by Climate Land Leader Oliver Luker, Seq Solutions and Wonderland Community Project

Nature is not one-dimensional: Just as human hopes and dreams cannot be reduced to “human capital,” neither can the variety of natural ecosystems be reduced to “natural capital.” Yet carbon offset systems seem to do just that, promising that by addressing the harm of capitalist expansion, the rising tide will lift all boats. In the words of Milo Minderbinder in Catch-22, “I don’t see what anybody is complaining about—we’re all much better off than before!”

In the past two years, I’ve immersed myself in the evolving landscape of carbon credits and debated their role in achieving net zero emissions. There are valid concerns about the efficacy and integrity of carbon offset schemes. However, alongside organizations like the IPCC and The Nature Conservancy (TNC), which advocate for high-quality carbon offsets to promote ecosystem restoration and biodiversity conservation, I believe carbon credits will accelerate our focus on systemic benefits and serve as a major pillar in achieving net zero.

There will be no return to the Holocene, and the landscape continues to present meaningful challenges. Separating the good from the bad in carbon credits is a key step towards ensuring we don’t throw the baby out with the bathwater.

Understanding Net Zero: Net zero is the balance between greenhouse gasses emitted and removed from the atmosphere. Achieving net zero is essential to mitigate the impact of 150 years of anthropogenic carbon emissions. Today, we emit roughly 56GT of CO2e annually. To reach net zero, we must

• Reduce baseline emissions by 80% to 12GT
• Ramp up engineered carbon removal to ~5GT/year
• Boost natural carbon removal to ~7GT/year

Vanessa Oniboni and Oliver Luker at Wonderland Community Project

This work is required, not optional: projected global heat increases will create millions of climate refugees, radically altering economies and social structures.

What are Carbon Credits?

A carbon credit is a certified unit of emission reduction or removal by another actor. These credits include

• Offsets – reductions from other sources
• Insetting – within a company’s supply chain
• Renewable energy certificates or RECs – representing renewable energy generation

Most carbon credits trade in regulated “cap and trade” systems where companies that exceed emissions targets can purchase credits from those who have not. Voluntary carbon markets allow for certified credits to offset emissions without assigned targets.

A primary issue with the use of carbon credits is the commodification of nature. By assigning a monetary value to ecosystems, carbon credits risk reducing nature to a mere commodity. This approach raises moral questions about our relationship with the environment and how we value its intrinsic worth beyond financial transactions. In addition, trading natural commodities often creates a disconnect between the location of environmental harm and the site of repair. This can lead to a form of “green colonialism,” where wealthy nations or corporations offset their emissions by funding projects in developing countries, perpetuating global inequalities.

There’s substantial evidence that carbon credits have been historically overvalued, contributing to financial greenwashing. A detailed study published in early 2023 found that millions of forest carbon credits approved by one of the world’s leading certifiers, are largely worthless and could make global heating worse. Additionally, some studies suggest regenerative practices like cover cropping and no-till farming might sequester less carbon than more complex management practices like silvopasture – while others find that they are effectively indistinguishable. This developing science has been used to undermine the credibility of current carbon markets and question their capacity to drive meaningful climate action

Even when created under strict protocols, carbon credits face challenges such as additionality (ensuring the reduction or removal wouldn’t have occurred anyway), leakage (emissions shifting elsewhere) and lack of transparency and accountability.

The case for carbon financing: Despite these criticisms, carbon finance remains essential for achieving net zero

Financially viable monoculture forest plantations “may not be effective for long-term ecosystem function“. Diverse nature-based solutions, while costly, provide ecosystem benefits far beyond carbon sequestration—water conservation, soil health, flood control, preserved biodiversity, and resilience to climate change. Carbon finance can tap into these additional resources to achieve the high-quality nature-based solutions.

Carbon credits have funded numerous projects with significant extended benefits. In the US, the Mississippi River Basin project plans to plant over 100M trees and in DRC [Democratic Republic of the Congo], the Mai Ndombe REDD+ project has funded community development initiatives, including a new hospital. This highlights the potential projects have to contribute to both environmental and social goals. And, as we know from recent work, the work may be cheaper than we think.

There’s no shortage of opportunity – consider:

• 148M acres of degraded land in the US suitable for reforestation (TNC)
• 22GT of additional carbon removal potential in the US (PNAS)
• $800B annual spend on civil engineering and environmental consultancy in the US

The challenge lies in matching this inherent capacity with the opportunity—and that requires financing.

In 2023, I founded a startup providing siting and systems design services for ecosystem restoration. We believe the emerging and evolving Payments for Ecosystem Services (PES) mechanisms, particularly those combining benefits programs to support implementation and monitoring costs, can provide the financial incentives needed to restore millions of acres, directly benefiting landowners.

What must change: Financing is essential but offset schemes have not lived up to their promises. Recognizing and embracing system complexity, and ensuring high integrity in project design, is crucial. This entails:

• Rigorous additionality – ensuring emission removal or reduction would not have occurred otherwise
• Permanence – ensuring sequestered carbon is protected from loss
• Addressing leakage – minimizing risk that reductions in one area cause increases elsewhere
• Robust and accountable systems for monitoring, reporting, and verification (MRV)
• Designing and delivering co-benefits such as biodiversity conservation, water quality improvement, and community development
• Full transparency, and active stakeholder engagement

Conclusion and Call to Action

The carbon cycle is essential to all life on earth, and we may never fully understand it. To address this, we need a better grasp of land capabilities and lower-cost measuring technologies to reduce the cost of carbon project baselines, design, and monitoring.

Open data standards, accessible GIS toolsets and comprehensive databases of companion plants and carbon sequestration methods must support a unified effort. This approach enables the adaptive management of millions of acres of land facing unpredictable climate change effects.

We must accept that nature is the unifier, not governance or financial structures. Building flexibility and multi-benefit modeling into our tools and programs may take longer, but it’s essential to accept that complex, multifarious systems comprise both the journey and the destination. The Oxford Principles for Net Zero Aligned Carbon Offsetting provide guidance on offsetting—we must work together to ensure these standards remain dynamic and open to organic change, not fixed dogma yardsticks with binary outcomes.

Ecosystem restoration with diverse, native succession is highly effective in mitigating climate change, including carbon removal. This doesn’t change that reducing emissions is our primary priority—the Science Based Targets initiative (SBTi) emphasizes that companies must prioritize deep decarbonization. However, high integrity nature-based solutions to carbon sequestration are an essential tool in achieving net zero. This requires significant capital expense, usually not recoverable through direct means, and we believe the gap in financing can be filled by robust Payments for Ecosystem Services, today primarily represented by carbon accounting.

However, this carbon-related incentive is no commodity: governance and financial instruments are important, they cannot substitute for the quality of carbon removal projects. Ensuring the highest integrity of the projects must be the primary focus. Systemic complexity and failure must be accounted for, and clear standards established, allowing both soil carbon and biomass storage to accumulate steadily as emissions decline. Only then can we achieve net zero and pass a better world to our descendants.