Maturity of carbon offsets opens a path for Blockchain and SDGs

Carbon offsets have been around for more than 20 years. In that time a dizzying variety of projects have been developed to reduce harmful carbon dioxide emissions compared with business-as-usual, generating billions of tonnes of effective and real reductions.

In that time, we have learned how to measure, verify and report on these reductions, we have built a system of electronic registries to hold them and we have built markets to trade them. Carbon offsets are now a mature business.

But in those 20 years, for the most part, we have only focused on the carbon element: every offset project generates these. But for a long time, we overlooked the co-benefits:

  • Reductions in land pollution.
  • Reductions in air pollutants other than CO2.
  • Stronger and healthier local communities.
  • Economic opportunity and jobs.

The launch of the Sustainable Development Goals (SDGs) by the United Nations in 2015 represented the starting point for a broader conversation on environmental issues. For many years, the concept of sustainable development had been discussed within the UN and other international fora, but the issue had not been translated into a set of wide, actionable principles.

The refinement of the SDGs into a concise list of 17 goals that would allow the world to “meet the needs of the present without compromising the ability of future generations to meet their own needs” represented the first time that interlinked social, environmental and economic goals have all been brought together

Until 2015 it had been climate change that received the most attention, thanks to the Kyoto Protocol and more recently the Paris Agreement. However, a large number of public and private actors had long seen the need to address other global goods in addition to the climate, and over the last ten years there were increasing efforts to capture these additional outcomes. 

Early attempts focused on capturing the “co-benefits” of carbon emission reductions. Distributing cleaner cookstoves, for example, reduced health impacts from burning wood in poorly-ventilated accommodation and allowed children to attend school and women to work, rather than risk their safety collecting firewood, all while reducing carbon emissions from inefficient fireplaces

Forest-based projects were also seen to bring economic and community benefits while also storing vast amounts of carbon dioxide. Small-scale, distributed renewable power generation brought benefits across many of the 17 SDGs to remote communities.

The challenge, however, has always been how to quantify these non-carbon benefits and render them into an asset that represents the value of sustainable development, and thereby incentivise the scale of investment that is needed to achieve the SDGs.

Earlier this year, two of the leading carbon offset standards, Verra and the Gold Standard, launched new rules and criteria for projects that specifically target the Sustainable Development Goals.

Verra’s SD VISta applies to any project that is contributing to the SDGs, including those related to eliminating hunger, promoting good human and environmental health and well-being, and ensuring education, and can be used in conjunction with its existing Verified Carbon Standard

Similarly, the Gold Standard for the Global Goals offers the opportunity to combine carbon offsets that meet the requirements of the UN Clean Development Mechanism or the Verified Carbon Standard, with measurable outcomes in terms of lifespan (Averted Mortality and Disability in Adjusted Life Years) or water security (water benefit certificates).

With these standards, the way is now open for climate-based projects to capture and quantify the associated public benefits embodied in the SDGs. We believe these standards will become the norm over time, as public and private stakeholders look to maximise the impact of their investments.

At the same time, it’s becoming clear that some existing technologies have passed through the realm of being “innovation” and are now “business as usual”. Wind power is a clear example, and we believe the time is right to start to streamline the process of calculating climate benefits from these newly-incumbent technologies.

Monitoring, verifying and reporting emissions reductions, as well as holding them in a recognised registry are critical components of the carbon offset business. But these aspects of offsetting, while well understood now, are challenging in developing economies and the need for increased standardisation of methodologies and baselines offer an ideal opportunity to leverage the capability of the blockchain to validate both the source and the transactions of offsets. By unlocking a trusted global market for environmental attributes, the blockchain helps renewable energy generators and carbon off-setters yield the full economic value and social benefit of their attributes, and provides corporates with a mechanism to flex their financial muscles and contribute in a meaningful way to the energy transition and to the SDGs.

Article 6 of the Paris Agreement comprises three approaches for cooperation between Parties – “cooperative approaches” under Article 6.2; a new mechanism to promote mitigation and sustainable development (Article 6.4 – 6.7); and a framework for nonmarket approaches (Article 6.8 and 6.9). There is very little clarity on how these approaches will function and very basic issues such as scope, governance and infrastructure for operationalising provisions under Article 6 are still to be agreed. Our view is that to ensure that SDGs are not relegated to being merely a reporting framework and the SDGs actually change countries’ development trajectories, its inclusion under Article 6.8 can unlock its potential and to effect real change.

As the Gold Standard puts it: “To ensure that sufficient resources are available to encourage the drive to achieve SDG goals, we can streamline the process of MRV for certain project types that deliver widely understood and easily quantifiable benefits.”

Hear, hear!  

Alexis Leroy
Board member at Climate Markets and Investment Association (CMIA)

Nature is declining globally at rates unprecedented in human history and the world will likely fail to meet 35 out of the 44 SDG targets

Nature is declining globally at rates unprecedented in human history — and the rate of species extinctions is accelerating, with grave impacts on people around the world now likely, warns a landmark new report from the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES).

The Report finds that around 1 million animal and plant species are now threatened with extinction, many within decades, more than ever before in human history.

