As the world scrambles to address the challenge of Climate Change, we find ourselves confronted by a crisis of unprecedented size, scope and severity. Even the struggle to persuade certain segments of the society that the problem genuinely exists sometimes seems like too much. Then, to arrive at a consensus and develop a series of tools and strategies to meaningfully mitigate this global threat, the work that lies before us is truly daunting. At this critical juncture, the carbon credit system may be one of the greatest tools at our disposal.
By creating a system of incentives to finance and promote projects that reduce the amount of CO2 and other greenhouse gases in the atmosphere, and funding those incentives by penalising those who contribute the most emissions in the first place, the carbon credit market offers a powerful set of carrots and sticks. And despite the recent reports of fraudulence and funny business, these sticks and carrots continue to provide some of the strongest forms of encouragement for companies to reduce their current emissions and invest in new projects that will lower our overall levels of atmospheric carbon.
The carbon credit system is designed to penalise greenhouse gas (GHG) emitters and incentivise carbon reduction by issuing carbon offsets or carbon removal credits to those who develop technological or nature-based solutions that will reduce CO2 emissions or remove CO2 that’s already in the atmosphere. Businesses and other private or public entities who wish to achieve carbon neutrality, whether voluntarily or by edict of law, can purchase these credits and offset their own emissions.
Leveraging the forces of the market, the price of carbon credits can fluctuate as the supply and the demand of credits goes up and down. So as carbon neutrality targets and deadlines draw closer and closer, we expect that the price of credits will rise. And the vast majority of reasonable people would agree that meeting these carbon neutrality goals, sooner than later, will be essential for the preservation of our planet. These incentives, therefore, seem very well placed.
As the cost of offsetting increases, those who generate the most pollution will feel growing pressure to reduce their emissions through research and innovation. Even if they don’t feel threatened by melting ice caps and rising sea levels, they will face real-life financial consequences in the carbon credit marketplace. And, in some cases, these might be the only forces that convince the polluters to plant more trees or invest in cleaner technologies like solar and hydrogen.
At the same time, as with any valuable commodity, a surge in price is liable to lure opportunists and gold-diggers out of the woodwork and into the forestry scheme. Couple that with the fact that this system is still in its infancy — not perfectly regulated, and often not well-understood — and you have a pretty risky playing field. It’s not as lawless as cryptocurrency, but indeed, you can find certain parallels.
These risks and uncertainties really took center stage recently, thanks to a scathing exposé in the Guardian newspaper (18 January, 2023), which shined a spotlight on some of the world’s largest (and seemingly most reputable) carbon credit issuing entities. In this high-profile report, more than 90 percent of rainforest carbon offsets were called into question.
In the majority of cases, project developers and verifiers had grossly overstated the impact their projects would have and the quantities of CO2 that their projects would be keeping out of the atmosphere. Check the original article for all the gruesome details, but the upshot is that the verifiers did not conduct nearly enough due diligence and the buyers spent millions of dollars on offsets that weren’t actually bringing any benefit to the planet. These buyers included companies like Gucci, Salesforce, Shopify, and even Pearl Jam.
The calculus behind carbon offsetting can get pretty complicated, and the debate over the accuracy of the article and the validity of these credits is sure to drag out for months if not years.
Even if we assumed the worst, however, the conclusion is not to give up on carbon credits as an effective mechanism. Rather, we should seize this opportunity to improve the system, learn from its shortcomings, and redouble our efforts to draw down CO2.
The universal measurement of a single carbon credit, carbon offset, or Carbon Dioxide Removal Credit (CDRC) is one ton of carbon dioxide (CO2) or carbon dioxide equivalent (CO2e). So it’s easy to assume that any ton of CO2 is equivalent to any other ton of CO2, and like a typical currency, every carbon credit is equal and exchangeable. And although people will often use terms like carbon offset and carbon removal credit interchangeably, or erroneously, these names do actually refer to different types of credits. (See the section below on Carbon Removal and Carbon Avoidance.)
The lack of strict regulation combined with a general carelessness with language have contributed to an industry and a public debate that are rife with misunderstandings and misguided assumptions. But, again, that shouldn’t lead us to abandon the whole enterprise.
The fact is, different carbon credits can be associated with completely different types of projects. And yes, some carbon credits are unreliable, perhaps due to sloppiness, possibly even the result of intentional deceit. And by all means, closer oversight and stricter third-party auditing is clearly needed to rein in the bad actors.
But are the companies who purchase these shady credits complicit in the deception? That’s a more difficult question to answer. But when any business, large or small, is purchasing a commodity for a suspiciously low price, they should be… well, suspicious. And when purchasing in significantly high volumes, they should at least consider conducting a bit of their own due diligence.
Still, the real burden of proof should lie with those who are generating and verifying the credits. If these agencies really certified such a preponderance of flimsy credits, then bring on the scrutiny, please. Rather than shy away from criticism, we welcome it, because that’s how we will craft a sharpened tool from what might now only be a dull instrument for climate alleviation.
Scandalous headlines aside, there are certain fundamental distinctions between carbon credits that we need to recognize before we dump out every baby with the tainted bathwater. One such difference is between carbon removal and carbon avoidance, which all too often end up sharing the same catch-all label of “carbon credit”.
