1 00:00:01,560 --> 00:00:06,280 Speaker 1: Welcome to zero. I am Kshatrati. This week Labradoodle's carbon 2 00:00:06,360 --> 00:00:22,200 Speaker 1: offsets and the Emperor's new clothes. Think of the last 3 00:00:22,200 --> 00:00:24,440 Speaker 1: time you bought a plane ticket and the airline offered 4 00:00:24,480 --> 00:00:27,760 Speaker 1: you the opportunity to spend some more money to offset 5 00:00:27,760 --> 00:00:30,640 Speaker 1: the emissions from your trip. If you didn't take it, 6 00:00:30,920 --> 00:00:33,880 Speaker 1: you did right. That offer is part of a market 7 00:00:33,920 --> 00:00:37,640 Speaker 1: known as the voluntary carbon market, worth two billion dollars today, 8 00:00:38,040 --> 00:00:41,120 Speaker 1: and it hasn't really proved to work. It's a place 9 00:00:41,159 --> 00:00:43,919 Speaker 1: where you and companies like Shell can buy credits from 10 00:00:43,960 --> 00:00:47,520 Speaker 1: projects such as a solar facility in a developing nation, that, 11 00:00:47,760 --> 00:00:52,120 Speaker 1: in theory, will avoid putting carbon into the atmosphere. At 12 00:00:52,159 --> 00:00:54,800 Speaker 1: face value, these offsets might seem like a good thing. 13 00:00:55,360 --> 00:00:59,200 Speaker 1: We want more solar plants, but the difficulty is improving 14 00:00:59,320 --> 00:01:02,280 Speaker 1: whether paying for these offsets was the reason the solo 15 00:01:02,320 --> 00:01:05,520 Speaker 1: plant was built. Many of these green projects would have 16 00:01:05,600 --> 00:01:09,120 Speaker 1: gone ahead anyway, and thus your offset has not really 17 00:01:09,160 --> 00:01:13,440 Speaker 1: provided any additional carbon benefit. It is why experts have 18 00:01:13,520 --> 00:01:16,000 Speaker 1: pointed out that most of the credits on the current 19 00:01:16,080 --> 00:01:20,800 Speaker 1: voluntary carbon market don't work still, as more companies sign 20 00:01:20,880 --> 00:01:24,720 Speaker 1: up for net zero plans rather than actually reducing emissions, 21 00:01:24,760 --> 00:01:28,039 Speaker 1: they find it easier to buy cheap offsets instead, and 22 00:01:28,200 --> 00:01:31,440 Speaker 1: the voluntary carbon market will get a boost because it's 23 00:01:31,440 --> 00:01:34,520 Speaker 1: receiving a stamp of approval from the US government itself. 24 00:01:35,040 --> 00:01:38,480 Speaker 1: At COP twenty seven, the US Special Presidential Envoy for 25 00:01:38,600 --> 00:01:42,880 Speaker 1: Climate John Kerry announced a new offsets program that will 26 00:01:42,959 --> 00:01:47,400 Speaker 1: help developing countries transition to clean energy through purchases made 27 00:01:47,400 --> 00:01:52,000 Speaker 1: by big corporate polluters. This was an unenviable task, especially 28 00:01:52,040 --> 00:01:55,840 Speaker 1: in front of a global audience of environmental experts. You 29 00:01:55,960 --> 00:02:00,880 Speaker 1: hear him acknowledge this throughout the conference. Unfortunately, some past 30 00:02:00,960 --> 00:02:05,080 Speaker 1: abuses have in many minds, discredited the use of a 31 00:02:05,120 --> 00:02:08,880 Speaker 1: carbon credit. No double counting, no greenwashing. We shouldn't let 32 00:02:08,919 --> 00:02:12,799 Speaker 1: the mistakes of the past keep us from employing a 33 00:02:12,800 --> 00:02:17,959 Speaker 1: powerful tool for steering private capital where it is most needed. 34 00:02:18,600 --> 00:02:20,799 Speaker 1: What Kerry is getting into is a market that's been 35 00:02:20,800 --> 00:02:23,920 Speaker 1: around for more than thirty years, and it's full of trouble. 36 00:02:24,360 --> 00:02:27,680 Speaker 1: The first common credit project was created in nineteen eighty eight, 37 00:02:27,960 --> 00:02:30,640 Speaker 1: and the man who created it was Mark Trexler, my 38 00:02:30,760 --> 00:02:33,760 Speaker 1: guest today. This is a commodity that you can't see, 39 00:02:33,919 --> 00:02:37,600 Speaker 1: you can't smell, you can't feel, and unless you're very 40 00:02:37,680 --> 00:02:41,320 Speaker 1: careful with how you manage that commodity or regulate that commodity. 41 00:02:42,000 --> 00:02:45,360 Speaker 1: You really are just selling a lot of emperors invisible clothes. 42 00:02:45,560 --> 00:02:47,720 Speaker 1: But a lot of people have a lot of money 43 00:02:47,720 --> 00:02:52,360 Speaker 1: at stake in doing just that. Mark is not a 44 00:02:52,360 --> 00:02:55,240 Speaker 1: fan of what carbon offsets have become, and he is 45 00:02:55,400 --> 00:02:57,919 Speaker 1: in a top position to explain why they don't work. 46 00:02:58,600 --> 00:03:01,880 Speaker 1: That's important because the US and many giant corporations are 47 00:03:01,919 --> 00:03:05,760 Speaker 1: doubling down on offsets as a solution. I spoke with 48 00:03:05,840 --> 00:03:08,440 Speaker 1: Mark this summer for an article about the bogus offsets 49 00:03:08,440 --> 00:03:10,920 Speaker 1: that companies buy so that they can claim to be 50 00:03:11,000 --> 00:03:13,680 Speaker 1: carbon neutral, and to learn if there's anything that can 51 00:03:13,720 --> 00:03:16,960 Speaker 1: be done to fix them. How did a good idea 52 00:03:17,080 --> 00:03:32,959 Speaker 1: go so wrong? Mark, Welcome to zero, Thanks very much. 53 00:03:33,480 --> 00:03:36,960 Speaker 1: Before we even start talking about carbon let's break down 54 00:03:37,040 --> 00:03:40,960 Speaker 1: the idea of what an offset really is and where 55 00:03:41,040 --> 00:03:44,480 Speaker 1: that idea came from. Well, an offset is basically the 56 00:03:44,560 --> 00:03:48,480 Speaker 1: idea that instead of installing an expensive piece of equipment 57 00:03:48,520 --> 00:03:53,920 Speaker 1: to control pollution on your power plant, you could do 58 00:03:54,000 --> 00:03:58,680 Speaker 1: something somewhere else that would have the same impact, and 59 00:03:58,720 --> 00:04:03,080 Speaker 1: so you would save the money of the expensive technology 60 00:04:03,160 --> 00:04:06,200 Speaker 1: that you might otherwise have to attach to your power plant, 61 00:04:06,240 --> 00:04:10,400 Speaker 1: and this this got started with the sulfur dioxide program 62 00:04:10,440 --> 00:04:14,000 Speaker 1: in the United States. The term now is pretty widely 63 00:04:14,120 --> 00:04:18,040 Speaker 1: used for sort of compensation of something you're doing in 64 00:04:18,040 --> 00:04:20,599 Speaker 1: one place by something you're doing someplace else that is 65 00:04:20,600 --> 00:04:24,480 Speaker 1: supposed to negate it. Given how big the market for 66 00:04:24,640 --> 00:04:28,960 Speaker 1: offsets has become is likely to become, and that more 67 00:04:28,960 --> 00:04:32,159 Speaker 1: and more people are going to come across the usage 68 00:04:32,160 --> 00:04:34,800 Speaker 1: of offsets in some way. Already people are being hawked 69 00:04:35,440 --> 00:04:39,599 Speaker 1: buying offsets when they buy their plane tickets. It's fascinating 70 00:04:39,600 --> 00:04:41,599 Speaker 1: to know the history, and you've been there from the 71 00:04:41,680 --> 00:04:43,840 Speaker 1: very start, but I do want to ask you a 72 00:04:43,960 --> 00:04:48,800 Speaker 1: very blunt question at this point, do you regret participating 73 00:04:48,839 --> 00:04:54,760 Speaker 1: in this industry that has not really helped the climate agenda? Yeah? Yeah. 74 00:04:55,000 --> 00:04:58,520 Speaker 1: This is sort of like the recent inventor of the 75 00:04:58,600 --> 00:05:04,640 Speaker 1: labradoodle apologizing to the world for inventing labradoodles and all 76 00:05:04,680 --> 00:05:07,839 Speaker 1: of the other doodles because it's become a Frankenstein in 77 00:05:07,880 --> 00:05:11,800 Speaker 1: the dog world. When this first started, this was a 78 00:05:11,839 --> 00:05:14,760 Speaker 1: great idea, and carbon offsets were a way of getting 79 00:05:14,760 --> 00:05:18,000 Speaker 1: electric utilities to talk about climate change and tackle climate 80 00:05:18,080 --> 00:05:21,960 Speaker 1: change before regulation was on the table. Once you start 81 00:05:22,120 --> 00:05:25,040 Speaker 1: doing carbon offsets, it becomes a lot harder to deny 82 00:05:25,760 --> 00:05:29,160 Speaker 1: climate change, and so I don't regret being involved in 83 00:05:29,200 --> 00:05:34,040 Speaker 1: it at that point. But no one ever envisioned the 84 00:05:34,120 --> 00:05:37,440 Speaker 1: idea that voluntary carbon offsets were going to be the 85 00:05:37,480 --> 00:05:40,640 Speaker 1: way that we solved climate change, which is what we're 86 00:05:40,640 --> 00:05:42,640 Speaker 1: talking about today and what a lot of people are 87 00:05:42,680 --> 00:05:47,200 Speaker 1: saying today that was never part of the conversation. And 88 00:05:47,400 --> 00:05:50,719 Speaker 1: you were there when the first carbon offset project was 89 00:05:50,760 --> 00:05:54,000 Speaker 1: created in nineteen eighty eight. How did you get involved? 90 00:05:54,920 --> 00:05:58,480 Speaker 1: I was hired into the World Resources Institute to develop 91 00:05:58,520 --> 00:06:01,360 Speaker 1: the methodology for that project, which was literally the first 92 00:06:01,400 --> 00:06:06,640 Speaker 1: carbon offset project entirely voluntarily done. And w r I 93 00:06:06,760 --> 00:06:10,680 Speaker 1: had selected this agraforestry project in Guatemala before I was 94 00:06:10,760 --> 00:06:14,240 Speaker 1: hired in, and so that's then the project that we 95 00:06:14,320 --> 00:06:17,360 Speaker 1: proceeded with and did a number of others with as 96 00:06:17,440 --> 00:06:20,640 Speaker 1: after that. Now, what is a YES and why were 97 00:06:20,640 --> 00:06:25,200 Speaker 1: they interested in carbon offsets at all? Well, AYES was 98 00:06:25,440 --> 00:06:29,719 Speaker 1: a small company at the time, an independent power producer 99 00:06:30,240 --> 00:06:32,880 Speaker 1: Applied Energy Services is what they were called at the time. 100 00:06:33,400 --> 00:06:37,479 Speaker 1: They were headed up by Roger Sant and he directed 101 00:06:37,480 --> 00:06:41,640 Speaker 1: a YES for many many years, and he was already 102 00:06:41,680 --> 00:06:46,200 Speaker 1: concerned about climate change. He knew that building a coal 103 00:06:46,240 --> 00:06:50,160 Speaker 1: fired power plant was not ideal, but in his view 104 00:06:50,240 --> 00:06:53,159 Speaker 1: and the numbers certainly bore this out. At the time, 105 00:06:53,839 --> 00:06:57,760 Speaker 1: there wasn't anything else he could build to generate power 106 00:06:58,240 --> 00:07:00,200 Speaker 1: given sort of the laws and the rules and the 107 00:07:00,240 --> 00:07:05,239 Speaker 1: economics in the US in terms of his business model, 108 00:07:05,320 --> 00:07:09,120 Speaker 1: and his business model was small power plants. They ended 109 00:07:09,200 --> 00:07:12,679 Speaker 1: up being coal fired power plants and gas fired power plants. 110 00:07:12,920 --> 00:07:15,760 Speaker 1: And he came up with the idea or went to 111 00:07:15,760 --> 00:07:18,640 Speaker 1: the WRII for help with the question of what can 112 00:07:18,680 --> 00:07:21,000 Speaker 1: I do to sort of make sure that I'm not 113 00:07:21,160 --> 00:07:25,720 Speaker 1: having a damaging impact on climate change? And that's how 114 00:07:25,720 --> 00:07:29,640 Speaker 1: the idea of carbon offsets was born. Now, the idea 115 00:07:29,640 --> 00:07:34,239 Speaker 1: of offsets, which the word offset itself, came earlier into 116 00:07:34,280 --> 00:07:39,680 Speaker 1: the lexicon and had been used for sulfur emissions. Did 117 00:07:39,720 --> 00:07:42,880 Speaker 1: the CEO as just turn around and said, well, they've 118 00:07:42,920 --> 00:07:45,240 Speaker 1: done it for sulfur, why not do it for carbon. 119 00:07:45,680 --> 00:07:49,440 Speaker 1: I don't think he went in with any preconceptions, but 120 00:07:49,640 --> 00:07:52,480 Speaker 1: he went in and said, I'm building these power plants, 121 00:07:52,480 --> 00:07:56,480 Speaker 1: they're going to emit carbon dioxide. Is there something we 122 00:07:56,600 --> 00:07:59,960 Speaker 1: can do? John Kerry was active at this time too. 123 00:08:00,400 --> 00:08:03,400 Speaker 1: He helped lead the foundation for using market mechanisms to 124 00:08:03,480 --> 00:08:06,840 Speaker 1: offset pollution. It started with sulfur emissions from coal plants, 125 00:08:06,960 --> 00:08:10,200 Speaker 1: which contributed to acid rain, and the market solution was 126 00:08:10,240 --> 00:08:12,920 Speaker 1: to create a cap and trade system. I led the 127 00:08:12,960 --> 00:08:16,120 Speaker 1: fight in the nineteen eighties when I was chairman of 128 00:08:16,120 --> 00:08:19,120 Speaker 1: a Governor's Task Wars as a non governor as lieutenant governor, 129 00:08:20,320 --> 00:08:24,320 Speaker 1: and we put together the acid rain response. And that's 130 00:08:24,360 --> 00:08:26,880 Speaker 1: