A new generation of carbon offsets

Article written by our CEO in which we address existing solutions to the climate crisis and how we can improve them.

Of all the ruminations stirred up within my mind by the latest report from the Intergovernmental Panel on Climate Change (IPCC), it seems to me that the most terrifying is the following:

 

Let's imagine that on Monday we shut down the last coal-fired power plant in the world, on Tuesday we rebel against the oil companies and stop their operations, on Wednesday we confiscate and ban all combustion vehicles in the world, on Thursday the last beef hamburger in history is eaten, and by Friday all the energy we generate and use is clean and renewable.

 

All of the above would be insufficient to stop the climate crisis we are in. The reason is very simple: there are already too many greenhouse gases in the atmosphere, and many of them, such as carbon dioxide (CO2), will be around for at least a hundred years.

 

What do we do as humanity in the face of this? What is our intergenerational plan? Do we give up? Do we lose hope and give in to the vice of the multiple systems that rule us?

 

No. We don't give up. 

 

We fight. We build better systems; we fail and we improve; we do our best and we come out ahead, as we have done and will do, united, for hundreds of thousands of years.

 

The possibility of sequestering carbon from the atmosphere and returning it to the Earth's surface is real, and not only that, but fundamental to building a future compatible with life. And by "life", I mean a state of harmony with the planet that shelters and sustains us.

 

One manifestation of these hopeful efforts is the carbon market. It is a place full of good intentions—and many questions—where organizations that pollute pay other organizations to capture an equivalent amount of pollution. This is done through the generation and sale of carbon credits. Some useful information about this:

 

-A carbon credit is produced by an organization that captured one tonne of carbon dioxide equivalent (CO2e) from the atmosphere, or prevented the emission of one tonne of CO2e into the atmosphere.

-An organization that pollutes one tonne of CO2e each year can buy one carbon credit each year and thus call itself "carbon neutral."

 

Where have we seen this in the market? Everywhere.

 

“Carbon neutrality is going to be so standardized that you will look at anything that is not carbon neutral and go, ‘where the hell did that monster come from?’ It's exciting.”

– Christiana Figueres, March 22, 2014



“By 2030, Apple’s entire business will be carbon neutral—from supply chain to the power you use in every device we make. The planet we share can’t wait, and we want to be a ripple in the pond that creates a much larger change.”

– Tim Cook, July 21, 2020

 

Great! 1 - 1 = 0, right? Yes and no. It's not that simple. The atmosphere behaves more like a cake than like a salad: The ingredients of a cake are blended, while in a salad, you could easily remove a piece of tomato if you wanted to. Since the atmosphere, similarly to a cake,  is a homogeneous mixture of greenhouse gases, it is very complicated to extract them once they are emitted. It is not the same to emit a ton of CO2 and then capture it, than to emit nothing in the first place. In other words, it will always be better not to pollute or to pollute less.

 

On the other hand, not all carbon credit offsets are the same. There are some very, very good ones, and there are some very, very bad ones. Unfortunately, there are dummy offsets, copy offsets, fake offsets, and junk offsets.

 

Moreover, there are some that are so low in price that companies have no incentive to pollute less: they can simply buy millions of cheap credits to offset their emissions. This can have the opposite effect from what we want and end up causing an increase in emissions, not a reduction.

 

Carbon credits must meet at least the following characteristics to be acceptable:

 

-The backing project must prove to be permanent, to the maximun extent permitted within the legal limits of each country.

-The removal of carbon from the atmosphere -and the aforementioned permanence- must be additional; that is, it would not have occurred in the abscence of the project.

-A robust registry of carbon credits must be maintained, so that each one is unique and not claimed by two different companies.

 

Increasingly, a significant number of companies and civil society organizations are demanding much more from the carbon market, and they are right to do so. In addition to the above attributes, a new generation of carbon credits seek to:

 

-Offer geographic traceability, exactly georeferencing the location of the corresponding stored carbon.

-Do the same in the case of financial traceability, ensuring that landowners receive at least 70% of what the purchasing company pays.

-Raise the price of carbon credits. This is essential and encourages companies to seek to reduce their emissions before paying for offsetting. In addition, landowners will have more resources to contribute to climate action.

 

How can we face these challenges in an increasingly complex world? Our view is as follows:

 

-Carbon credits should be clearly geo-referenced on a map-based web platform. This avoids double counting and allows for public scrutiny with remote sensing tools.

-All projects should have an operations monitoring dashboard. This makes the restoration and conservation work resulting from the project visible and generates important ecosystem benefits.

-Financial transactions should be recorded on the blockchain in a public, transparent, and unalterable way. It should be easy for the project and its financial structure to be publicly scrutinized.

 

We know we don't have all the answers, but this is a good synthesis of the conceptual and technical analysis we have done at Toroto and a good way to understand the family of projects we are working on.

 

How do we believe we can contribute to building a much more robust carbon market? Through the Metaregistry, or “Metaregistro,” a Mexican platform that offers robustness, transparency, and traceability to the national market. Here are some of its characteristics:

 

-Carbon credits are geo-referenced, allowing purchasing companies to see exactly where the carbon they are paying for is located.

-It has geographic information systems (GIS) that show the hundreds of monitoring sites we install for each project.

-All data related to floristic, biodiversity, biomass, and other analyses carried out as part of the project can be accessed.

-The purchase of carbon credits happens in normal transactions outside the platform, but they are recorded in the blockchain forever.

-Co-benefits and sustainable development objectives are clearly defined and measured.

 

Our communication channels are open to feedback. Take a look around and don't hesitate to tell us if you think there is something we can improve. We hope you enjoy the platform!

 

On the other hand, if you are a forest landowner or forest project developer and you want your project to be in the Metaregistry, please contact me! My email is santiago@toroto.mx.


If you are interested in learning more about carbon market transparency and the role of technology, join the Metaregistry webinar on August 18 at 1:00 p.m. Register here!

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