2020 seem poised to be the year the voluntary offset market would take a big leap forward. It was almost daily that new companies were announcing carbon reduction plans and companies with long-running commitments announced even more ambitious plans. Additionally, the CORSIA offset market for addressing international air travel emissions was set to begin this year. The names of companies with notable carbon commitments that come to mind are Microsoft, Disney, Starbucks, Delta, and JetBlue, as both airlines have announced commitments above and beyond what CORSIA requires of them.
The good news is that despite the economic pain caused by the pandemic many companies have publicly stated that the plan to stay the course on their carbon reduction commitments. This shouldn’t be too surprising, since there has been a lot of research showing that companies that set ambitious environmental goals tend to have a strong economic foundation.
The big challenge facing the current voluntary market is temporal. Although voluntary corporate demand is likely to drop due to reduced emissions, supply should be relatively unaffected in the near term. This is because there are many projects that have already completed verification site visits or projects where verification can be done remotely.
New projects, however, require site visits for development work and for an initial verification. Such projects are held up by social distancing restrictions. Unfortunately, this means some projects won’t move forward. Economic activity will likely pick up, and hence emissions too, before new projects come online.
This sort of lag could prove costly for the climate. Recognizing this, standards should be working proactively now on any modified procedures for the long term. Currently, the focus is on tracking the reopening of the economy, but there needs to be thought put into what happens if or when, as some public health experts predict, social distancing rules need to go into effect again. This guidance can be the difference between go and no go for many new offset projects. Corporate buyers have a role too. Their ambition could extend to how to fund these projects. Buyers could start to provide upfront payments or fund development costs to help projects go forward.
These are scary and uncertain times. This pandemic could be a precursor for what we might experience from unchecked growth in emissions. These commitments by voluntary companies are too important to fail and by extension so are current and potentially new offset projects intended to support these efforts.