Monday, November 28, 2022
The Compensate webinar, COP27 – key takeaways for companies, was arranged in November 2022. In this Q&A, we answer the questions we received during the webinar.
If you missed the webinar you can download the
"No deforestation" gets me to CO2e-certificates. I know that CO2-markets and the issue of double counting was already addressed back at COP26. However, I wonder if it has still been a topic this time at COP27. Has there been a discussion on how to regulate/control the generation of certificates to avoid double counting?
One of the crucial outcomes of COP27 was the decision to establish a new type of carbon credit known as a mitigation contribution under Article 6.4 – providing clarity on the issues of double claiming and corresponding adjustment. This is a clear signal that mitigation contribution units cannot be used for making offset claims. Now, it's time for the voluntary carbon market and the ongoing initiatives working on reforming the market –
How does carbon offsetting work for net zero target as carbon offsets don't account for emissions reduction?
In line with the SBTi net Zero Standard, no net zero claim can be made until emission reductions reach a certain level. In the case of SBTi that means reaching “deep decarbonization of 90-95% before 2050”. When that point is achieved, companies need to reach net zero by “neutralizing” the remaining unabatable emissions through carbon removal. Even though the net zero claim cannot be made until companies have reached deep decarbonization, companies can and should take responsibility for their current emissions. In most cases, this means offsetting those emissions that cannot be avoided. Offsetting must be done with carbon projects that have a true climate impact.
Does the tendency towards no double claiming mean that corresponding adjustments will be necessary for the VCM?
For making a credible offset claim, double counting must be avoided. The decision at COP27 to establish a new type of carbon credit known as a mitigation contribution under Article 6.4 provides clarity on the issues of double claiming and corresponding adjustment. This also sends a clear signal to the voluntary carbon market that double counted credits called “mitigation contribution units” cannot be used for making offset claims. Alternatively, companies can choose to use double counted credits to make contribution claims where they support countries reaching their NDCs.
Does SBTi agree with carbon offsetting?
According to the SBTi, a company is only considered to have reached net zero when it has achieved its long-term science-based target. Most companies are required to have long-term targets with emission reductions of at least 90-95% by 2050. At that point, a company must use carbon removals to neutralize any limited emissions that cannot yet be eliminated. Even though the net zero claim cannot be made until companies have reached deep decarbonization, companies can and should take responsibility for their current emissions. In most cases, this means offsetting those emissions that cannot be avoided. In addition, the SBTi recommends companies go further by making investments outside their science-based targets called
Countries are actively working to make it possible as part of implementing a corresponding adjustment for credits sold on the voluntary market. This however will take some time. Where is SBTi on the double claiming issue? Double claiming is not explicitly addressed in the SBTi Net Zero Standard, but a reference is made in the Beyond Value Chain Mitigation section to making a contribution claim when credits are supporting countries achieving their NDCs. Would mitigation units be applied to unconditional NDC only? Or precisely the conditional NDC? Whether it is conditional or unconditional NDC, if double counting occurs, then it's a contribution claim. Will the certification and verification companies (like Verra, Gold Standard) include this new type of credit into their methodologies? This is only related to making a contribution claim and not an offset claim, thus the same methodology for calculating the carbon can be used, just the claim buyers make is different. Hopefully, the standards are going to differentiate double counted credits from the ones which have received a corresponding adjustment, so that the buyers can make informed decisions.
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