when cap and trade was born because we took it 131 00:08:26,920 --> 00:08:32,080 Speaker 1: from the American Enterprise Institute Conservative entity, which had designed 132 00:08:32,160 --> 00:08:35,480 Speaker 1: a market based solution to the problem of sulfur. I 133 00:08:35,520 --> 00:08:37,640 Speaker 1: guess what it worked. We saved it. You don't hear 134 00:08:37,679 --> 00:08:41,000 Speaker 1: about acid rain. Now back to mark of the nineteen eighties, 135 00:08:41,480 --> 00:08:44,439 Speaker 1: WRI teamed up with a relief group called CARE that 136 00:08:44,520 --> 00:08:47,840 Speaker 1: was already operating in Guatemala to see if they could 137 00:08:47,880 --> 00:08:51,640 Speaker 1: set up a carbon offset program. And so the AES 138 00:08:51,920 --> 00:08:56,880 Speaker 1: money went to CARE to expand the work of CARE 139 00:08:57,240 --> 00:09:01,600 Speaker 1: in agriforestry. You know, this involved helping landowners put in 140 00:09:01,840 --> 00:09:06,560 Speaker 1: hedgerows and putting together small tree farms to come up 141 00:09:06,640 --> 00:09:10,199 Speaker 1: with huge numbers of seedlings that could be planted on 142 00:09:10,800 --> 00:09:14,400 Speaker 1: the land. So it tried to build a whole economy 143 00:09:14,600 --> 00:09:20,760 Speaker 1: in rural Guatemala around sort of reforestation integrated into the 144 00:09:20,840 --> 00:09:25,319 Speaker 1: agricultural system. And the methodology that I ended up developing 145 00:09:25,600 --> 00:09:31,600 Speaker 1: was that the carbon sequestration wasn't based on the agricultural systems. 146 00:09:31,640 --> 00:09:34,960 Speaker 1: It was based on protecting the natural forest that otherwise 147 00:09:35,000 --> 00:09:38,040 Speaker 1: would have been cut down as these farmers had to 148 00:09:38,120 --> 00:09:41,319 Speaker 1: abandon their lands in one place as they got depleted 149 00:09:41,679 --> 00:09:45,880 Speaker 1: and move into new lands. So what does a methodology 150 00:09:46,320 --> 00:09:49,920 Speaker 1: for a carbon offset project really entail? Well, the methodology 151 00:09:49,960 --> 00:09:53,400 Speaker 1: that I developed for that project, by today's standards, would 152 00:09:53,480 --> 00:09:58,280 Speaker 1: be seen as laughable. So you know, I did some calculations, 153 00:09:58,280 --> 00:10:00,320 Speaker 1: I made some assumptions. I wrote it all all up 154 00:10:00,360 --> 00:10:04,600 Speaker 1: in a very nice way. Methodologies today, for almost any 155 00:10:04,960 --> 00:10:08,600 Speaker 1: kind of project, there are a whole bunch of things 156 00:10:08,600 --> 00:10:11,480 Speaker 1: they have to address. There are all sorts of tests 157 00:10:11,480 --> 00:10:14,520 Speaker 1: for additionality, and you have to discuss permanence, and you 158 00:10:14,600 --> 00:10:18,040 Speaker 1: have to discuss leakage. None of that existed for the 159 00:10:18,160 --> 00:10:23,160 Speaker 1: first methodology. But the basic idea behind the methodology is 160 00:10:23,160 --> 00:10:27,360 Speaker 1: to say, here's a project, whether it's agraphores ary, whether 161 00:10:27,440 --> 00:10:33,560 Speaker 1: it's cook stoves, whether it's energy efficiency, here is how 162 00:10:33,640 --> 00:10:40,120 Speaker 1: it's going to reduce or remove carbon emissions. And here 163 00:10:40,200 --> 00:10:43,880 Speaker 1: is how we're going to measure the difference between what 164 00:10:43,920 --> 00:10:48,120 Speaker 1: would have happened otherwise the baseline and what happens with 165 00:10:48,200 --> 00:10:51,800 Speaker 1: the project, and how we're going to calculate the difference 166 00:10:51,800 --> 00:10:55,040 Speaker 1: between those two, which is the number of offset credits 167 00:10:55,240 --> 00:11:00,920 Speaker 1: that that project is then allowed to sell. Now, could 168 00:11:00,920 --> 00:11:06,800 Speaker 1: you explain those three terms? Additionality, permanence, and leakage. Right, 169 00:11:07,120 --> 00:11:11,120 Speaker 1: these terms came out of law that already existed in 170 00:11:11,120 --> 00:11:16,160 Speaker 1: the US for other plutants regulated by the Environmental Protection Agency, 171 00:11:16,280 --> 00:11:19,520 Speaker 1: and so we took several of the terms from those 172 00:11:19,640 --> 00:11:23,920 Speaker 1: rules and applied them to the idea of carbon offsets. 173 00:11:23,960 --> 00:11:28,200 Speaker 1: And the three really key criteria for what makes a 174 00:11:28,320 --> 00:11:35,199 Speaker 1: legitimate carbon offset our additionality, permanence, and leakage. Because what's 175 00:11:35,200 --> 00:11:39,320 Speaker 1: happening with an offset is you're in effect permitting a 176 00:11:39,400 --> 00:11:42,440 Speaker 1: ton of CO two to be emitted in one place. 177 00:11:42,600 --> 00:11:46,480 Speaker 1: That's what the offset is, at least in principle, making possible. 178 00:11:47,080 --> 00:11:50,240 Speaker 1: And so the characteristics of the offset have to be 179 00:11:50,280 --> 00:11:54,080 Speaker 1: such that you're compensating for the real characteristics of the 180 00:11:54,120 --> 00:11:58,040 Speaker 1: ton that has now been emitted, and so you have 181 00:11:58,120 --> 00:12:00,920 Speaker 1: to be doing something that wouldn't have other wise happened. 182 00:12:01,200 --> 00:12:04,160 Speaker 1: You have to do something that is quote unquote permanent 183 00:12:04,280 --> 00:12:06,360 Speaker 1: because the ton that's being emitted is going to be 184 00:12:06,360 --> 00:12:09,200 Speaker 1: in the atmosphere for one to two hundred years. So, 185 00:12:09,320 --> 00:12:12,000 Speaker 1: for example, if you're putting a fence around a forest 186 00:12:12,040 --> 00:12:16,240 Speaker 1: to protect that forest, that might be additional because it 187 00:12:16,240 --> 00:12:19,520 Speaker 1: wouldn't have been otherwise protected. It might be permanent if 188 00:12:19,520 --> 00:12:22,560 Speaker 1: you assume that you can permanently protect that forest. But 189 00:12:23,440 --> 00:12:26,280 Speaker 1: all the pressure that there would have been to exploit 190 00:12:26,400 --> 00:12:30,520 Speaker 1: that forest, hasn't that just gone someplace else? And if 191 00:12:30,559 --> 00:12:33,840 Speaker 1: it is exploiting forest someplace else, then the carbon benefit 192 00:12:33,840 --> 00:12:37,480 Speaker 1: of that first project to protect the forest is leaking. 193 00:12:37,760 --> 00:12:40,920 Speaker 1: And then after you go home, what happens to carbon offsets? 