The trouble with carbon markets
It’s painfully obvious to anyone who has taken a close look at what we are doing to our planet that there is an enormous gap between what we value, as human beings, and what our economic systems value.
As far as markets are concerned, timber and soybeans are worth more than intact rainforests, and dead whales are worth more than alive whales. Even if you asked directors of multinational timber and fishing companies you would be hard pressed to find many who would agree that this was how they truly felt.
Carbon markets are one attempt to close this gap. By creating a supply of carbon from intact rainforests and living whales and demand from companies and organizations who wish to call themselves “carbon neutral”, the market discovers a price for carbon. If the market is operating as it should, the idea is that this market will create a steady flow of revenue from large polluting corporations to deserving carbon negative conservation projects around the world.
After a flurry of recent scandals, reports of corruption, profiteering, exploitation of indigenous communities - in short all of the same injustices which plague financial markets - carbon markets have reached a nadir of credibility and trust.
And yet we simply can’t afford to abandon them - market mechanisms are probably the only viable route to unlock capital for planetary regeneration at the scale and speed necessary for us to avert catastrophe. Where have carbon markets gone wrong, and how can we get them back on track?
The most important mistake we’ve made is one which cuts across Western civilisation as a whole - our need to reduce what we call “objective reality” to a series of measurable metrics. These metrics are then pursued with tunnel vision, ignoring the complexity around them or any potential trade-offs involved in optimizing for one metric at the expense of the whole.
For example it’s simply not true that a tonne of carbon avoided by protecting virgin rainforest in Papua New Guinea is worth the same as a tonne of carbon sucked out of the air with a machine in New Hampshire. Nor is it true that optimizing for carbon is always going to lead to desirable results. Just look at the countless examples of indigenous people being forced from their lands because their millenias old symbiotic relationship with the habitats they live in are suddenly considered to be “unsustainable” simply because a few more tonnes of carbon could be absorbed if they weren’t there.
Another problem comes with the entire binary notion of “additionality”. Briefly, a tonne of carbon is considered to be “additional” if it would not have been sequestered had the credit not been bought, or in the case of “avoided deforestation” if the buying of the credit resulted in the protection of a tonne of carbon which otherwise would have been released due to deforestation.
The latter of the two is of course difficult to prove, and results in a huge amount of disagreement and controversy. But perhaps the error is really in the framing of the problem. Given that additionality involves “what might have been”, additionality is not black or white - it’s a matter of probability. We can say that x tonne of carbon would 100% would have been released had the credit not been bought, whereas y tonne we’re only 60% sure would have been released.
And again we have to be aware of the perverse incentives here. If you can only monetise rainforest when it’s under threat of deforestation then there’s a perverse incentive to overplay threats, if not to actually manufacture them. In practice additionality ensures that the communities who have flirted with logging and mining companies are in for a large payday, whereas those communities who have managed their carbon assets responsibly will find it difficult to prove the threat.
Then there’s an issue of equity. Because of the expensive and unwieldy verification process, carbon accreditors generally only work with projects in the millions of tonnes - anything below that simply can’t access the market. And for those indigenous communities who do reach the market there are reports of communities receiving as little as 14% of the sale price, or in some cases nothing at all.
Native allows companies to protect our planet and support indigenous communities with transparency and accuracy. We combine AI and satellite imaging to pinpoint NbS (Nature-based Solutions) to 3m2 Squares. Every Square can be monitored and showcased to key stakeholders via our map, and 90% of sale proceeds go to indigenous communities.
Using readily available technology and publicly available information, Native are developing an accreditation process which will democratize and disintermediate NbS in the voluntary carbon market, allowing small scale carbon stewards and indigenous communities to access carbon markets directly, unlocking much needed finance for the world’s most biodiverse regions and vulnerable communities.
Our ABC methodology takes into account the ambiguity of additionality and the complexity of the natural world by using a sliding scale to take into account the probability of additionality, as well as a score for biodiversity and community co-benefits.
Additionality - We evaluate the carbon density of a given Square and analyze the risk of losing those carbon stocks over a 40 year period.
Biodiversity - We measure the biodiversity within the Square, including intactness, species count, the presence of endemic species, and their vulnerability to extinction.
Community - We examine how thoroughly the project consults and includes the views of local indigenous guardians and how the project will affect their quality of life.
Going beyond that, Native aims to evolve the entire conversation around “offsets” and “carbon neutrality”. This linear way of thinking about environmental costs and impacts is entirely inadequate for systems of such complexity.
Acting responsibly in a world on the brink of climate and biodiversity collapse is not a mere matter of balancing two scales. Nature has never been “a balance” - Nature is harmony.
- https://www.sylvera.com/blog/guardian-offsets-response
- https://www.theguardian.com/environment/2023/mar/10/biggest-carbon-credit-certifier-replace-rainforest-offsets-scheme-verra-aoe
- https://www.theguardian.com/environment/2023/mar/10/as-carbon-offsetting-faces-credibility-revolution-shoppers-should-be-wary
- https://www.theguardian.com/environment/2023/jan/18/forest-communities-alto-mayo-peru-carbon-offsetting-aoe
- https://www.forbes.com/sites/kensilverstein/2023/01/25/the-carbon-credit-market-confuses-the-corporate-world/?sh=25ee1d235362
- https://globaljusticeecology.org/carbon-commodification-in-the-peruvian-amazon-the-kichwa-peoples-struggle-against-territorial-and-climate-destruction/
- https://earth.org/carbon-piracy/
To find out more email contact@nativeearth.io