage site will need to be carefully tailored to the specific geological circumstances at the injection sites. Now such concerns with carbon removal are sometimes brushed away with the sheer enthusiasm that surrounds these technologies. The assumption appears to be that large-scale carbon removal will work because it has to work. Even if we assume these technologies do emerge at scale, it's likely they will be very expensive to run. Some studies estimate many trillions of US dollars to no evident economic benefit, since it's about clearing up carbon pollution and hiding it underground.
The time has come for us to voice our fears about net zero policies, and that begins by leveling with the public about the Paris Agreement. At the moment, we are desperately trying to manage the narrative and adjusting models in order to avoid acknowledging that the Paris Agreement is failing. A 2021 survey conducted by the science journal Nature found that a majority of IPCC climate scientists who responded thought we were heading towards a catastrophic three degrees Celsius of warming. Only four percent thought limiting to 1.5 was likely.
We can avoid climate catastrophe, but I fear we won't if we don't confront our wishful thinking around net zero. DB: As you can see, carbon markets are not uniformly delivering what they promise, and many believe they may actually be making things worse. However, they are potentially a mechanism to provide investment in vital natural solutions and if done differently, could bring significant money to people and places that need it. Here is Kavita Prakash-Mani of Mandai Nature to talk about ways to ensure that local communities benefit from this growing industry. Kavita Prakash-Mani: Let me start by saying that a ton of carbon is not just a ton of carbon. It embodies in it natural protection, community interests and benefits, as well as helping save us from disastrous climate change.
We have a lot of nature-based conservation organizations protecting and restoring our ecosystems, and they are all wondering how they can be part of this carbon market. Their ability to monetize carbon that they sequester will be crucial for their long-term survival and the impact that we all want. After all, nature and climate are two sides of the same coin. However, to get to those opportunities, we need to address some really systemic challenges. Take, for example, the technical aspects that we have on any carbon credit: additionality, permanence, no leakage, baselining, all very difficult concepts for these small organizations. Add to that measurement and verification.
How do we get pre-feasibility studies, feasibility studies, project development? How do these small organizations take on these high costs when the price of carbon is very low to deliver these documentation? But that's not the problem with the larger players. And there's a systemic imbalance of power. Larger NGOs, companies, project developers all have access to international markets and institutional finance. The smaller organizations see the opportunity but just do not have the means to tap into it. We should also look one level higher, at governments. Take, for instance, Indonesia, a country with the highest potential of carbon mitigation from nature-based solutions.
It's the third-largest tropical forest. It has a coastline with mangroves, and it has 15 to 30 million hectares of peatland. But the government has restricted any new projects from being developed or carbon credits from being sold to the international market.
This has merit because, after all, developing countries also need to meet their nationally determined contributions, and they do not have to sell cheap credits to developed countries that have already destroyed part of their environment or companies that are not decarbonizing. However, it does restrict international finance from going into conservation and into communities. Some countries are trying to get the market to work. In Asia, that's Vietnam and Cambodia. But we still do not have the right market mechanisms to ensure that it's equitable, safe and the impact that we want. DB: As Kavita said, a ton of carbon is not just a ton of carbon.
To build on that, here's Susan Chomba of the World Resources Institute Africa, to talk in more detail about all the things we miss when we think too narrowly about carbon benefits and nothing else. Susan Chomba: So I'm going to talk to you about all the elements about carbon markets that have got nothing to do with carbon. Our forests, peatlands and oceans are more than the carbon that they store. They're the foundation of livelihoods of billions of people who depend on them directly and indirectly. They provide the hydrological functions that ensure we have rivers, we have lakes and that we can grow food successfully. They are home to biodiversity.
They are also home to indigenous people who protect them with their blood, sweat and tears. So when we lose these ecosystems, the livelihoods of local communities and Indigenous people are adversely affected. When you look at the way we designed the carbon markets, we designed them with various assumptions.
First of all, carbon markets perpetuate the notion that our forests and peatlands are all about carbon. They overlook the ecosystem services that these ecosystems provide, such as clean water, healthy and nutritious food, biodiversity and its related services such as pollination, pest control and even nitrogen fixation. Companies are prepared to pay for carbon because it helps them to tick either their compliance box or the public relation boxes. But rarely do we couple that with the other ecosystem services that these natural ecosystems are providing. Carbon markets perpetuate the notion that we can continue with our fossil fuel-driven lifestyles and offset our externalities, and perhaps even our guilt, on the poor local communities that are located in the Global South. In fact, nowadays, if a lot of projects provide a lot of ecosystem services but are not solid on the carbon side, they are often dismissed as poorly designed or poorly governed.
