Companies need to question the value of carbon credits, according to Skipp Williamson, managing director of global consulting firm, Partners in Performance.
Now the whistle has been blown on the Emissions Reduction Fund’s (ERF) carbon credit scheme, companies need to assess whether their own emissions reduction plans are green washing.
Last month, the former head of the federal government’s $4.5 billion carbon credits fund claimed that most of the money under the scheme, upon which companies relied on to reduce their carbon footprint, was being spent on fake carbon reductions.
Professor Andrew Macintosh claimed that, not only did most of the approved carbon credits not represent real or new cuts in greenhouse gas emissions, but the scheme actually hurt the environment by allowing corporations to purchase carbon credits instead of cutting emissions.
Relying on carbon credits to offset carbon emissions has often been criticised as a way for companies to demonstrate their “green credentials” without having to make meaningful changes to their operating models.
These claims by Macintosh about the scheme should be a wake up call for Australian businesses.
Companies can no longer rely on ‘short cuts’ like carbon credits and offsets to meet their sustainability targets.
The good news is that the technology and energy alternatives now exist to make real emissions reductions not only achievable in nearly all industries, but also profitable.
Partners in Performance, for example, works with companies to develop implementable net zero plans.
The first 30-50 per cent of these reductions are typically NPV positive and can, and should be, implemented rapidly for that reason.
Within a few more years the next tranche of improvements should also be economic and can then be pursued. In addition, most can be financed with lower cost green financing.
Partners in Performance recently worked with a major single commodity global mining company to identify a path to rapidly reduce their emissions by 60 per cent and then reach net zero by 2040.
This was achieved by identifying opportunities to move to renewable electricity, replacing the fleet with lower emission technologies, assessing current business processes, and providing recommendations to increase governance for emission management.
While many businesses may have bought into carbon credits in good faith, it’s time to question the impact of these programs. Leaders must avoid thinking ‘what is the easiest way to comply with regulations or look good on annual reports?
It’s time to find long term solutions to the problem.
Carbon credits should only be a stop-gap to help businesses address emissions while they move toward full decarbonisation. They will find that the root-cause solution also saves costs and in many cases can also create new revenue streams.
If you are going down the offset route for those residual emissions, considerable expertise is needed to identify genuine offsets. When building this portfolio up, we help our clients identify and create offsets which also hold significant local and community benefits and are often significantly cheaper than those available off the shelf.
This can be a road full of traps for those new to the space but there can be significant triple bottom line impacts from doing this well.