What are the common risks associated with voluntary carbon credits?
There are three principal risks associated with the voluntary carbon markets.
The first is that everything we do must follow a strict carbon mitigation hierarchy, which simply says that primarily, our actions must reduce absolute emissions. Then, we must consider energy efficiency. Only at the very end, with the remainder, can we look to carbon sequestration via this medium of carbon offsetting.
Secondly, we need to be incredibly careful of greenwashing – there’s been too much bad press around carbon credits that are fake, non-existent, or in some cases, we’ve seen forests burning down. So, we have to be incredibly careful that they are real!
This brings me to my third risk. Everything we do must be firmly grounded in science. We’re trying to establish a high-integrity market that gives investors confidence to deploy capital, so a science-based approach must be the way forward.
Why is credibility so important?
Credibility is absolutely vital to voluntary carbon markets because they have such a critical role to play in our transition to net zero. And, why is that? I’m going to explain by using what we call our ‘bathtub’ analogy.
We can think of emissions in two ways: we have the flow of emissions, so these are the emissions that we’re pushing out into the atmosphere every day, and then you can think of the stock of emissions, those that are sitting in the atmosphere for 100+ years and will remain there unless we do something about it.
We can focus on reducing the flows, which is a little bit like turning off the bathtub tap, but you’ve still got the stock in the bathtub, which is the water that’s filled up, and it’s crucial we take care of that.
There are only two ways we can do that. One would be with technology, and let’s be honest, technology is still at a nascent stage and unscalable as yet. The second is nature, and that’s why it’s absolutely vital that we recognise the true value of ecosystem services and the power of nature to help us deliver on that net-zero transition.
Science lies at the heart of what we’re going to do with the Strategy.
In what way does science underpin the Strategy’s approach to net zero and nature?
Science lies at the heart of what we’re going to do with the Strategy. In fact, we’re lucky in the UK for two reasons. One is that we already have two very credible carbon codes that help inform the things we need to do to generate high-integrity, science-based carbon credits. The first of those is the UK Woodland Carbon Code (WCC), and the second is the Peatland Code. The good news is that we’ve got a bunch of emerging ecosystem carbon codes in the offing as well. So, we expect to be able to make use of the planned UK Saltmarsh Carbon Code and UK Hedgerow Carbon Code in the not-too-distant future.
We’re also blessed in having some incredible academics in the UK – many that are leaders in the field for the very types of restoration that we want to accomplish. That includes afforestation, peatland restoration, habitat restoration, and again, some of these emerging ecosystem services, particularly on the ‘blue’ and the ocean side.
Who are Finance Earth, and how have we partnered with them in this project?
Finance Earth are specialists in originating and structuring nature-based deals. They are going to be a vital partner for us as we work with the Department for Environment, Food and Rural Affairs (Defra) to scale nature restoration in the UK, partly because of their huge experience as a corporate advisor to some of the largest landowners in the UK. These just happen to be some of the best-known environmental charities: the National Trust, the RSPB, the Wildlife Trusts, for example, all of whom we aim to partner with to find the land on which we to restore nature.