Carbon markets are based on complicated and costly reporting and verification systems. And these end up taking up most of the revenue that is then coming from carbon. And local communities get the leftovers if they are lucky.
The value and the price of carbon, compared to alternative land uses such as mining, fossil fuel extraction, has been far too low for far too long. And so what we are witnessing is governments in the Global South continue to issue permits for mining, for oil exploration, in some of the most critical ecosystems: peatlands, forests. I work a lot in the Congo Basin. I see it every day. LL: So we've heard what isn't working and what existing carbon markets often miss on the ground. Now let's dive into different ways of thinking that could reshape the system and actually generate the positive outcomes we want.
Here's Gabrielle Walker of Rethinking Removals. Gabrielle Walker: I think the carbon market is immensely powerful and immensely valuable, and I do think we can use it as a powerful tool for helping to solve the climate crisis. But I've also started to think that we've been thinking about it the wrong way. There are three really big and important climate outcomes that the carbon market could help with.
So there’s reducing fossil emissions as fast as possible; there’s protecting natural carbon sinks; and there's removing CO2 from the atmosphere. Reduction, protection and removal. And I found that in lots of people's minds, those three get kind of smooshed together in one generic kind of, offset, but it's worth separating them out because those outcomes need different kinds of incentives. I'll show you what I mean. If you start with the first one, reducing fossil emissions as fast as possible.
That's reduction credits. Now, one problem with those is that they don't actually neutralize emissions. So if I put a ton of CO2 in the air, and I pay you not to put your ton of CO2 in the air, my ton is still there. It doesn't get you to zero, it doesn't neutralize.
And this is the realm of quite a lot of traditional offsets. Another issue with them, is they tend to be very cheap, less than 20 dollars a ton. So it can get immensely tempting just to buy loads of credits and not do the hard work of reducing your own emissions. And that is not where we should be putting the money. But where reduction credits can help us is in creating clean infrastructure in places where it wouldn't have happened otherwise. So if you think about it that way, that's the outcome you're trying to get to, then the incentives to build around reduction credits, the highest-rated reduction credits, will be the ones that drive money towards building clean infrastructure in the Global South.
And the cheapest coal-fired power plant to shut down will be the one in the Global South that was never built in the first place. OK, so that's the first one. Second one, protecting natural carbon sinks. Now, these already exist in the carbon market, like the reduction credits.
And like reduction credits, they don't neutralize emissions. I put a ton of CO2 in the air, you stop a ton coming out from a sink, my ton's still in the air. They also tend to get smooshed together. There isn’t a separate category called protection credits -- yet. And I think it's worth separating them out because it's hugely important to drive money towards protecting those sinks, rain forests, peatlands.
So then what incentives do you build around? What are the highest-rated protection credits? They'd be the ones maybe with the biggest carbon stores, maybe the ones that are most vulnerable, maybe the ones that protect the most biodiversity, maybe the ones that drive the money towards the communities that are actually there husbanding and protecting those stores. OK, third category, we’ve heard a lot about this, third category: removal credits. That's taking a ton of CO2 out of the atmosphere and keeping it out.
So unlike the other two categories of credit, removals credits really do neutralize emissions. If I put a ton of CO2 in the air, I pay you to remove a ton, you get to zero because what goes up does come down. Those are the only category of credits that can be used to claim net zero. None of the others can do it. They do already exist in the carbon market, really tiny percentage of the total.
And we're going to need an awful lot more of them. So at the moment, every year we're removing durably maybe 100,000 tons of CO2. And according to the IPCC, carbon removals are now unavoidable to get to net zero by 2050. And by 2050, we're going to have to be removing billions of tons.
So to get from a 100,000 tons to billions of tons, we're going to have to start really small in this almost nonexistent industry and scale it up to the gigaton scale, affordably, without causing other undesirable side effects and making sure that these removals are real. And we've got to get the cost down very quickly the way that we did for solar and wind. So that's the objective, that's the outcome that we're trying to achieve. DB: So that's a way to reorganize our overall thinking around carbon credits.
