This article is Free, but to access more of our content, you can sign up for a no strings attached 28-day free trial here.
Nearly two years ago, the UK passed a law to end its contribution to global warming, setting a target to bring all greenhouse gas emissions to Net Zero by 2050, compared with the previous target of at least 80% reduction from 1990 levels. This week, Prime Minister Boris Johnson announced a new plan seeking at least a 78% reduction in greenhouse gas emissions by 2035, compared to 1990 levels, which carries cross-party support. This announcement sent a powerful signal to investors, regulators and corporate leaders about the government’s commitment to the climate change agenda. However, it also raised practical questions about how such an ambitious reduction could be achieved with the solutions and technologies available – many of which remain untested and underfunded.
One solution, which has sparked significant debate, is carbon offsetting. Once companies have calculated their carbon emissions, they could consider a carbon offsetting project that focuses on carbon removal and, as a result, carbon neutrality. Often, this involves financing projects that remove emissions from the atmosphere through tree planting, or they might fund an initiative that prevents emissions that would have occurred otherwise, such as purchasing and distributing clean cooking stoves. Critics argue carbon offsetting is ineffective and claim that they fail to address the scale of our emissions crisis and instead encourage climate polluters to rely on others to compensate for their ‘dirty’ practices.
Despite these concerns, carbon offsetting can be effective, but it needs to be part of a toolbox of solutions within our carbon mitigation hierarchy. Firstly, we must try to prevent the immediate release of greenhouse gases, by reducing our reliance on fossil fuels, before looking to minimise our carbon footprint by adopting new technologies and lifestyles. Finally, once we have exhausted these options, we can then assess how to effectively offset the remainder of our carbon footprint.
Nature-based solutions are being overlooked yet their potential for carbon offsetting means that they hold an important place within our climate change toolbox
The potential positive contribution of carbon offsetting has led the UK’s Environment Agency to issue a review into 17 different offsetting approaches to better understand their potential, reflecting the diversity and scalability of the schemes.
One of the most significant benefits of carbon offsetting is its ability to make a meaningful difference both nationally and globally. The breadth of potential projects allows for versatility that can be maximised across different geographies and weather conditions. For example, tropical climates are ideal environments for afforestation, or large-scale tree planting, which acts as a ‘carbon sink’ guzzling up global carbon dioxide emissions, whilst having secondary, localised benefits such as supporting biodiversity and natural wildlife. Some countries like the UK have already recognised the benefits of afforestation and set an ambitious target of planting to 30,000 hectares per year across by 2025 to support local woodlands, mitigate flood risk and improve water quality. Uruguay has also developed a number of land restoration and reforestation carbon offsetting projects, which have been embraced by organisations like Earth Capital as part of their corporate offsets along with the UN Clean Development Mechanism.
Recognising both the global and local benefits, we are starting to see developments in carbon offsetting technology, including ‘mechanical trees’ which use direct air capture to absorb carbon dioxide as well as the consideration of ‘blue ocean’ strategies, which explore the potential of our coastal and marine ecosystems in carbon capture and storage. Although new developments and solutions might be considered costly or even unrealistic, the acceptance and acceleration of renewables over the last few years should act as a blueprint, giving us hope showing that with the right investment and mindset, novel concepts can become mainstream.
However, as we wait for the arrival of new carbon offsetting technologies and products, we should start to assess how nature-based solutions can be used. We already have access to wetlands, which soak up heavy rainfall and act as a barrier to extreme weather events, as well as peatlands, the largest land store, which absorbs more carbon dioxide than all other vegetation. Nature-based solutions are being overlooked yet their potential for carbon offsetting means that they hold an important place within our climate change toolbox. In Scotland, we are starting to see some early initiatives such as The Scottish Rewilding Alliance, which campaigns to preserve woodlands, wildflower meadows and grasslands to support the development of a nature-based economy.
Although policymakers, corporates and investors are beginning to recognise the benefits of carbon offsetting, there is still plenty of work to be done. It is common knowledge that the complete eradication of carbon and the achievement of net-zero economies will be impossible if we do not strategically assess which sectors of the economy, and their respective pathways, will be most responsive to carbon offsetting. For example, the development of green buildings and the use of renewable energy sources could advance the real estate sector. The aviation industry is also slowly starting to make gains, with over 30 airlines within the International Air Transport Association offering offsetting programmes, but we are still a long way from green aviation. For other industries like agriculture, carbon offsetting will be even more challenging, as afforestation will limit the availability of agricultural land and crop yield. To help identify which sectors will most benefit from carbon offsetting and which schemes would be most practical, we need further guidance from policymakers.
Since the early 1990s, climate change has had a complex relationship with politics and global leadership. For too long, political and regulatory inaction has forced climate change off the global agenda. We have wasted precious time deliberating our options, questioning the cost of action, and becoming fixated on regulation and disclosure. Now, during the ‘Year of Climate Action’, governments, investors and corporates need to take immediate steps to repair and rebuild our perspective of how to address climate change. Instead of viewing products and solutions in isolation, we need to look at how we can inclusively address climate change mitigation and adaptation. We have several tools within our climate change toolbox to create economies, cities and communities that are fit-for-the-future. We just need to take the first step, whilst making sure we do not leave any damaging footprints behind.
Richard Burrett is Chief Sustainability Officer at Earth Capital and a member of the firm’s investment committee. He is also a Fellow of the University of Cambridge Institute for Sustainability Leadership.