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The world’s leading arbiter of corporate climate targets issued research finding the use of carbon offsets in climate goals was mostly “ineffective”, as it attempted to move beyond a backlash from staff and climate experts.
The Science Based Targets initiative leadership has faced heavy criticism over a push to allow wider use of the carbon offsets, generated by projects such as tree planting and cleaner cooking stoves, which are meant to reduce emissions or remove carbon dioxide from the atmosphere.
Its chief executive Luiz Amaral resigned last month citing personal reasons. This followed a staff revolt over a decision in April to allow companies to use carbon offsets more widely, which shook its credibility and cast a spotlight on its backers including the Bezos Earth Fund.
The group will now decide next year to what extent companies can use offsets in climate targets. Many corporations have struggled to make headway in cutting their emissions, and turned to offsets as a solution.
In a paper published as part of consultations into next year, SBTi said the evidence showed “there could be clear risks to corporate use of carbon credits for the purpose of offsetting”, including the “potential unintended effects” of hindering the shift to net zero and reducing climate finance.
At present, the SBTi standards allow the use of offsets for the “last mile” or just 10 per cent of emissions in company plans, with the remaining 90 per cent to come from direct cuts in pollution from their own operations.
An SBTi synthesis of existing research included studies that found only 12 to 33 per cent of carbon credits delivered their stated climate benefits to corporate buyers.
But the research, which will inform the revision to SBTi’s standard for corporate climate change plans, still leaves the door open to the use of instruments similar to carbon offsets in its updated policy.
In this framework, known as Beyond Value Chain Mitigation, the qualifying activities can include projects such as protecting existing forest cover or installing heat pumps in cold climates, according to Juliette de Grandpré, a member of SBTi’s technical advisory group.
These activities “may represent preferable models” for accelerating climate finance, SBTi said. One potential difference to offsets was in how companies could integrate BVCM activities into their emissions claims, by accounting for them separately, it suggested.
The SBTi began as a collaboration between non-profit groups, but as it expanded, it raised funds from private philanthropic interests, including Bezos, the Ikea Foundation and the Laudes Foundation.
On the conflict between the board and the staff, SBTi interim chief executive Susan Jenny, previously the chief legal officer, said there was a distinction between the role of the board and SBTi policies.
The board was “giving a strategic steer”, she told the Financial Times. “The board doesn’t dictate what the technical team does,” Jenny said. “The board encouraged them to take carbon credits into consideration.”
The research papers published on Tuesday will be formed into a draft standard by the end of the year, codified into proposed requirements, and presented to SBTi’s technical council for review, according to chief technical officer Alberto Carrillo Pineda, before going for public consultation. It will be late 2025 before any updated standard will be in effect.
Thomas Day, a carbon market analyst at the NewClimate Institute, welcomed the research as a step forward. “We have often criticised the SBTi for drifting too far from its science-based mantra. But the papers published today stick to the science in ruling out offsets and exploring improvements to the standard, putting the SBTi back on track,” he said.
The evidence-based approach to carbon offsets was “a clear rebuttal of the board’s statement in April, where specific individuals tried to bulldoze through a proposal that did not have any internal support,” said Gilles Dufrasne, policy lead on global carbon markets at Carbon Market Watch.
The research is particularly critical of a framework for carbon offsets known as Redd+, or reducing emissions from deforestation and forest degradation. Studies had made “directly opposing findings on the effectiveness of Redd+”.
It noted that this specific category of credits was “generated based on a counterfactual baseline scenario of future deforestation, meaning there is inherent uncertainty associated with this type of credit”.
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