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Our paramount objective should be the gradual elimination of fossil fuels while simultaneously rejuvenating natural carbon sinks Image Credit: Gulf News

The 2030 emission target to keep the global warming below 1.5°C is estimated to be around 30 Gt of carbon dioxide equivalent per year. This is equal to the annual emissions of the six largest emitters combined. Therefore, there is a need to scale up the mitigation actions and to mobilise the maximum resources and cooperation.

Carbon offsetting is one of the mechanisms to facilitate the mitigation efforts. Carbon offsetting is a way for entities and governments to compensate for their GHG (green hosue) emissions by investing in projects that avoid, reduce or remove emissions elsewhere. For example, an oil company that emits 100 tons of CO2 equivalent per year and buys 100 tons of carbon credits from a project that plants trees in Africa can claim that it is carbon neutral.

Carbon offsetting is based on the assumption that the source and the location of the emission do not matter, as long as the global net emissions are reduced. Therefore, the carbon offset market has grown significantly in the past decade, reaching a value of $5.5 billion in 2019 according to Ecosystem Marketplace.

The carbon offset concept has been widely adopted and promoted by various sectors, such as governments, corporations, NGOs and other entities. With this process, many entities demonstrate their environmental responsibility and contribute to the global climate actions.

Read more by Dr Abdullah Belhaif Al Nuaimi

The market, however, is divided into two main segments: the compliance market and the voluntary market. The compliance market is regulated by national or international policies, while the voluntary market is driven by the demand of entities that choose to offset their emissions for any reason without any legal obligation.

Carbon offsetting, however, has been criticised by many experts, activists and communities, who question its legitimacy and usefulness. Carbon offsetting has been accused of being a distraction and a false solution for climate change.

This article examines the main criticisms and rebuttals of carbon offsetting. The op-ed also argues that carbon offsetting is not a viable solution for climate change, and that the focus should be on reducing emissions and restoring forests, which are the biggest natural carbon sinks.

Carbon offsetting has been criticised on various aspects, such as the following:

Measurement and verification

One of the most important challenges of carbon offsetting is to measure and verify the actual impact of the offset projects on the GHG emissions. Quantifying the baseline emissions, additionality and the reductions requires rigorous and transparent methodology.

However, these parameters are not easy or straightforward to verify. Some types of projects involve extremely complex and dynamic ecological and social systems. This process is risky and does not guarantee real, measurable and additional emission reductions. This risk is exacerbated by the lack of standards, regulation and oversight of the offset market, which allows for different and inconsistent methodologies. Transaction costs

Another challenge of carbon offsetting is the high transaction costs involved in the process of developing, certifying, registering and trading carbon credits. These costs include the costs of project design, implementation, monitoring, reporting, verification, certification, registration, brokerage and administration.

These costs vary depending on the size, location, duration and type of the project. According to a study by the World Bank, the average transaction cost for a carbon offset project ranges from $0.38 to $1.33 per ton of CO2 equivalent. The high costs of transaction create barriers and disincentives for project developers, especially those who have less financial and technical resources.

Free rider problem

The problem of free riders is particularly evident in the voluntary carbon offset market, where there is no binding target or limit for the entities to reduce their emissions or to buy carbon credits. The self-regulated market may not be sufficient or consistent to ensure the environmental integrity and the social justice of the market.

This may undermine the overall effectiveness and fairness of the global climate action, and create moral hazard and perverse incentives for the high-emitting entities. The free rider problem is indeed a great challenge to the carbon offsetting system.

Ignoring of other greenhouse gases

A major criticism of carbon offsetting is that it ignores or neglects the other greenhouse gases, besides CO2 which also contribute to global warming and climate change. Carbon offsetting is mainly focused on CO2, which is the most abundant and the most well-known greenhouse gas.

However, there are other greenhouse gases, such as methane, nitrous oxide and fluorinated gases, which have lower concentrations in the atmosphere, but higher global warming potential than CO2. This means that these gases have greater potential to trap more heat in the atmosphere over a given period of time.

For example, methane has a global warming potential of 28 over 100 years, which means that it can trap 28 times more heat than CO2 over the same period of time. Moreover, some carbon offset projects may use or produce fluorinated gases, such as sulphur hexafluoride, which is used as an insulator in the electrical industry.

Therefore, carbon offsetting may not capture the full picture or the true impact of the GHG emissions reductions, and may underestimate or overlook the role and the risk of other GHGs.

In conclusion, carbon offsetting is not a silver bullet for climate change. It has many limitations and challenges that compromise its effectiveness and credibility. It may also create a false sense of security and complacency among the entities that rely on it to justify their emissions. Carbon offsetting should not be seen as a substitute for emission reductions, but as a complementary measure.

The ultimate goal should be to phase out fossil fuels and to restore the natural carbon sinks, such as forests, that can absorb and store carbon for the long term. This is the only way to ensure a safe and stable climate for the present and future generations.

Dr Abdullah Belhaif Al Nuaimi is the Chairman of the Advisory Council of the Emirate of Sharjah