SBTi Research Reveals Inefficiency of CO2 Offsets: Shift in Course on the Horizon

The research by the Science Based Targets initiative (SBTi), the world's leading arbiter for corporate climate targets, has found that the use of carbon offsets in climate targets is predominantly 'ineffective.' This move comes after the organization faced heavy criticism from staff and climate experts. In recent months, SBTi leadership has faced significant criticism for allowing a broader application of carbon offsets. These offsets, generated through projects such as reforestation and clean cookstove installations, aim to either reduce emissions or remove carbon dioxide from the atmosphere. Last month, SBTi CEO Luiz Amaral stepped down for personal reasons following a staff revolt in April that shook the organization's credibility. These events also brought supporters like the Bezos Earth Fund into the spotlight. Next year, SBTi will decide the extent to which companies can use carbon offsets in their climate targets. Many companies struggle to reduce their emissions and resort to offsets as a solution. In a paper published as part of the consultations, SBTi noted that there are 'clear risks' associated with the corporate use of carbon credits for offsetting purposes, including 'potentially unintended effects' that could hinder the transition to net-zero and reduce climate financing. Currently, SBTi standards permit the use of offsets for the 'last mile,' or only 10 percent of emissions in corporate plans, with the remaining 90 percent required to come from direct emission reductions within their own operations. A synthesis of existing research by SBTi shows that only 12 to 33 percent of carbon credits deliver their stated climate benefits to corporate buyers. Despite these findings, similar tools remain available for use in the updated SBTi policy. The framework known as Beyond Value Chain Mitigation (BVCM) allows qualifying activities such as protecting existing forests or installing heat pumps in cold climates, explained Juliette de Grandpré from SBTi's technical advisory group. According to SBTi, these activities could represent 'preferred models' for accelerating climate financing. A potential difference from offsets is that companies could integrate BVCM activities into their emissions claims by reporting them separately. Originally a coalition of non-profit organizations, SBTi has over the years received funding from private philanthropic interests such as Bezos, the Ikea Foundation, and the Laudes Foundation. Commenting on the internal conflicts, interim SBTi CEO Susan Jenny, who previously served as Chief Legal Officer, emphasized the distinction between the role of the board and SBTi policies. According to Jenny, the board provides 'strategic guidance' and does not dictate the work of the technical team. The research papers released on Tuesday are to be transformed into a draft standard by the end of the year and submitted to the technical SBTi committee for review before being opened to public consultation. The updated standard is expected to take effect no earlier than the end of 2025. Thomas Day from the NewClimate Institute welcomed the research as progress. 'We have often criticized SBTi for straying too far from its science-based mantra. But the papers published today adhere to the science and explore improvements to the standard, bringing SBTi back on track,' he said. The evidence-based approach to carbon offsets is 'a clear rejection of the board statement in April, where individual members tried to push forward a proposal that had no internal support,' said Gilles Dufrasne of Carbon Market Watch. The research particularly criticizes the Redd+ resource framework for reducing emissions from deforestation and forest degradation. Studies showed 'directly conflicting findings regarding the effectiveness of Redd+.' The research found that this specific category of credits is based on a hypothetical baseline scenario of future deforestation, leading to inherent uncertainty in this type of credit.