194 00:12:40,960 --> 00:12:44,040 Speaker 1: Do you think that you're going to keep hearing about them? 195 00:12:44,080 --> 00:12:49,280 Speaker 1: Because other people would adopt this idea. The popularity of 196 00:12:49,320 --> 00:12:54,040 Speaker 1: carbon offsets grew rapidly. For example, electric utilities in the 197 00:12:54,120 --> 00:12:59,160 Speaker 1: United States, especially cold fired electric utilities, they anticipated that 198 00:12:59,240 --> 00:13:02,800 Speaker 1: their greenhouse gas emissions would be regulated by the mid 199 00:13:02,880 --> 00:13:06,559 Speaker 1: nineteen nineties. Of course, they were off by decades, but 200 00:13:06,760 --> 00:13:11,839 Speaker 1: they were very interested and very motivated to try and 201 00:13:12,280 --> 00:13:16,559 Speaker 1: come up with alternatives to being forced to directly reduce 202 00:13:16,640 --> 00:13:19,480 Speaker 1: their emissions because they had no idea how they were 203 00:13:19,520 --> 00:13:22,079 Speaker 1: going to do that. And so within three or four 204 00:13:22,200 --> 00:13:25,160 Speaker 1: years you had all kinds of companies doing all kinds 205 00:13:25,160 --> 00:13:30,000 Speaker 1: of projects to sort of test out the idea of offsets. 206 00:13:30,120 --> 00:13:33,640 Speaker 1: And after that, offsets got integrated into pretty much every 207 00:13:34,320 --> 00:13:37,960 Speaker 1: policy proposal to tackle climate change at the federal level 208 00:13:38,200 --> 00:13:40,320 Speaker 1: in the US, and they took then they took on 209 00:13:40,360 --> 00:13:44,800 Speaker 1: a life of their own at international fora And was 210 00:13:44,840 --> 00:13:48,959 Speaker 1: there any skepticism about combon offsets during that period early years? 211 00:13:49,400 --> 00:13:57,640 Speaker 1: The skepticism did start to arise relatively early, and it 212 00:13:58,160 --> 00:14:02,839 Speaker 1: was quite active. For example, around the period of the 213 00:14:03,000 --> 00:14:06,320 Speaker 1: Kyoto Protocol, were you there by the way, I was 214 00:14:06,400 --> 00:14:08,920 Speaker 1: in Kyoto. I was not in the negotiating room because 215 00:14:08,920 --> 00:14:10,920 Speaker 1: I was not part of a delegation, but there were 216 00:14:10,920 --> 00:14:14,479 Speaker 1: a lot of us in terms of the non governmental organizations. 217 00:14:14,520 --> 00:14:17,280 Speaker 1: There were hundreds of us, you know, milling around the 218 00:14:17,320 --> 00:14:21,200 Speaker 1: conference center all night waiting for the people in the 219 00:14:21,640 --> 00:14:25,040 Speaker 1: negotiating room to try and come to a final document. 220 00:14:25,280 --> 00:14:27,760 Speaker 1: So people knew that there would be market mechanisms, they 221 00:14:27,800 --> 00:14:31,120 Speaker 1: knew there would be offsets, but there was some real 222 00:14:31,200 --> 00:14:35,560 Speaker 1: concern in the environmental community at the time, parts of 223 00:14:35,600 --> 00:14:37,600 Speaker 1: the environmental community. So you had some parts of the 224 00:14:37,680 --> 00:14:41,320 Speaker 1: environmental community, the groups that were out doing work in 225 00:14:41,360 --> 00:14:43,840 Speaker 1: the field, they saw offsets as a way of funding 226 00:14:44,320 --> 00:14:47,880 Speaker 1: their activities, and this would be the CARES, the Rainforest 227 00:14:47,920 --> 00:14:52,960 Speaker 1: Action Coalition, the Nature Conservancy. But you did see other 228 00:14:53,440 --> 00:14:58,040 Speaker 1: environmental groups that were very concerned that sort of forestry 229 00:14:58,080 --> 00:15:02,400 Speaker 1: would take over and swing the market away from the 230 00:15:02,520 --> 00:15:05,600 Speaker 1: energy side, where they thought a lot more attention needed 231 00:15:05,680 --> 00:15:11,000 Speaker 1: to be delivered and distort sort of the overall effort 232 00:15:11,000 --> 00:15:14,360 Speaker 1: at mitigating climate change. So let's talk about the Quote Protocol, 233 00:15:14,400 --> 00:15:17,920 Speaker 1: which was you know, first agreed upon in nineteen ninety seven. 234 00:15:18,040 --> 00:15:21,520 Speaker 1: But what was the goal when the Quote Protocol was 235 00:15:21,560 --> 00:15:25,280 Speaker 1: being discussed and how did offsets become a part of it. Well, 236 00:15:25,280 --> 00:15:28,440 Speaker 1: the Kyoto Protocol is a protocol to the United Nations 237 00:15:28,440 --> 00:15:33,680 Speaker 1: Framework Convention on Climate Change, which had been approved earlier. 238 00:15:33,800 --> 00:15:37,960 Speaker 1: It didn't place mandates on anyone to do anything in particular. 239 00:15:38,040 --> 00:15:40,840 Speaker 1: It was more of a rhetorical document, you could say. 240 00:15:41,480 --> 00:15:45,280 Speaker 1: The Kyoto Protocol was specifically intended to give some keith 241 00:15:45,880 --> 00:15:49,680 Speaker 1: to the UNFCCC. And so the Quote Protocol said, we 242 00:15:49,800 --> 00:15:53,880 Speaker 1: have annex one countries. These are basically industrialized countries. They 243 00:15:53,960 --> 00:15:58,280 Speaker 1: will have a treaty based mandatory obligation to reduce their 244 00:15:58,280 --> 00:16:02,920 Speaker 1: emissions from a historical base line. We have developing countries 245 00:16:03,000 --> 00:16:07,120 Speaker 1: Annex two countries. They will have an obligation to at 246 00:16:07,200 --> 00:16:10,640 Speaker 1: least report on their emissions, etc. With the idea that 247 00:16:10,680 --> 00:16:16,840 Speaker 1: they eventually start reducing their emissions and carbon offsets and 248 00:16:16,920 --> 00:16:20,440 Speaker 1: market mechanisms generally, because there were a couple different kinds, 249 00:16:20,560 --> 00:16:24,680 Speaker 1: Joint implementation and the clean Development mechanism were a way 250 00:16:25,040 --> 00:16:29,160 Speaker 1: to tell the industrialized countries, this won't be as expensive 251 00:16:29,200 --> 00:16:33,920 Speaker 1: as you think, because you can buy these credits, and 252 00:16:34,040 --> 00:16:37,560 Speaker 1: you could tell the developing countries you're getting something for 253 00:16:37,640 --> 00:16:40,000 Speaker 1: this because a lot of money will flow to these 254 00:16:40,160 --> 00:16:44,640 Speaker 1: projects in your countries. So the idea of these market 255 00:16:44,680 --> 00:16:50,120 Speaker 1: mechanisms was quite key to the final