But how should companies reshape their thinking? Here is Derik Broekhoff of the Stockholm Environment Institute. Derik Broekhoff: Net zero has become the dominant paradigm for climate ambition. Many countries have announced net-zero targets, and so many companies are doing the same. Today, I want to challenge the idea that companies should emphasize achieving net zero for themselves rather than focus on how best to contribute to global net zero. I like the way Carbone 4 frames it: "'A company is not carbon neutral.
It contributes to neutrality." Let me explain why I believe it's essential to make this distinction. Current net-zero frameworks presume that companies should imitate, at a corporate level, what must happen globally. That is, reduce their own emissions as far as possible and balance out the emissions that remain with carbon dioxide removals.
Yet this notion is already leading to a perverse effect on how companies spend their mitigation dollars. According to at least one study, just a handful of companies have already pledged more removals than the entire world could provide. At a global level, removing carbon dioxide from the atmosphere will be essential for limiting global warming.
As the IPCC, for example, has made abundantly clear. But having corporate actors purchase removals in bulk to achieve their own mini versions of net zero misses the forest for the trees. The world desperately needs to reduce emissions. To move the world towards net zero, companies would do better in the near term to both reduce their own emissions and help others do the same. First, focus on the big picture. The idea of achieving net zero at a corporate level is self-centered.
We need to change the narrative from: “We’re no longer part of the problem if we’ve neutralized our emissions,” to “We are part of a global solution to climate change.” This means not just imitating what needs to happen globally, but instead taking actions that beneficially advance a global net-zero outcome, including by prioritizing emission reductions over removals in the near term. Second, put equity front and center.
From a scientific perspective, there's no reason why the correct level of emissions for any given actor should be net zero. What is fair and feasible could be net positive, zero or negative emissions. Companies should focus on making equitable contributions to global goals, including through near-term support for emission reductions outside their value chains. Third, connect with larger policy efforts.
No company acting on its own can solve the climate crisis. We urgently need to focus attention on collective action. Companies that are truly committed to net zero need to support climate policies at all levels of government and internationally that advance an equitable, comprehensive and coordinated global transition. LL: We know many people think carbon credits and the idea of net zero are deeply flawed.
But do they have to be? In our next talk, Annette Nazareth of the Integrity Council for Voluntary Carbon Markets lays out a set of required core principles to build a market that delivers robust, quantifiable and climate-positive outcomes. Annette Nazareth: Our starting point for the voluntary carbon market is that it exists to accelerate a just transition to 1.5 degrees. It is an important complementary tool to mobilize billions of dollars that wouldn't otherwise be available into climate mitigation that wouldn't otherwise happen. But it will only deliver on that promise if it is rooted in high integrity. An important thing to know about the voluntary carbon markets is that it is, as its name suggests, voluntary.
It's driven by private sector actors, and it's not regulated by governments or by financial authorities. But unregulated cannot mean chaotic or opaque. I spent much of my career as a markets regulator, and I know markets. And I know that there are some who think that markets are always looking for some new product to hawk. And today, that product is carbon.
That's why in designing an effective market, we have to start with integrity. These core carbon principles, which we call CCPs, will address the most critical elements of credit quality. They include additionality, permanence, robust quantification, validation and verification, no double-counting, transition to net zero emissions and sustainable development impacts and safeguards.
So let me unpack those a bit. Additionality. Additionality means that the emission reduction or emission wouldn't have happened without the revenue from carbon credits.
Permanence means that those reductions and removals will stand the test of time. And if they don't, they will be fully compensated. An example of that would be a forestry project that issues carbon credits that is then destroyed in a wildfire. Robust quantification means that the impact of the credits is accurately measured and accounted for conservatively based on solid science. Validation and verification means that the numbers are genuine and meaningful and are validated and verified by an accredited body that has the integrity to do that job robustly. No double-counting means that a carbon credit is registered and issued only once, and the emissions reductions and removals that that credit generates will only be claimed by one party.
