At this very moment, organizations (both private and government) are creating best-hope estimates in their decarbonization plans – keep in mind that they are only estimates.
In the race to make organizational pledges, commitments and guarantees to decarbonize, the carbon-offset market needs to become more significant and have standard procedures in place quickly. n
The current struggle of any organization today is to find a feasible, sustainable way to remove carbon altogether from its supply and value chain. We are a few years away from fossil or hydrogen fuel technology to break even. We’re in this awkward phase where the solution is not clear, though the goal is.
Many small businesses centred around sustainable solutions have sprung up over the past five years. Most of them will provide a service or product that solves the most pressing issue. One of the cardinal rules of achieving sustainability is collaboration. Given the options available today, organizations will take any help.
THERE ARE THREE TIERS OF EMISSIONS ORGANIZATIONS CAN TRACK TODAY.
Tier 1- These are the direct emissions from operations owned or controlled by an organization.
Tier 2- Emissions consumed indirectly by the organization, such as heat, steam, electricity or cooling.
Tier 3- These emissions include everything indirect through value or supply chains.
Tier 3 emissions are the most difficult to keep track of for an organization. Keeping track of tier 3 emissions requires complete transparency between all players in the value chain. It requires organizations to question everything from where each fabric is sourced to its location, ethicality, and sourcing.
There is no sugar coating around it. If you are dependent on your supply chain, you are responsible for all three emission tiers.
Today, organizations may use carbon offsetting to achieve net-zero emissions, especially to compensate for tier 3 emissions. But carbon accounts and offsets must be standardized.
Specific demographics might consider carbon offsetting to be the lazy way out. And it is a persuasive argument. But Organizations use carbon offsetting as the last tool in their belt. Tier 3 is almost impossible to keep track of in-house.
Green/carbon financing has taken a lot of steps since its inception. Banks spend weeks talking to C-level executives to understand their plans because this, in turn, affects the bank’s plans.
Lets talk about the carbon offset market.
It isn’t news that this market is in its infancy stage. However, the market is both problematic and filled with opportunities. It has to snowball and to a scale where impact is visible from the naked eye.
The year 2050 net-zero targets will demand 7.6 gigatonnes of carbon dioxide to achieve net-zero status. That’s 7,600,000,000 tonnes of carbon dioxide, seriously tonnes (1 tonne = 1000 Kilo gs).
At the shallow end, markets for carbon offsetting will quadruple – Bank of America.
Today, there are four primary registries for carbon offsets: Verified Carbon Standard, or Verra; The Gold Standard, the American Carbon Registry and the Climate Action Reserve. All are non-profit, non-governmental organizations.
Note: These organizations have to come together soon to form some standardized process.
There’s bound to be bad press around carbon offsetting. It is inevitable. At this stage, we can’t be picky. There are a small number of cases of greenwashing, and it gives the entire market a bad reputation. But planting a tree is still desirable, compared to not planting one.
HEARD OF THE NEW TOKEN - CARBON CREDITS?
We’ll define what carbon credit is a few lines below, but let’s take a quick look at its value in
2019 – 8$
2020- 18$
2021- 35 $
It’s 2022, and it’s not getting any lower. Why the rise? Let’s define what a carbon credit is first.
According to the Corporate credit institute, a carbon credit is a tradeable permit or certificate that provides the holder of the credit the right to emit one tonne of carbon dioxide or an equivalent of another greenhouse gas (GHG).
The increase in price relays one thing. If organizations can pay their carbon away, they will.
Let’s look at it from a basic level. If a farmer can demonstrate a reduction in one metric tonne of CO2 or its equivalent on their farming operation, they should be able to create and sell a carbon credit.
There is a more pragmatic practice today if you’ve heard of the term ESG investing. Organizations have started investing in forestry and community climate facilities. The carbon not emitted through these facilities sells as carbon credits by investing in these areas. As a result, the term offset has a more precise meaning now.
At Anima, we see any movement as progress. Is this the right direction? Of course, it is. Any forward or adjacent movement is a good movement. But do we think that this is the only way to move? Most definitely not.
The key to progressing sustainability within an organization is by being proactive. These solutions provide a reactive premise because they were designed reactively. The second something new comes up, we need it. And we must support these projects on all fronts. Time is of the essence in our world. Every year there seems to be one calamity after another, and it’s not helping our cause.
Nonetheless, at Anima, we believe that every organization has something more to contribute. A solution to sustainable issues that genuinely defines the organization.
Prevention is always better than cure.