Carbon avoidance basically refers to a project designed to prevent the additional generation of CO2. That might include something like protecting a tropical forest that’s already there. For the sake of the planet’s future, it’s essential that we protect these forests, and private incentives for such protection are well-intended and largely admirable.
Avoidance also includes things like biogas and solar and wind farms which are curbing the consumption of carbon-intensive fossil fuels. Carbon credit financing has helped many these projects to reduce their start-up curve and get off the ground more quickly.
Although they crucially help to avoid new CO2 emissions, these projects aren’t exactly capturing the CO2 that’s already adrift. Furthermore, it’s not a simple formula to measure just how much carbon a forest is drawing from the atmosphere on an annual basis. Then, imagine the forest was not being protected. How much of it would be removed, how quickly, and what exactly would take its place? Even with the best intentions, these calculations can very easily go awry. And with slight a degree of ill intent, anything is possible.
The majority of carbon credits identified in the latest scandal appear to come from REDD+ forestation projects of the carbon avoiding variety. But there’s another, more robust category of credits based on carbon removal.
One thing that sets biochar apart from these well-meaning forestry schemes is the plain and simple tangibility of the carbon. While the verification of carbon removal or avoidance through forestry involves the cooperation of numerous botanists, soil scientists and skilled technicians, the carbon is never really visible to the naked eye.
When measuring carbon in a biochar project, by contrast, you can physically behold a cubic meter of grey matter and measure it to contain something like 84 percent carbon. Then you can literally bury that carbon in the ground (after mixing mixing the char with compost) and mark its precise location with GPS. With some simple, straightforward calculations, you know exactly how much carbon dioxide has been gathered in the biomass and relegated to the soil.
At Planboo, we consider biochar production to be one of the very best methods of carbon removal at our disposal. We like to point out that a schoolchild, without a PhD in soil science, could revisit the site several centuries from now and still dig the carbon from the ground. The measurement and verification is much more clear and quantifiable, but it also brings a wider range of benefits.
When derived from a sustainable source of biomass, like well-managed bamboo, we rely on the age-old cycle of photosynthesis whereby vegetation absorbs CO2 from the atmosphere. This is the basic principal that underlies any forestry-based carbon project (and pretty much all life on earth). But by steadily harvesting the most mature bamboo poles and leaving the bulk of the plant intact, we are collecting the highest concentrations of carbon without having to kill off the plant as you would when harvesting a tree.
Then, through the careful process of pyrolysis, the majority of that carbon is trapped in a substance called biochar, which serves as an extremely beneficial soil additive. Buried in the earth, the porous biochar helps the topsoil retain moisture and attract a healthy population of microorganisms. At the same time, the regenerated soil stores the carbon and keeps it out of the atmosphere for up to a thousand years.
Cleaning the air, improving the soil, regenerating forest and farmland, and reducing the need for expensive, chemical fertiliser, biochar creates a complete cycle of carbon removal and land enrichment. Finally, by tracking and certifying the carbon removal, and issuing commensurate CDRCs, we are able to finance these positive projects in parts of the world that have been hardest hit by deforestation and Climate Change.
At Planboo, we have no intention of hiding our heads in the ground. Neither do we intend to beat around the bush or make excuses for those who have and may continue to abuse the system. We acknowledge that the system may have its flaws, and that much work remains to be done.
But when it comes to initiating and verifying projects, we hold ourselves and our partners to a very high standard. We believe that our MRV (measuring, recording and verifying) tools are capable of monitoring and scrutinizing everything that goes into (and comes out of) a biochar operation. Our methods and technology deliver both reliability and transparency, and we invite any critic to work with us if there’s room for improvement.
In spite of any shortcomings, we still believe that the carbon credit market can and should be used to hold the major polluters accountable. Given the critical state of our planet and the atmosphere, the system of punishing GHG emitters and rewarding CO2 removal makes pretty good sense. But those who participate in the system have to recognise the difference between higher and lower-value credits. And we all need to push for greater transparency and stricter enforcement so the bad apples don’t distract from the real, existential threat that should remain our highest priority.
The carbon credit system is designed to penalise greenhouse gas emitters and incentivise carbon reduction. But financial incentives can also lead to dishonesty.
Fred Hornaday, founder of Bambu Batu, is a leading voice in the bamboo industry. He's been working in the industry since 2006 with a network that spans all six continents.
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To keep the world within 1.5 degrees of global warming and to avoid global catastrophe – we now need to not only drastically reduce our emissions but also rapidly remove them too.
However, there is very little carbon removal today with less than 50,000 tonnes of CO2 removed in 2021. It’s estimated we need to remove 10% of Global GHG emissions by 2030, which is equal to 5 billion tonnes per year. Carbon removal needs to grow 100,000 times bigger.
Planboo is a nature-based carbon removal company, using bamboo-the fastest growing plant in the world. Like all plants, through photosynthesis bamboo absorbs CO2 and releases oxygen into the atmosphere. Because it grows so fast, it’s carbon removal potential is huge. We develop projects in Sri Lanka with local partners and supply high quality and high integrity carbon removal credits for the carbon market.
