Stalled Carbon Credit Initiatives Threaten Corporate Emission Goals

Efforts to expand companies' use of carbon credits to offset greenhouse-gas emissions are facing challenges, raising concerns that some firms may abandon or backtrack on their net-zero emission targets. Despite initial support, the Science-Based Targets initiative (SBTi) has indicated that carbon offsets are largely ineffective, delaying a final decision until 2025.

Stalled efforts to expand companies' use of carbon credits to offset greenhouse-gas emissions are raising the prospect that some firms will backtrack or abandon their targets to shrink their carbon footprint.

Since 2015, when governments agreed in Paris to aim for keeping global temperature rise below 1.5 degrees Celsius, more than half of the world's largest 2,000 publicly listed companies have committed to net-zero emissions by 2050. However, environmental advocates are concerned that these targets are not being met. Companies cite delays in clean technology deployment and inadequate government policies as obstacles.

Proponents argue carbon offsets can help companies meet their targets when direct emissions cuts fall short. However, the non-profit Science-Based Targets initiative (SBTi) recently found offsets largely ineffective in reducing emissions due to unverifiable climate benefits. This has led to a delay in deciding whether to permit their use in meeting emission goals until 2025.

Initially, the SBTi's board had contemplated allowing wider use of offsets in target-setting. Currently, companies may use offsets only after achieving direct reduction targets. Nearly 6,000 companies use the SBTi for validating emission targets. Tommy Ricketts, CEO of BeZero Carbon, noted that some firms might scale back their net-zero ambitions if unable to use offsets, although they may instead focus on more realistic actions. As John Lang of the Energy & Climate Intelligence Unit stated, recalibrating targets doesn't mean regressing on ambition.