structure of the 256 00:16:50,200 --> 00:16:53,960 Speaker 1: Kyoto Protocol. Now that sounds ideal, right. It would be 257 00:16:54,040 --> 00:16:56,920 Speaker 1: great to find a way in which wealthy countries could 258 00:16:56,960 --> 00:17:00,360 Speaker 1: transfer some of their wealth to developing countries and help 259 00:17:00,400 --> 00:17:04,040 Speaker 1: developing countries not tap into the fossil fuels that really 260 00:17:04,080 --> 00:17:06,760 Speaker 1: powered the developed countries to be developed, and put all 261 00:17:06,800 --> 00:17:11,679 Speaker 1: these emissions into the atmosphere and what you're describing with 262 00:17:11,840 --> 00:17:14,480 Speaker 1: the use of offsets, there is in some way this 263 00:17:14,720 --> 00:17:21,800 Speaker 1: acknowledgement from the developed countries that perhaps the goals of 264 00:17:21,840 --> 00:17:25,800 Speaker 1: reducing emissions that they are setting themselves up for may 265 00:17:25,840 --> 00:17:28,520 Speaker 1: be too stringent, and they needed a way out, and 266 00:17:28,600 --> 00:17:32,639 Speaker 1: carbon offsets provided this way out. The real challenge with 267 00:17:32,720 --> 00:17:36,400 Speaker 1: carbon offsets since the very beginning, is that carbon offsets 268 00:17:36,400 --> 00:17:40,080 Speaker 1: are trying to do two different things, and to some 269 00:17:40,200 --> 00:17:46,280 Speaker 1: extent those things are potentially contradictory. The first is mitigate 270 00:17:46,280 --> 00:17:50,639 Speaker 1: climate change more cost effectively. The other real motivation and 271 00:17:50,840 --> 00:17:55,359 Speaker 1: driver is to reduce the cost to the companies or 272 00:17:55,400 --> 00:17:59,320 Speaker 1: the countries for complying with whatever the rules end up. 273 00:18:00,640 --> 00:18:04,119 Speaker 1: And so let's make this as low cost as possible. 274 00:18:04,880 --> 00:18:08,480 Speaker 1: That ends up being the driver that gets the biggest 275 00:18:08,480 --> 00:18:12,040 Speaker 1: seat at the table, as opposed to let's make sure 276 00:18:12,160 --> 00:18:16,120 Speaker 1: this is actually mitigating climate change. There are far fewer 277 00:18:16,600 --> 00:18:19,879 Speaker 1: people at the table trying to push that point, and 278 00:18:20,000 --> 00:18:23,800 Speaker 1: unfortunately the cost containment has in effect one out. And 279 00:18:23,920 --> 00:18:27,000 Speaker 1: you made this point that when you first started on 280 00:18:27,040 --> 00:18:30,280 Speaker 1: this journey and you saw the idea of Flourish, there 281 00:18:30,359 --> 00:18:34,119 Speaker 1: was a sense of offsets will eventually go away but 282 00:18:34,760 --> 00:18:37,520 Speaker 1: now we're talking about the Kyoto Protocol and you're seeing 283 00:18:37,520 --> 00:18:41,439 Speaker 1: all these countries wanting to adopt it more. It's getting 284 00:18:41,920 --> 00:18:45,520 Speaker 1: further entrenched into the system rather than going away. What happened. 285 00:18:45,920 --> 00:18:47,960 Speaker 1: You know, if all the countries of the world have 286 00:18:48,119 --> 00:18:52,080 Speaker 1: all these policies in place to reduce emissions and encourage 287 00:18:52,119 --> 00:18:55,440 Speaker 1: carboncy equestration, there is no room for an offset market, 288 00:18:55,680 --> 00:19:00,040 Speaker 1: because an offset market is dependent on a supply of 289 00:19:00,080 --> 00:19:05,399 Speaker 1: sets from sectors that otherwise aren't regulated or capped in 290 00:19:05,440 --> 00:19:09,680 Speaker 1: any way. And so I think most of us would 291 00:19:09,680 --> 00:19:13,000 Speaker 1: have assumed, and probably still do assume, that if we 292 00:19:13,040 --> 00:19:16,800 Speaker 1: really were serious about climate change, we would be using 293 00:19:16,880 --> 00:19:21,080 Speaker 1: public policies and measures to make that happen. People have 294 00:19:21,200 --> 00:19:24,399 Speaker 1: become so frustrated with the lack of policy action on 295 00:19:24,440 --> 00:19:27,879 Speaker 1: climate change that they're willing to grasp at almost any straw. 296 00:19:28,560 --> 00:19:32,280 Speaker 1: Carbon offsets is one of those straws, and you know 297 00:19:33,400 --> 00:19:36,000 Speaker 1: it's not going to work, but it gives people a 298 00:19:36,040 --> 00:19:38,960 Speaker 1: sense that we're doing something when we don't seem to 299 00:19:39,000 --> 00:19:44,240 Speaker 1: really be willing to do very much more. Up to 300 00:19:44,280 --> 00:19:55,320 Speaker 1: the break and then the cure to protocols sort of 301 00:19:55,359 --> 00:19:58,919 Speaker 1: get stuck right till two thousand and five countries do 302 00:19:59,080 --> 00:20:02,280 Speaker 1: not ratify it put it into action. Of course, the 303 00:20:02,320 --> 00:20:09,640 Speaker 1: biggest potential buyer of these offsets and potential emission reducing country, 304 00:20:09,920 --> 00:20:14,679 Speaker 1: the US never ratified it. So would you say common 305 00:20:14,720 --> 00:20:18,080 Speaker 1: offsets had their peak in the Kuto Protocol period. I 306 00:20:18,080 --> 00:20:21,280 Speaker 1: think they're probably at a higher peak today, but at 307 00:20:21,280 --> 00:20:24,040 Speaker 1: the time that was something of a peak. And two 308 00:20:24,119 --> 00:20:27,800 Speaker 1: things that you've mentioned. One of them two things really 309 00:20:28,400 --> 00:20:32,560 Speaker 1: sort of torpedoed this idea quite early on. The first 310 00:20:32,760 --> 00:20:36,400 Speaker 1: was that the United States never ratified the Kuto Protocol, 311 00:20:36,840 --> 00:20:41,240 Speaker 1: and the United States had been anticipated to be net 312 00:20:41,280 --> 00:20:45,960 Speaker 1: demand of two billion tons a year for these markets, 313 00:20:46,200 --> 00:20:48,040 Speaker 1: and so the fact that the US was not in 314 00:20:48,080 --> 00:20:52,040 Speaker 1: the market just made the market much harder to envision 315 00:20:52,200 --> 00:20:55,160 Speaker 1: how it was going to work. The other huge thing 316 00:20:55,160 --> 00:20:58,680 Speaker 1: that happened was that the way the numbers were calculated 317 00:20:59,040 --> 00:21:02,879 Speaker 1: for Annex one countries, which included Russia and Eastern Europe 318 00:21:02,920 --> 00:21:07,080 Speaker 1: at the time, they got credit in a sense for 319 00:21:07,200 --> 00:21:10,840 Speaker 1: the collapse of the Soviet Union, and they got credit 320 00:21:11,119 --> 00:21:14,879 Speaker 1: for the collapse of the economy, and so suddenly you 321 00:21:14,960 --> 00:21:19,760 Speaker 1: had this very large number of tons that in principle 322 00:21:20,359 --> 00:21:24,760 Speaker 1: could be sold from Russia to the United States, if 323 00:21:24,800 --> 00:21:27,760 Speaker 1: the United States wasn't buying, but you had this large 324 00:21:27,840 --> 00:21:33,240 Speaker 1: number of tons, not really offsets and not additional because 325 00:21:33,720 --> 00:21:37,000 Speaker 1: it had sort of happened by itself, and that really 326 00:21:37,040 --> 00:21:40,640 Speaker 1: fouled up the market because you have to remember that 327 00:21:40,880 --> 00:21:45,240 Speaker 1: to go out and develop good carbon offset projects takes time, 328 00:21:45,359 --> 00:21:49,080 Speaker 1: it takes money, it's a risk. You're generating these offsets. 