More robust ways of measuring the impact of carbon credits can restore trust in offsetting schemes, a new study finds.
Carbon credits, used by companies to offset their greenhouse gas emissions (GHGs), have been discredited due to inaccurate ‘baseline scenarios’ – estimates of what the situation would have been like if the project hadn’t taken place.
This could for example entail showing how deforestation rates would have been much higher in an area where a project to protect tropical forests has taken place.
Scientific evaluations frequently find that the emissions reductions are overestimated, allowing companies to adopt carbon offsetting strategies without having any real effect on the climate.
But an international team of researchers, led by Philippe Delacote and colleagues at INRAE and the Climate Economics Chair, France and including the University of Exeter, demonstrate in a recent article published in Nature Sustainability how a range of academic research methods can more reliably estimate the expected impacts of projects.
These methods compare a project area to a control area that is selected based on similarity criteria.
Under these methods, satellite data could be used to determine deforestation levels before and after a project, comparing the project areas to similar control areas over the same period.
They say this enhanced methodological approach could reduce the carbon offset supply, but would improve the quality of results by ensuring GHG emissions are actually lowered.
However, one obstacle is that those who implement the projects must accept the risk of not knowing how many credits they will receive.
The researchers say this could be overcome through mechanisms such as risk sharing along the value chain.
Companies could support project financing early on through climate contributions that would not be part of their climate strategies but would guarantee initial funding for the project developers.
Then if it was shown that a project had made a genuine impact, additional payment could be made so companies could include these credits in their climate strategy and environmental claims to increase funding for projects with proven effectiveness.
Professor Ben Groom, Dragon Capital Chair in Biodiversity Economics at the University of Exeter Business School, said: “Providers of carbon removal should commit beforehand to robust evaluations of their projects later on.”
“This commitment will provide much needed information to build trust in the market and allow us to learn what is additional carbon removal and what is not. Our proposal contains mechanisms to manage the changes in the allocation of risk and liability that this commitment will entail.”
