Michael Berends, CEO and Co-Founder, ClearBlue Markets.

They’re not perfect. But we need to keep engaging with them to help slow climate change.

Once a faraway concept that prompted more arguments than action, extreme climate change is here right now, impacting all corners of the planet. We need to slash greenhouse gas emissions immediately. Not tomorrow. Today.

To even get close to meeting the ambitious targets of The Paris Agreement—and other international and national pledges—we must decarbonize faster. The world is dependent on fossil fuels; it’s going to take time for our biggest emitters to adopt new technologies, pivot to renewables and reduce emissions from operations, all while providing people with the things they need. Yet, we need significant emissions reductions, and we need them quickly.

The voluntary carbon market (VCM) offers a viable path to achieving this goal.

I’ve spent nearly two decades working in the VCM. I’ve worked with offset projects around the world, been involved in thousands of market transactions, and structured and executed offsets on the ground in over 40 countries. As co-founder and CEO currently working with companies on a daily basis who engage in the VCM, I’ve seen firsthand the real impact of offsets on decarbonization—they make a difference.

Supporting Carbon Markets

This tool in the fight against climate change allows organizations to purchase carbon offset credits to compensate for their emissions. Offset credits are issued for projects that provide real, additional and quantifiable emissions reductions, avoidance or removals. The ability to monetize offsets provides project developers with the financial support needed to ramp up their endeavors.

However, 2023 saw a decline in confidence in the VCM as standards setter Verra investigated concerns about a small handful of projects. It found some of the claims to be credible and assisted the projects in taking appropriate action, including job termination, training and the firming up of policies.

As well, the VCM and some carbon projects were attacked by the media. Verra responded with concerns about the “ill-informed” nature of the coverage. These swift and fact-based responses show that there is industry oversight, and the VCM can build the kind of accountability infrastructure that will benefit it in the coming years.

The VCM has vulnerabilities and flaws—just like any market or policy—however walking away from carbon markets can work against our most urgent climate goals. Every year that passes without us making a difference means another setback in our efforts to slow climate change.

Instead, we need to keep supporting the VCM while pushing for its improvement. We can iterate as we go, building expertise and reshaping the organizations involved to be well-governed and efficient. ​​This can all be done while decarbonizing and staying focused on the urgency of our climate goals rather than pushing pause.

How The Voluntary Carbon Market Works

In carbon markets, one offset credit equals one tonne of carbon dioxide avoided, reduced or removed. In the voluntary market, any organization can purchase offsets. Depending on the purchaser, their goals and use of offsets can differ. Some purchase for trading purposes, which is important for any commodity market. Most commonly, organizations buy to compensate for emissions. Often, this is to satisfy or support their climate commitments in tandem with efforts to directly reduce operational emissions.

Sellers of carbon offsets can include project developers establishing renewable energy and waste management facilities, and those doing nature-based projects such as reforestation or sequestering carbon in soil.

Project developers must prove their work is additional, ensuring that the carbon reduced, avoided or removed wouldn’t have otherwise occurred.

Some offset projects also have co-benefits, such as improving water quality or reducing economic inequality. These have value, of course, but we need to remain focused on tonnes of carbon dioxide.

What The VCM Offers

In the rush to lambaste this evolving market, we cannot overlook its positive qualities. One carbon offset equals one metric tonne of carbon, full stop. There’s no such thing as a poor-quality tonne of carbon as long as it is additional, verifiable and created through a reputable program. If it’s not being emitted, it’s not contributing to global warming.

While offsetting through the VCM is a crucial tool, it’s not a substitute for decarbonization efforts. Nonetheless, this doesn’t lessen the value of offsetting, particularly as it encourages and incentivizes decarbonization across the value chain. When companies buy offsets, it imposes an additional cost on their emissions, motivating them to expedite emission reduction. Moreover, because direct emission cuts may require time to implement, offsetting offers a practical and immediate means to address climate change.

Many also misunderstand transparency in the VCM. The VCM is actually highly transparent, offering detailed information about the projects run by developers who sell their offsets.

We have proof that carbon markets work and can improve. In the compliance markets, the EU Emissions Trading System, the Western Climate Initiative and others have iterated and improved since their inception and have made important contributions to lowering emissions globally.

Moving On

The VCM can be better, no question. Together, we can offer constructive criticism and support improvements. There’s nothing wrong with a relatively new sector experiencing growing pains.

Companies curious about the VCM or already engaging with it can help nudge this emerging sector forward. Some approaches include:

• Advocating for rigorous, standardized verification processes to enhance the credibility of offsets.

• Supporting the continuous improvement of organizations like Verra.

• Educating industries and shareholders about the VCM.

• Planning and prioritizing internal emission reductions. Offsetting should complement, not replace, value-chain emissions reductions.

• Communicating clearly and transparently so carbon reduction and carbon offsetting become a better-understood part of doing business.

We should build up the VCM, not knock it down. Dismissing it wholesale because it’s imperfect is foolhardy. I believe we need to keep building this market and fostering transactions while making improvements. We don’t have time to start over.

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