The Science-Based Targets initiative (SBTi), under fire since April for allowing the use of carbon credits towards companies’ climate targets, has published a report that virtually trashes the current mechanism of carbon credits.
- The report, Evidence Synthesis Report – Part 1: Carbon credits, is one of four technical outputs released on 30 July as "an early step in the process for the revision of the SBTi Corporate Net-Zero Standard."
- After the April controversy, which had resulted in a backlash even from its own the staff, the SBTi in May had announced a review of the Corporate Net-Zero Standard.
THE SYNTHESIS: There were 111 unique pieces of evidence that were submitted to the SBTi’s Call for Evidence that submitters tagged as being relevant to emission reduction credits. The SBTi identified 71 pieces of evidence that were either relevant or partially relevant to both the research questions posed and to carbon credits that represent emissions reductions or emissions avoidance. The discussion of the evidence is split into three main themes.
- Theme 1: Mitigation outcomes and conditions for effectiveness (Total number of relevant submissions = 41): The empirical and observational evidence in Tiers A and B (those with less risk of bias or irrelevance) suggests that various types of carbon credits are ineffective in delivering their intended mitigation outcomes. Evidence in Tier C (those with higher risk of bias or irrelevance) shows more mixed results. There was no evidence submitted that identified characteristics or operating conditions associated with effective carbon credits and projects.
- Theme 2: Corporate Use Cases for Carbon Credits and Implications for Net-Zero Aligned Transformation and Climate Finance (Total number of relevant submissions = 31): The evidence suggests that there could be clear risks to corporate use of carbon credits for the purpose of offsetting. This includes potential unintended effects of hindering the net-zero transformation and/or reducing climate finance. BVCM [beyond value chain mitigation] and contribution claim approaches may represent preferable models for accelerating net-zero transformation and increasing climate finance.
- Theme 3: Claims (Total number of relevant submissions = 19): All Tier A evidence challenge the legitimacy of offsetting claims, arguing that treating carbon credits as fungible with other sources, sinks, or reductions of emissions is inadvisable, illogical, or damaging to global mitigation goals. Two of the three Tier B evidence submissions oppose offsetting claims and 10 of the 12 Tier C evidence submissions directly oppose offsetting claims, with the other two not taking a strong stance either way.
The report admitted: “A number of evidence submissions highlight that the quantity and diversity of claims has created confusion amongst corporates and other actors.”
THE OUTPUTS ISSUED: The SBTi released four technical outputs:
- Scope 3 discussion paper: A discussion paper setting out the SBTi’s initial thinking on potential changes being explored around scope 3 target setting, including underlying principles and concepts. The discussion paper is informative by nature and does not propose draft requirements or criteria.
- Evidence received on the effectiveness of Environmental Attribute Certificates: The release of all evidence submitted as part of the open call for evidence which ran September to November 2023 on the effectiveness of Environmental Attribute Certificates (without SBTi assessment).
- Synthesis report of evidence on the effectiveness of Environmental Attribute Certificates in corporate climate targets – Part 1: Carbon credits: A report presenting the SBTi’s synthesis of the evidence submitted through the call for evidence on the effectiveness of carbon credits in corporate climate targets. This is the first of the three distinct reports that will be published as outlined in the Terms of Reference; the reports on the other EAC instruments will be published at a later stage.
- Findings of independent systematic review on the effectiveness of carbon credits in corporate climate targets: A statement on the findings of the assessment conducted by an independent third party on peer-reviewed academic literature on the effectiveness of carbon credits when used as a substitute for direct abatement. The statement summarises the process followed, findings and limitations of this research exercise.
NEXT STEPS: A draft Corporate Net-Zero Standard will be released for public consultation towards the end of Q4 2024. The SBTi will publish a summary of feedback received, respecting data privacy and data protection regulations, that will be considered by the SBTi to inform the development of the standard.
