Though the voluntary carbon markets have risen in popularity, not all carbon credits are created equal. Under the carbon credits system, a company engaged in practices that support the preservation of the environment can sell a certified emissions reduction (CER) credit to company with hard-to-abate emissions; this allows for more sustainable companies to profit and more pollutive companies to take accountability and “offset” their emissions. “Greenwashing,” or the labelling of corporate practices as sustainable without supporting evidence, has risen in line with the corporate move toward offsetting emissions on the voluntary carbon markets.
Carbon market analysis firm Sylvera released a market analysis in May 2023 refuting the belief that companies purchase carbon credits or “offsets” in order to avoid taking real action to reduce their emissions and decarbonize. The report examines whether investment in carbon credits hinders decarbonization among the world’s largest companies.
According to the data analyzed, the report found that, on average, companies with sustainability initiatives in place annually reduced emissions by around 5%. While companies that did not purchase carbon credits reduced emissions by 3.4% per year, the companies that purchased carbon credits also reduced their emissions by 6.2% annually, almost double that rate. The carbon credits purchased did not directly impact these companies’ emissions, but the investment in carbon credits coincided with an accelerated rate of decarbonization.
Decarbonization leaders featured in the Sylvera report include Bank of America, with an annual decarbonization rate of 9.5%, as well as Visa, Spanish telecommunications company Telefónica, and German auto manufacturer Audi. All four of the exemplary corporations have committed to net-zero emissions or carbon neutrality by mid-century, and all four companies purchased between $50,000-$250,000 USD in carbon credits from 2020-2021 to help offset residual emissions in addition to their decarbonization efforts.
Some ways in which innovative technology is being used to remove emissions and generate carbon credits is through carbon capture, storage, and utilization (CCUS). With recent controversies surrounding the quantifiability of “nature-based” carbon credits, more verifiably permanent technological solutions using CCUS, like carbon mineralization, are producing more reliable carbon credits of a higher quality.
In the industrial sector, including the purchase of carbon credits in a corporate decarbonization plan is slowly becoming the norm. Swedish steel producer Ovako has implemented decarbonization strategies that have reduced its emissions by 55% since 2015. To support further emissions reductions, Ovako plans to buy 180,000 tonnes of carbon credits annually to offset residual emissions from their steel production— about 180 kg of carbon offset via credits per ton of finished steel product. Ovako’s climate action strategy includes decreased purchasing of carbon credits over time, as their practices become more climate-friendly and residual emissions likewise decrease. Anticipating a reduced need to offset excess emissions, Ovako “plans to buy no more than 100 kg CO2 offsets per ton of finished steel product produced by 2030.”
Ultimately, the study found that carbon credits are often purchased as part of a suite of decarbonization efforts, rather than as an excuse to forgo climate action regarding a company’s own emissions. When it comes to corporate decarbonization, prioritizing emissions reduction in conjunction with purchasing high-quality carbon credits is the most effective strategy for a corporation to reduce its carbon footprint with the greatest possible environmental impact.
At CarbiCrete, carbon mineralization curing using CCUS is combined with cement elimination to reduce emissions by well over 100% compared to that of conventional concrete. This dual-action pathway of avoidance and removal of harmful GHG emissions makes companies like CarbiCrete eligible to sell both reduction and removal credits on the voluntary market. This can help transform our built environment into one that can reduce GHGs to the point of offsetting emissions for more carbon-intensive industries.
Continuing efforts to transform heavily emissive industries into environmental saviours, coupled with the promise of financial support for this new technology through selling credits on the voluntary carbon market, are helping to incentivize the development of sustainable technology. This additional facet of the voluntary carbon markets is yet another reason to maintain the system with additional regulations. When greenwashing is addressed through mandating truly accountable corporate sustainability initiatives that only utilize carbon credits only in addition to their own emissions reductions, the intended benefits of the voluntary carbon market can be fully realized.