Meanwhile, our colleagues at the Voluntary Carbon Markets Integrity Initiative, the VCMI, are working on similar standards that will address credible claims so that we can come to a common understanding that carbon credits will only count if they are used as a complementary tool within a legitimate net-zero pathway. If we have integrity in the supply of credits, how they are traded and how they are used, then a powerful price signal will emerge. LL: The Dilemma Series was born out of a strong conviction that when reasonable people disagree, the way out is not to dismiss one side over another, but in fact to hold and value different points of view and see what we can generate together. In dilemma thinking, this is called the resolution zone, and reaching it is vital if we are going to make real progress on climate. Let's hear again from some leading voices who we invited to share ideas, ask questions and engage in productive debate.
NG: In my inbox, every day, are the debates in the climate community about how exactly we're going to get this done. And the debates are important because this is the hardest problem that we've ever faced. And so we have to have open ears, even more open perhaps to our critics than to the ones who agree with us because we have so much to figure out at TTO: I had a good conversation about how, as much as I would like to pretend we're going to get there on climate because of trust and relationships, we've wasted all the time for that so we really need to get there by alignment. If we can agree to a few things that lead to not dying on a fiery gas ball, I will build my relationships on the way to that. NK: We heard in the first sessions about how to make sure that the carbon market is working for people on the ground and communities on the ground who didn't do anything to contribute to climate change are going to be often the most vulnerable to bearing the brunt of its impacts.
They're not thinking about the carbon market, we heard that from Susan Chomba from her work in Burundi, and from Kavita Prakash-Mani from her work with smallholders in Southeast Asia. JF: The thing that shifted my thinking the most was the way that Annette Nazareth talked about what is necessary to create in an integrated and high-integrity carbon market. That level of clarity I found actually shifted my mind in terms of structuring a market in a valuable way. DB: There were a lot of kind of, overlapping ideas on how to get to solutions from people who don't really agree on everything.
JD: All carbon removal proposals need to be based on robust science, engineering and economics. Once we have a credible total amount of carbon that can be removed by proposed technology that includes its capture and safe storage, then and only then can it be included in net-zero policies and models. GW: So to get from 100,000 tons to billions of tons, we're going to have to start really small in this almost nonexistent industry and scale it up to the gigaton scale affordably without causing other undesirable side effects of making sure that these removals are real. KPM: On the government side, we need clear guidance and clear regulation. SC: Good carbon markets must help us to cut emissions from the source. We have to decarbonize our supply chains.
We have to decarbonize our economies. We have to decarbonize our lifestyles. TTO: I think deep listening really matters for conversations like the ones we had today and the ongoing thorniness of people who feel threatened by a planet in decline trying to make decisions. JF: The heterodoxy of perspective and opinion stimulates new ideas. And if you start the conversations with respect and with open minds, you get to new places. And we had that in our breakout group, for sure.
JD: But we need a kind of grounded sense of hope and optimism, which has got kind of rough edges and realism. Tom Rivett-Carnac: I agree. JD: And we somehow need to embrace those fears because often we don't want to, right? TRC: So I think that a stubborn and determined optimism lies on the other side of despair.
I think you have to go through that and you have to stare into the abyss and say: “This is possible, it may even be likely, but you know what? I'm going to do everything I can at this moment to be the change, to create that difference." TTO: I've never heard so many polite people disagree about things they hate. I've never met so many people who hate offsets, who are still super nice and trying to figure out what could be useful about a thing they're not sold on. DB: It is useful to be reminded to like, be patient, to listen, to learn, to be open, to be warm, to be generous and kind to people who are on my side that I disagree with. IY: Sometimes we do need to take a step back and not put all that pressure on our own shoulders that we're going to find the solution. But it’s: How do we generate those connections that together move us forward? And maybe one day I will be sadder and I will be less optimistic, but someone else will bring that hope to me.
AG: When we try to reason collectively, it's really important and valuable to recognize that different points of view can add to the collective wisdom. One of the most powerful telescopes in the world had an innovative design when it was built, including the decision to build two virtually identical telescopes only 60 meters apart. If they're looking at a supernova, 100 million light years away, it turns out that the ability to view that object from two different points of view only 60 meters apart on a small planet makes all the difference in the amount of information that can be collected and processed and used to enhance our understanding. And the same thing is true when we try to reason together in a group.
If there are different points of view, then the different life experiences of everyone in the group can add to the collective wisdom and make the group far smarter than the smartest individual in that group.