329 00:21:49,080 --> 00:21:53,280 Speaker 1: Then over five years, ten years, fifteen years, if at 330 00:21:53,320 --> 00:21:57,199 Speaker 1: some point you think the market might collapse because Russia 331 00:21:57,240 --> 00:22:00,359 Speaker 1: sells a ton of credits into Western Europe, going to 332 00:22:00,400 --> 00:22:05,919 Speaker 1: be very nervous about doing legitimate projects and taking that risk. 333 00:22:06,280 --> 00:22:09,439 Speaker 1: And so the whole between the absence of demand from 334 00:22:09,480 --> 00:22:14,120 Speaker 1: the US and between this potential availability of hot air supply, 335 00:22:14,280 --> 00:22:17,840 Speaker 1: which is what it was called from Eastern Europe, it 336 00:22:17,920 --> 00:22:22,399 Speaker 1: was really difficult for a legitimate offset market to get 337 00:22:22,480 --> 00:22:26,119 Speaker 1: off the ground. But all along, the voluntary carbon market 338 00:22:26,880 --> 00:22:30,040 Speaker 1: for corporations was still pretty active, and you were helping 339 00:22:30,080 --> 00:22:33,320 Speaker 1: companies go carbon neutral through the use of offset. Right, 340 00:22:33,520 --> 00:22:35,879 Speaker 1: there were a few companies at the time, this is 341 00:22:35,920 --> 00:22:39,840 Speaker 1: the mid nineteen nineties that really face no threat of 342 00:22:39,880 --> 00:22:44,040 Speaker 1: regulation at all, but that we're trying to figure out 343 00:22:44,200 --> 00:22:47,240 Speaker 1: how to push the needle, so to speak, on mitigating 344 00:22:47,520 --> 00:22:51,280 Speaker 1: climate change. And so there were a group of companies 345 00:22:51,320 --> 00:22:54,080 Speaker 1: at the time, the Carbon Neutral Network, that was starting 346 00:22:54,119 --> 00:22:58,879 Speaker 1: to explore the idea of what would carbon neutrality look like. 347 00:22:59,520 --> 00:23:02,520 Speaker 1: Interface Carpet was a big player there, and Nike was 348 00:23:02,560 --> 00:23:06,000 Speaker 1: a player there. But we had also been working with 349 00:23:06,119 --> 00:23:11,160 Speaker 1: stony Field Farm Yogurt, which is now a subsidiary of danone, 350 00:23:11,640 --> 00:23:14,520 Speaker 1: but at the time was its own independent company led 351 00:23:14,520 --> 00:23:18,720 Speaker 1: by some very progressive people, and they came up with 352 00:23:18,760 --> 00:23:22,600 Speaker 1: the idea of could we make our dairy and our operations, 353 00:23:22,640 --> 00:23:26,399 Speaker 1: could we make them carbon neutral? Figured out how much 354 00:23:26,640 --> 00:23:29,199 Speaker 1: carbon that all was, and then they went out and 355 00:23:29,240 --> 00:23:33,920 Speaker 1: purchased carbon offsets to be able to say we're carbon neutral, 356 00:23:33,960 --> 00:23:37,120 Speaker 1: and they were the first company to actually do that 357 00:23:37,240 --> 00:23:41,520 Speaker 1: in nineteen ninety six. And because companies then start using 358 00:23:41,560 --> 00:23:45,399 Speaker 1: these carbon offsets, people try to make them into a 359 00:23:45,440 --> 00:23:49,520 Speaker 1: commodity in this voluntary market. And there's this climate exchange 360 00:23:49,560 --> 00:23:51,720 Speaker 1: that was launched by Al Gore in two thousand and 361 00:23:51,760 --> 00:23:56,199 Speaker 1: three called the Chicago Climate Exchange, And somehow then things 362 00:23:56,240 --> 00:23:59,560 Speaker 1: went downhill. What happened Something I said at a conference 363 00:23:59,600 --> 00:24:03,399 Speaker 1: of the Party early on was policymakers tend to forget 364 00:24:03,560 --> 00:24:06,439 Speaker 1: that there are a thousand very smart people in the 365 00:24:06,520 --> 00:24:10,760 Speaker 1: room next door just waiting to game whatever the rules 366 00:24:10,800 --> 00:24:14,880 Speaker 1: are that policymakers come up with for carbon offsets, and 367 00:24:14,920 --> 00:24:18,000 Speaker 1: so you have some people trying to have stronger rules, 368 00:24:18,040 --> 00:24:22,400 Speaker 1: you have some people using weaker rules. That's really problematic 369 00:24:22,440 --> 00:24:25,200 Speaker 1: because it ends up in a race to the bottom 370 00:24:25,280 --> 00:24:27,840 Speaker 1: of the market. And I think a lot of people 371 00:24:27,840 --> 00:24:31,879 Speaker 1: would argue that the Chicago Climate Exchange ended up reflecting 372 00:24:31,920 --> 00:24:35,760 Speaker 1: that because they were embracing methodologies for soil carbon and 373 00:24:35,800 --> 00:24:39,159 Speaker 1: for other things that were so weak that the carbon 374 00:24:39,200 --> 00:24:42,840 Speaker 1: offsets involved were literally being sold for pennies a ton, 375 00:24:43,480 --> 00:24:48,960 Speaker 1: And eventually that just didn't fly anymore and that fell apart. 376 00:24:49,080 --> 00:24:52,400 Speaker 1: But it really illustrated this problem that if if anyone 377 00:24:52,440 --> 00:24:55,360 Speaker 1: can go out and sort of figure out their own methodology, 378 00:24:56,240 --> 00:24:59,200 Speaker 1: how do you maintain quality in a situation like that, 379 00:24:59,640 --> 00:25:02,199 Speaker 1: Because if you go into the market saying I'm only 380 00:25:02,240 --> 00:25:05,520 Speaker 1: going to do really high quality stuff, but all your 381 00:25:05,520 --> 00:25:08,960 Speaker 1: competitors are selling lower quality stuff, you're not going to 382 00:25:09,000 --> 00:25:11,720 Speaker 1: survive in that market very long. So it's turned into 383 00:25:11,840 --> 00:25:15,480 Speaker 1: a very challenging market to be in. In full transparency, 384 00:25:15,600 --> 00:25:18,359 Speaker 1: The first carbon offset project that I worked on. You know, 385 00:25:18,480 --> 00:25:21,920 Speaker 1: we estimated the cost of that at two cents a ton. 386 00:25:22,520 --> 00:25:26,639 Speaker 1: It's hard to imagine today, but at the time it 387 00:25:26,880 --> 00:25:30,280 Speaker 1: made sense. And since then we've realized that these projects 388 00:25:30,280 --> 00:25:34,680 Speaker 1: are actually a lot more difficult to implement than they sound. 