A new scientific study published in Nature Communications earlier this month covering “almost 1 billion tons of CO2e” largely discredits carbon crediting mechanisms. While the term “credit” is used throughout, the study is actually limited to “voluntary, project-based activities that seek to reduce emissions or enhance removals” (i.e., voluntary offsets rather than credits under regulatory/compliance programs). Even with that caveat, the results – and the analytical process used – are valuable information for companies. The authors
“… synthesized studies relying on experimental or rigorous observational methods, covering 14 studies on 2346 carbon mitigation projects and 51 studies investigating similar field interventions implemented without issuing carbon credits. The analysis covers one-fifth of the credit volume issued to date, almost 1 billion tons of CO2e. We estimate that less than 16% of the carbon credits issued to the investigated projects constitute real emission reductions, with 11% for cookstoves, 16% for SF6 destruction, 25% for avoided deforestation, 68% for HFC-23 abatement, and no statistically significant emission reductions from wind power and improved forest management projects…
These quality problems stem from adverse selection, the ability of project developers to make unrealistic assumptions or pick favourable data and inappropriate methodological approaches.”
In conducting their work and making their claims, the authors focused the “analysis on the two most basic principles of carbon credit quality: additionality and conservative quantification.” These elements of carbon project validity have been at the core of most recent project controversies.
Yes, yes – I know many sustainability/climate professionals roll their eyes at yet another attack on offsets, but this study appears to be based in scientific rigor and peer review.
Beyond just the results, the report offers a methodology companies may adapt as part of their own internal offset due diligence and evaluation processes – explained on page 4 of the document:
“We introduce the term ‘offset achievement ratio’, which compares studies’ quantitative estimates of carbon crediting projects’ emission reductions with those made by project developers to generate carbon credits. An OAR of 50% indicates that the academic literature estimates that only half of the emission reductions claimed by project developers—and issued as carbon credits—were likely achieved.”
You can read about the details of the OAR in the study itself, but it appears companies could create a simplified version of it with a little work – adding an element of scientific rigor to your offset due diligence process.
Our members can learn more about offsets here.
If you aren’t already subscribed to our complimentary ESG blog, sign up here for daily updates delivered right to you.