The average abundance of native species in most major land-based habitats has fallen by at least 20%, mostly since 1900. More than 40% of amphibian species, almost 33% of reef- forming corals and more than a third of all marine mammals are threatened. The picture is less clear for insect species, but available evidence supports a tentative estimate of 10% being threatened. At least 680 vertebrate species had been driven to extinction since the 16 th century and more than 9% of all domesticated breeds of mammals used for food and agriculture had become extinct by 2016, with at least 1,000 more breeds still threatened.

The Report notes that, since 1980, greenhouse gas emissions have doubled, raising average global temperatures by at least 0.7 degrees Celsius – with climate change already impacting nature from the level of ecosystems to that of genetics – impacts expected to increase over the coming decades, in some cases surpassing the impact of land and sea use change and other drivers.

Despite progress to conserve nature and implement policies, the Report also finds that global goals for conserving and sustainably using nature and achieving sustainability cannot be met by current trajectories, and goals for 2030 and beyond may only be achieved through transformative changes across economic, social, political and technological factors. With good progress on components of only four of the 20 Aichi Biodiversity Targets, it is likely that most will be missed by the 2020 deadline. Current negative trends in biodiversity and ecosystems will undermine progress towards 80% (35 out of 44) of the assessed targets of the Sustainable Development Goals, related to poverty, hunger, health, water, cities, climate, oceans and land (SDGs 1, 2, 3, 6, 11, 13, 14 and 15). Loss of biodiversity is therefore shown to be not only an environmental issue, but also a developmental, economic, security, social and moral issue as well.

You can access to the report here


ALLCOT Group presented “SDG Co-Benefits in Voluntary Carbon Offsetting” as part of CPLC Technical Workshop in Washington D.C

The workshop “SDG Co-Benefits in Voluntary Carbon Offsetting” was presented by Sergi Cuadrat, Chief Technical Officer of ALLCOT Group as part of the Carbon Pricing Leadership (CPLC) Technical Workshop for the 4th Annual CPLC High-Level Assembly (HLA) organized by Gold Standard, WWF and WRI at Embassy of Canada on April 12th 2019 in Washington, D.C.

In 2015, leaders from the member states of the United Nations agreed on objectives to shift all economies and societies toward sustainable and decarbonised development through the adoption of the Agenda 2030 on the Sustainable Development Goals (New York, September 2015) and the Paris Agreement on limiting climate warming to well below 2ᵒC (Paris, December 2015). Both frameworks, although negotiated under different multilateral processes, promote the participation of all countries and are highly interlinked: the Paris Agreement emphasizes the need for sustainable development considerations in low-carbon transitions; at the same time avoiding dangerous climate change is one of the 17 Sustainable Development Goals (SDGs) defined in the 2030 Agenda on Sustainable Development. Thus, failure in one process could undermine the success of the other. The implementation of Nationally Determined Contributions (NDCs) –countries’ emissions reduction commitments– requires huge investments, which are more likely to be financed if embedded in and benefiting national development plans. While, vice versa, prospects for sustainable development depend on a limitation of global warming.

Sergi Cuadrat emphasized that such interdependency can be seen as an opportunity to move away from the discourse of two different agendas that are often perceived to be in competition; and instead pursue their implementation in a way to maximise mutual benefits. The 2030 Agenda for Sustainable Development will not be achieved without the commitment of the private sector and at the same time, companies are demonstrating their willingness to ramp up sustainability action by aligning not only their corporate social responsibility policies, but also their core business strategies, with the targets defined in the SDGs. To achieve these, clarity is required to give business the confidence to embrace the SDGs, as it can be difficult to understand how investments in development activities can have greater impact and help achieve the necessary transformation towards alignment with the SDGs.

ALLCOT is seeing an evolution in the way its clients think about carbon finance and the additional impacts their carbon investments can have so businesses are able to articulate the benefits of their carbon project investments beyond the verified emission reduction. Sergi Cuadrat stated that “businesses can use carbon finance to deliver additional value through alignment with the SDGs, enabling the voluntary carbon market to extend beyond emission reductions, and play a vital role in driving low carbon sustainable development throughout the world”.

In order to assist business in measuring their SDG baselines and to measure future progress, Sergi Cuadrat unveiled that ALLCOT is developing an open-source SDG Quantification Methodology which aims to establish the measurable co-benefits of the SDGs as an operational tool in development activities to ensure a fair carbon price.  The tool will include recommended approaches for the formulation of targets and decision-making pathways based on the individual needs of an organization to measure and report on the impacts of sustainable development actions, including its use in the carbon markets, business supply chain, city-scale interventions or NDC assessments. Although still under development, the design of the tool will consider how to reduce the barriers to measure, quantify and certify SDG impacts, including IT based platforms and blockchain-based solutions.

Pricing carbon, through a carbon tax or cap-and-trade system, has proven to be effective in addressing climate change and can be an essential tool for meeting the SDGs. Therefore, ALLCOT firmly believes that carbon pricing policies should be designed to help achieve the global sustainable development agenda to benefit the fight against climate.

Carbon Pricing Leadership Report

On the other hand, the Carbon Pricing Leadership Coalition (CPLC) has published Carbon Pricing Leadership Report, where ALLCOT Group has participated.  This report acts as CPLC’s 2018/19 annual report, providing an update on CPLC’s activities over the last year. It also showcases articles from thought leaders to inspire and guide government and business leaders to increase their carbon pricing ambition.

You can read the full report here and ALLCOT Group contribution in page 56.