Since the rise of voluntary carbon offsetting in the 2000s, over 435.7 million tons of carbon emissions have been sequestered or avoided through the voluntary carbon offset market. This is equivalent to removing 300 million passenger vehicles from the road for a year. Though that may seem like a lot, scientists estimate the atmosphere can absorb no more than 420 Gt of CO2 if we want to stay below the 1.5°C target. Otherwise, we face global mass extinction of ecosystems and a climate refugee issue to the scale of up to a billion people, to name just a couple catastrophic problems.
Carbon offsetting is a simple idea: for every amount of carbon emission you release, you pay to absorb that emission or prevent it from being released in the future in some other form through methods, such as planting trees or landfill methane capture.
With just 100 companies responsible for over 70% of global carbon emissions, and the repeated calls by experts for the inexorable need for businesses to change their behaviors to even dream of combating our climate crisis to any respectable degree, it is clear that both governments and companies must both do more to create such changes. Globally, initiatives such as Science Based Targets (SBT) and CDP (formerly known as Carbon Disclosure Project) have been proven to increase the company’s participation. These two ongoing initiatives serve as scientific framework for incentivizing private sector towards becoming leaders in environmental transparency and action. There are not yet companies in Indonesia participated in SBT. As of January 2019, only three companies in the ASEAN region had emissions-reduction targets approved by SBTi: City Developments Limited (CDL), HK Electric Investments, and Singtel. Within the realm of carbon offsetting, companies and governments have enormous opportunities and responsibilities to combat climate destruction as providers, purchasers, and regulators for such offsets.
Avoiding releasing emissions in the first place would always be the best option. But when we still have unavoidable emissions, such as the 2% of global emissions (equals to 6.62 Gt CO2 in 2018) related to air travel, carbon offsetting is a useful tool in the fight against our climate crisis.
In Global South countries like Indonesia, which lack of a systematized, government-supported carbon offset market, businesses have an enormous opportunity to work with governments in creating the groundworks for such market to thrive. Businesses can learn from offsetting standards and rules from established markets in California or South Korea to help leapfrog the carbon offsetting market over the usual issues related to effectiveness, accountability, and transparency.
For instance, a simple way to more effectively implement carbon offset projects would be to require the purchase or creation of diverse and largely locally implemented projects so that a wide range of co-benefits from projects can also be distributed locally. In addition, geographical proximity would make management and monitoring of these projects more easily enforceable.
Co-benefits of projects come in many shapes and sizes that benefit both the environment and the livelihoods of people. For instance, forest conservation in Kalimantan may not only avoid emissions related to tree cutting, but also foster more diverse income sources through agroforestry or tourism.
Another key aspect of having a successful carbon offsetting scheme is openness and transparency. By openly monitoring, reporting, and verifying their carbon offsetting scheme and having these reports easily available to the public, businesses not only help make carbon offsetting more manageable and effective, but also creates the potential for increased consumer and investor support. A study found that over 60% of investors considered good corporate governance as a key factor in investment decisions. The three characteristics of such governance are transparency, accountability, and corporate direction.
Businesses can further accelerate the creation of carbon offset market by providing consumers practical ways to do carbon offsets. Qantas Airlines has had enormous success with providing consumers the option to offset their aviation-related emissions. Since 2007, this largest Australian flight carrier has been offering their flyers to pay extra flight fees to mainly conserve rainforest from deforestation and giving frequent flyer points and incentives. To date, a total of 3.1 million tons of emissions have been sequestered. In doing so, businesses create an opportunity for the public to better understand the concept of managing their individual carbon emissions, alongside making the concept more common. Increased consumer awareness and support for such programs lays the groundwork from which necessary institutional framework for a carbon offset market can begin to develop.
There is enormous potential within Global South countries such as Indonesia to host a strong carbon offset market. Businesses, as the driving force of our climate crisis, have an inexorable responsibility to actualize their extensive resources to foster the foundations for carbon offsetting to thrive.
Cement industry has been proven to be the champion in the greenhouse gas inventory and reporting using a global initiative called Technology Roadmap - Low-Carbon Transition in the Cement Industry where it mentions the usage of biomass and waste materials as fuels in cement kilns to offset the consumption of carbon-intensive fossil fuels. With its capacity and proven track records, cement industry could be a champion by initiating the carbon offsetting. Starting from this, other line business could take lessons learned and then enhanced the carbon offsetting.
Meanwhile, Indonesian government also could participate by incentivizing the carbon offsetting. Carbon pricing could be an alternative. It offers a good example of an incentive framework that can drive concerted climate action in the public and private sectors, where it captures what are known as the external cost of carbon emissions. One of the most commonly used carbon pricing policies is Emission Trading Scheme (ETS). In the South Korean ETS, international offsets could make up only 5% of emission reduction obligations.
By taking even a few of the steps outlined above, businesses would be taking the essential steps necessary to combat our climate crisis. A good governance and accountable processes are imperative for a successful emission offsetting implementation. There is no better momentum to continue this than today, where international communities celebrate the Zero Emissions Day.