389 00:25:35,640 --> 00:25:37,719 Speaker 1: And so if you're able to buy these offsets at 390 00:25:37,760 --> 00:25:41,160 Speaker 1: these cheap prices, and this is early two thousands, then 391 00:25:41,440 --> 00:25:45,840 Speaker 1: why does the market not keep buying them? And why 392 00:25:45,920 --> 00:25:48,480 Speaker 1: is the interest in offset sort of starting to decline? 393 00:25:48,520 --> 00:25:51,159 Speaker 1: In the early twenty tents there were a lot of 394 00:25:51,240 --> 00:25:56,320 Speaker 1: front page exposs and they those who have continued. So 395 00:25:56,760 --> 00:26:00,760 Speaker 1: at some point companies say, is this really worth it 396 00:26:00,800 --> 00:26:04,159 Speaker 1: to risk being charged with greenwashing for going out and 397 00:26:04,200 --> 00:26:07,640 Speaker 1: buying these low cost offsets. We should just go back 398 00:26:07,680 --> 00:26:13,520 Speaker 1: to focusing on energy efficiency programs and reducing our carbon footprint. 399 00:26:13,840 --> 00:26:17,320 Speaker 1: Then twenty fifteen comes around, the Paris Agreement is signed, 400 00:26:17,640 --> 00:26:20,400 Speaker 1: and suddenly offsets are back on the table. And now, 401 00:26:20,440 --> 00:26:22,679 Speaker 1: of course we are talking in twenty twenty two, and 402 00:26:22,720 --> 00:26:26,160 Speaker 1: it's a huge market, and so what causes companies to 403 00:26:26,200 --> 00:26:30,840 Speaker 1: rethink this shame has suddenly the quality of offsets become 404 00:26:31,040 --> 00:26:34,480 Speaker 1: not a problem. If only that were true. What's really 405 00:26:34,520 --> 00:26:39,720 Speaker 1: happened is that everyone seems to have largely given up 406 00:26:40,040 --> 00:26:45,240 Speaker 1: on the idea that governments and policymakers will solve this problem. 407 00:26:45,880 --> 00:26:50,040 Speaker 1: So when the Kyoto Protocol basically failed in terms of 408 00:26:50,240 --> 00:26:53,920 Speaker 1: there was no renewal of the protocol after its first term, 409 00:26:54,920 --> 00:26:58,920 Speaker 1: we switched to a totally different paradigm with the Paris Agreement, 410 00:26:58,960 --> 00:27:02,639 Speaker 1: where everything is suddenly voluntary. Everyone voluntarily comes in and 411 00:27:02,720 --> 00:27:05,720 Speaker 1: makes commitments, and you hope that those commitments will add 412 00:27:05,800 --> 00:27:11,040 Speaker 1: up to what is required. The IPCC, the Intergovernmental Panel 413 00:27:11,040 --> 00:27:14,440 Speaker 1: on Climate Change, comes out and says that if we're 414 00:27:14,480 --> 00:27:17,280 Speaker 1: going to meet the two degree target or a two 415 00:27:17,280 --> 00:27:19,520 Speaker 1: degree target, if we're going to do that, we need 416 00:27:19,560 --> 00:27:25,320 Speaker 1: to be net zero by twenty fifty globally, and that 417 00:27:25,800 --> 00:27:30,520 Speaker 1: then led companies to say, well, why don't we go 418 00:27:30,640 --> 00:27:33,119 Speaker 1: net zero? So this was sort of the next iteration 419 00:27:33,280 --> 00:27:37,159 Speaker 1: from carbon neutrality. But as companies started to step up 420 00:27:37,160 --> 00:27:40,359 Speaker 1: and say we'll go net zero because that's what needs 421 00:27:40,359 --> 00:27:44,080 Speaker 1: to happen, then suddenly they realized, oh, we're going to 422 00:27:44,119 --> 00:27:47,520 Speaker 1: need enormous numbers of offsets to be able to go 423 00:27:47,800 --> 00:27:52,520 Speaker 1: net zero by twenty fifty, So let's get offsets going again, 424 00:27:52,720 --> 00:27:56,880 Speaker 1: and can offsets get us to net zero. It sort 425 00:27:56,880 --> 00:27:59,560 Speaker 1: of depends what you mean. You know, the potential supply 426 00:28:00,160 --> 00:28:05,800 Speaker 1: of low quality, illegitimate offsets is virtually infinite. I mean, 427 00:28:05,880 --> 00:28:09,000 Speaker 1: just for example, something that's happening right now in this 428 00:28:09,080 --> 00:28:13,960 Speaker 1: market is that countries that have always done a good 429 00:28:14,040 --> 00:28:18,040 Speaker 1: job of protecting their forests, their tropical forests, they have 430 00:28:18,200 --> 00:28:21,919 Speaker 1: not been able to participate in offset markets because the 431 00:28:22,000 --> 00:28:24,920 Speaker 1: forest has to be under threat. If a forest is 432 00:28:24,960 --> 00:28:28,400 Speaker 1: not under threat, then you can't do an offset project. 433 00:28:29,119 --> 00:28:33,720 Speaker 1: And the countries like Gabon for example, that have done 434 00:28:33,840 --> 00:28:36,120 Speaker 1: for whatever reason, they've done a good job of managing 435 00:28:36,200 --> 00:28:40,200 Speaker 1: their forests low deforestation rates, they have been very upset 436 00:28:40,320 --> 00:28:43,640 Speaker 1: that they've been locked out of this mechanism. So they 437 00:28:43,680 --> 00:28:48,840 Speaker 1: have now started selling carbon credits into the market that 438 00:28:49,000 --> 00:28:53,200 Speaker 1: basically don't have any additionality. And if you start selling 439 00:28:53,240 --> 00:28:57,160 Speaker 1: billions and billions of tons from standing forests that isn't 440 00:28:57,240 --> 00:29:01,640 Speaker 1: under any immediate threat, yeah you could accomplish at zero, 441 00:29:01,960 --> 00:29:04,840 Speaker 1: but it won't actually have the climate change benefit that 442 00:29:04,880 --> 00:29:08,880 Speaker 1: you're hoping for because it's all just a mirage. But 443 00:29:09,040 --> 00:29:12,760 Speaker 1: that's weird, right. You go through these phases where carbon 444 00:29:12,840 --> 00:29:15,280 Speaker 1: offsets become an interesting tool, then there's sort of a 445 00:29:15,320 --> 00:29:19,600 Speaker 1: boom bus cycle of the commodity life happening here and 446 00:29:19,640 --> 00:29:23,280 Speaker 1: all the time. People have these problems that many become 447 00:29:23,320 --> 00:29:26,400 Speaker 1: aware of them, somehow they forget, and then other groups 448 00:29:26,440 --> 00:29:32,000 Speaker 1: of people become aware of why. Well, it's weird only 449 00:29:32,040 --> 00:29:34,760 Speaker 1: in the sense that in an ideal world it wouldn't happen. 