What role do carbon credits have to play in sustainability strategies?

What’s best practice?

Your organisation needs to measure, then try to continue reducing as far as possible, the volume of your emissions. You can read about the UN’s ‘Race to Zero’ initiative and its guidance on emissions reduction targets here.

Alongside this ongoing process, many businesses may also choose to address remaining emissions by buying and retiring carbon credits. Choosing an appropriate 'claims framework' such as VCMI helps companies talk about their actions and impacts in an accurate and compliant way.

For a better understanding of the treatment of carbon removals in corporate claims frameworks, we’ve published a paper recommending five principles to follow. To set the context, Angela Hepworth – Drax Commercial Director, Bioenergy with Carbon Capture and Storage (BECCS) – has written the following article.

As your organisation continues reducing carbon, there’s general agreement – typified by the Oxford Principles for Net Zero Aligned Carbon Offsetting – that your portfolio of credits should evolve over time . This means moving from reduction credits to carbon removal credits with a permanence of less than 100 years, and beyond. The end-goal is for your carbon credits portfolio to progress towards a predominance of carbon dioxide removals (CDRs) lasting a century or longer.

This direction of travel will also move you from choosing predominantly nature-based projects delivering mid-term storage (decades to centuries) that’s biological. Such projects have some risk of reversal – i.e. the carbon may be re-released – if events such as forest fires or pollution occur. These would, of course, affect the permanence of the trees or other natural environments in question.

Engineered and hybrid removal projects on the other hand are associated with long-term and permanent geological storage. The longevity of such storage is almost infinite, so the risk of reversal is virtually non-existent.

Let’s look at each of the removal methods and project types in turn:

What’s available?

Within the two categories of credit (relating to either carbon reduction or removal), different types of project exist – nature-based, engineered, or a hybrid of the two.

So for example, reforestation projects restore forests through planting trees and are therefore classified as nature-based carbon removal. These projects depend upon trees growing and, in the process, removing carbon from the atmosphere.

Direct air carbon capture and storage (DAC ) is an engineered solution involving contact between the air and chemicals known as sorbents. The sorbents keep capturing CO2 from the air until they’re saturated and then processed. The CO2 is released in concentrated form into a vessel before it’s injected underground into geological storage .

A good example of a hybrid solution is bioenergy with carbon capture and storage (BECCS). The nature-based element of this hybrid solution involves trees absorbing CO2 as they grow in well-managed forests. The forestry industry maintains and harvest these woodlands for the timber and construction sectors. It’s possible to use the by-products of these activities to create biomass, which is then combusted to generate electricity.

The engineered part of the BECCS solution involves using sorbents to capture the CO2 produced during combustion, then transporting and permanently storing it underground and/or under the sea . The IPCC refers to permanence when storage will last for 10,000 years or longer.

What’s next?

Your organisation needs a portfolio of projects (and associated carbon credits) that reflects the whole spectrum of projects and, due to market forces, prices. There are multiple advantages to creating that broad-based portfolio now, rather than buying only reduction credits – which are less expensive than the others – and postponing higher-end purchases.

Let’s consider the benefits of building a broad-based portfolio of projects and credits now:

• Meet your net zero targets and keep stakeholders happy – the limited supply of CDRs means buying today helps to secure the credits you need for achieving future targets and satisfying your staff, customers, investors and other stakeholders
• Use your limited carbon budget wisely – securing CDRs gets you ahead of the expected supply versus demand squeeze that will drive prices even higher, meaning you’ll cover a larger proportion of your emissions earlier than many competitors
• Enjoy first-mover advantage – by investing in new projects now, you’ll not only get cheaper prices compared to waiting but support the development of new technology that accelerates the race to net zero and helps decarbonise your supply chain

The world needs all these nature-based, engineered and hybrid solutions – there’s no one ‘silver bullet’. So supporting a broad portfolio of projects as early as possible on your decarbonisation journey, and acquiring the associated credits, is a sound approach to achieving your sustainability goals.