Since humans were hunter-gatherers, it has been most economically sensible to cut down forest. Cutting down forest gained timber to burn, use, or sell; or cleared the way for the more productive use of land, for houses, farms, and, later, industry. Natural capital – forest – was fuel on which human development was propelled, transforming our forebears from hunter-gatherers to the masters of the known world.
Hydrocarbons proved more efficient than wood, but forest remained something to be tamed to more profitable use: almost any purpose is more economic than retaining forest. In the broad sweep of human history, human development has been synonymous with deforestation. Only now are we realising the true cost of that.
The creation of carbon credits, where verified suppliers can sell carbon emissions avoided or sequestered, have done something truly amazing: they have upended that economic equation. Now, perhaps for the first time in ~40, 000 years, it can be more sensible to convert land back to forest, taking payment for carbon drawn down. Heady articles from Bloomberg and Morgan Stanley agree these markets are set for turbocharged growth. The theory is beautiful: environmentally conscious consumers and corporates will use new methodologies to account for, and rectify, the disastrous negative externality of human economic activity, playing out through the climate crisis.
But these are stormy seas. Some carbon credits, notably REDD+ (which, broadly, protect existing forest areas from destruction,and take payment for avoided deforestation), have been discredited: the Guardian has highlighted where emission reductions are non-existent and dishonest. Insofar as projects are inaccurate no doubt criticism is justified: the market needs to be honest as a sine qua non, and buyers must have absolute confidence in their purchases. The industry vigorously defended itself and its methodologies; analysts suggest there is integrity in the markets, and that REDD+ credits are actually underreprted.
Yet we are in the midst of a significant retreat. Despite public pledges, Shell pulled away from its carbon neutral commitment, choosing instead to double down on oil and gas. Nestle has stepped away from carbon neutrality, instead committing to a more nebulous intention to reduce emissions. Pricing for most voluntary market carbon credits, in turn, has crumbled. Given the non-uniform nature of carbon credits, it is hard to generalise. But across the board, prices are down as much as 80%, according to Reuters.
It is hard not be disheartened. Corporate volte-faces signal how meaningless hyped public commitments are, and undoes optimism built around COP28’s pledges to action at a global scale. What worth have pledges if abandoned? No consequences whatsoever are felt: the announcement had no negative impact on the Shell share price, which has actually risen since (shell share price - Google Search). Nestle’s share price barely moved. No one, it seems, was listening. Or, if they were, they hardly cared. The myth that financial markets have somehow ‘written in’ ESG metrics to their analysis of companies has been another casualty in the flight from carbon neutrality.
Are carbon credits facing a ‘minidisc moment’: a technology doomed to be swept aside, as minidiscs were by the better technology of the .mp3 player and subsequent Ipod?
The difference is that nothing yet identified compares to carbon credits in impact, scale, or ability to remove carbon. Nothing. At Oko Environmental, we convert degraded land in West Africa to the native forest that once it was, taking millions of tons of carbon from the atmosphere and storing it in regrown forests. We create hundreds of jobs in a place barren of employment, and recreate the biodiversity long since disappeared. No farmers are driven from land. We will funnel millions of dollars to the local area, paid for by companies in the global North seeking to offset their carbon emissions.
We are part of a new wave of several carbon developers, bringing scale and resources to the challenge of sequestration,trying to learn quickly how to store as much carbon as possible in as short as space a time, without compromising community impact or biodiversity. Native forest restoration is, by the standards of agricultural endeavour, an incredibly young industry: humanity has been growing wheat since Sumerian times; but regrowing native forest for a decade or two. We need to channel huge resource into research and development. This is funded by the voluntary carbon markets, without which the industry would simply not exist. It is providing,via carbon credits, investment to remove the gigatons of carbon required to avert our own destruction. The benefits of this are hard to understate.
That, at least, is the plan. For companies like us, focused on sequestration (the pulling of carbon from the atmosphere into permanent forest) rather than the more nebulous ‘avoided deforestation’ (where it is hard to prove that, but for your activities, land would have been deforested), this move may be the flight to quality of an industry in its infancy, with rewards available for those who can guarantee it. It might spell the end for REDD+, but not reforestation credits. This would be a shame: whilst there will surely be mistakes or bad actors in the early stage of an industry’s growth, it seems obvious that anything we can do to protect existing forest should be encouraged, multiplied, and praised.
But slipping confidence in the market and its benefits, or the resounding silence from the financial market about abandonment of carbon pledges, might sound a darker note. If, after all, no financial benefits accrue from carbon offsetting, and no penalties follow its abandonment, many buyers well may question paying a self-imposed carbon tax. Commitments may slip away, not with a bang but with a whimper. And an entire industry, with all its myriad benefits for local communities, for biodiversity, and ultimately for the future of our planet, will be forgotten as quietly as Shell’s commitment to carbon neutrality. The world would be much poorer, and much more vulnerable,for it.