[CDx Launch Session Summary] The Great Offsets Debate: Navigating the Landscape to Credible Carbon Offsetting

The ‘Great Offsets Debate’ revolved around the effectiveness and role of carbon offsets in corporate decarbonization, comparing them with direct actions such as insetting and the use of renewable energy certificates (RECs). The session focused on the practicality, ethical implications, and potential impact of offset strategies in helping corporations meet their climate goals, particularly in Asia. While carbon offsets have gained popularity, their credibility and long-term impact were questioned, especially when compared to direct investments in emission reductions through renewable energy projects and energy efficiency.

Key Points in favor of Carbon Offsets:

1. Need for Immediate Tools: Offsets provide a mechanism for companies to address hard-to-reduce emissions, especially in the context of Asia’s growing energy demands.
2. Market Growth and Opportunities: The demand for RECs and carbon credits is growing, with significant development in solar and wind energy initiatives in Asia, though their integrity remains in question.
3. Evolving Standards: New governance frameworks, such as the Integrity Council for Voluntary Carbon Markets, are addressing challenges like additionality and quality, making offsets more credible.
4. Encouraging Transparency: Carbon offsets can foster transparency and accountability in corporate emissions reductions, encouraging companies to open their procurement processes to public scrutiny.

Key Points against Carbon Offsets:

1. Delays in Direct Action: Offsets allow companies to delay necessary decarbonization actions within their supply chains, potentially leading to greenwashing.
2. Social and Environmental Impact: The overuse of offsets can distract from other critical environmental and social issues at the offset site, leading to community resistance.
3. Credibility and Quality Issues: Many offsets fail to deliver the promised emissions reductions, causing a loss of trust in the carbon market.
4. Focus on Insetting and Direct Action: Advocates argue that direct investments in renewable infrastructure and energy efficiency should be prioritized over offsets to achieve real decarbonization.

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Notable Perspectives

Tathagata Guha Roy, Seneca Impact Advisors

• Argues that offsets allow corporations to avoid necessary decarbonization in their own supply chains.
• Highlights issues of credibility in the voluntary carbon market, suggesting a shift towards insetting within corporate value chains as a more authentic solution.

Ingo Puhl, South Pole

• Supports the use of offsets, but advocates for a decentralized governance model where carbon markets align with national climate goals, citing Thailand's pioneering efforts.
• Believes that the carbon offset market is undergoing a "metamorphosis" in response to new demands and regulatory scrutiny, and innovation is necessary to meet evolving market conditions.

Roble Velasco-Rosenheim I-REC Standard Foundation

• Suggests a combination of renewable energy investments (tracked by RECs) and offsets for emissions that cannot be directly reduced.
• Emphasizes the need for transparency and credibility in the carbon offset market and advocates for more rigorous standards to ensure the integrity of offsets.

Albert Sutanto, Mt. Stonegate

• Urges a clear distinction between RECs and carbon offsets, noting that RECs address Scope 2 emissions, whereas offsets tackle other types of emissions.
• Advocates for renewable energy as the primary tool for decarbonization, with offsets being used only as a last resort when direct emissions reductions are not feasible.

Moderator: Ping Manongdo, Eco-Business

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