450 00:29:34,840 --> 00:29:37,200 Speaker 1: I mean, we see this kind of thing happening in 451 00:29:37,240 --> 00:29:40,840 Speaker 1: all kinds of areas all the time. Back in two 452 00:29:40,880 --> 00:29:45,840 Speaker 1: thousand and eight, people were cold calling retirees telling them 453 00:29:46,040 --> 00:29:49,560 Speaker 1: you really should invest in carbon offsets for your retirement 454 00:29:49,600 --> 00:29:52,440 Speaker 1: funds because you'll make a lot of money. This was 455 00:29:52,560 --> 00:29:55,240 Speaker 1: two thousand and eight. The market collapsed in two thousand 456 00:29:55,280 --> 00:29:59,720 Speaker 1: and nine. Now people are out telling retirees you should 457 00:29:59,760 --> 00:30:03,160 Speaker 1: be a investing in carbon offsets because you're going to 458 00:30:03,240 --> 00:30:07,120 Speaker 1: make a lot of money, And maybe they're right this time. 459 00:30:07,200 --> 00:30:10,120 Speaker 1: I can't predict the future better than anyone else. I 460 00:30:10,200 --> 00:30:15,040 Speaker 1: can say that these markets are incredibly fragile. This is 461 00:30:15,080 --> 00:30:17,800 Speaker 1: a commodity that you can't see, you can't smell, you 462 00:30:17,840 --> 00:30:21,640 Speaker 1: can't feel. It's sort of like the Emperor's invisible clothing. 463 00:30:22,040 --> 00:30:26,280 Speaker 1: So it's a very strange commodity. And unless you're very 464 00:30:26,360 --> 00:30:30,000 Speaker 1: careful with how you manage that commodity or regulate that commodity. 465 00:30:30,360 --> 00:30:33,800 Speaker 1: You really are just selling a lot of emperors invisible clothes. 466 00:30:33,880 --> 00:30:36,200 Speaker 1: But a lot of people have a lot of money 467 00:30:36,200 --> 00:30:40,320 Speaker 1: at stake in doing just that. I don't think people 468 00:30:40,320 --> 00:30:43,280 Speaker 1: are going into this with nefarious intent, but you know, 469 00:30:43,360 --> 00:30:46,320 Speaker 1: they're able to convince themselves that what they are doing 470 00:30:46,400 --> 00:30:49,760 Speaker 1: is good for the planet, etc. But when you look 471 00:30:49,760 --> 00:30:53,080 Speaker 1: at the whole picture, it is not having much of 472 00:30:53,080 --> 00:30:56,720 Speaker 1: an effect. So officers don't work as they are intended to, 473 00:30:57,080 --> 00:31:01,560 Speaker 1: yet they're everywhere. Is there any way to fix them? Well, 474 00:31:01,600 --> 00:31:04,400 Speaker 1: I think the two ways you could go about fixing them. 475 00:31:04,600 --> 00:31:06,680 Speaker 1: One is to go back to a decision that was 476 00:31:06,720 --> 00:31:10,200 Speaker 1: made very early on in terms of a positive list 477 00:31:10,320 --> 00:31:14,520 Speaker 1: versus the alternative. And the positive list was somebody would 478 00:31:14,520 --> 00:31:17,880 Speaker 1: sit down and decide what offsets are good offsets, and 479 00:31:18,360 --> 00:31:20,760 Speaker 1: those would go on to a positive list and only 480 00:31:20,800 --> 00:31:24,280 Speaker 1: those could be brought into the market. And this was 481 00:31:24,560 --> 00:31:28,000 Speaker 1: abandoned very early on in the process because no one knew, well, 482 00:31:28,040 --> 00:31:29,880 Speaker 1: who's going to do it, how would they pay for it, 483 00:31:29,920 --> 00:31:32,120 Speaker 1: how long will it take. Let's do more of an 484 00:31:32,120 --> 00:31:34,760 Speaker 1: ad hoc system, which quickly turned into sort of a 485 00:31:34,800 --> 00:31:39,400 Speaker 1: creative writing exercise to get projects proved. So the other 486 00:31:39,440 --> 00:31:43,680 Speaker 1: thing that could make a significant difference is giving buyers 487 00:31:44,000 --> 00:31:49,240 Speaker 1: the ability to differentiate between lower quality and higher quality offsets, 488 00:31:49,840 --> 00:31:53,960 Speaker 1: and that could be done through a scoring system, and 489 00:31:54,160 --> 00:31:57,400 Speaker 1: my team many years ago developed the first carbon offset 490 00:31:57,400 --> 00:32:01,640 Speaker 1: scoring system, where basically all offsets would be ranked or 491 00:32:01,680 --> 00:32:05,479 Speaker 1: scored between zero and a thousand to say, here's how 492 00:32:05,560 --> 00:32:09,760 Speaker 1: much confidence you can have that this offset is satisfying 493 00:32:09,800 --> 00:32:14,440 Speaker 1: the criteria of additionality, permanence, and leakage. Ideally, people would 494 00:32:14,480 --> 00:32:18,760 Speaker 1: buy eight hundreds and would not buy two hundreds. So 495 00:32:18,960 --> 00:32:22,160 Speaker 1: if we're going to have offsets, the idea of scoring 496 00:32:22,200 --> 00:32:26,440 Speaker 1: offset seems to me an option that could do a 497 00:32:26,520 --> 00:32:30,120 Speaker 1: lot of good. So, given all the problems we've talked through, 498 00:32:30,600 --> 00:32:34,480 Speaker 1: you've still stuck with this market for thirty audios. Why 499 00:32:35,040 --> 00:32:38,840 Speaker 1: this is by no means my primary focus. I'm focused 500 00:32:38,880 --> 00:32:41,480 Speaker 1: on climate risk issues and how can we better communicate 501 00:32:41,520 --> 00:32:45,040 Speaker 1: climate risk. But I do continue to get drawn back 502 00:32:45,080 --> 00:32:48,480 Speaker 1: into the offsets issue just because I have been around 503 00:32:48,520 --> 00:32:53,320 Speaker 1: it for so long. But I personally really do despair 504 00:32:54,000 --> 00:32:57,320 Speaker 1: that will ever use offsets in the way that we 505 00:32:57,440 --> 00:33:01,040 Speaker 1: could as a climate change mitigation tool. It's just too 506 00:33:01,160 --> 00:33:04,920 Speaker 1: easy to do it wrong, and we just keep seeing 507 00:33:04,960 --> 00:33:10,880 Speaker 1: that repeatedly. Mark, thanks for coming on the show. Thank 508 00:33:10,880 --> 00:33:20,920 Speaker 1: you very much. I've been writing about carbon offsets for 509 00:33:20,960 --> 00:33:23,680 Speaker 1: a few years now and I still haven't plumbed all 510 00:33:23,720 --> 00:33:28,040 Speaker 1: the depths or grasped all the complications. However, talking to 511 00:33:28,120 --> 00:33:31,080 Speaker 1: Mark has allowed for probably the clearest understanding of where 512 00:33:31,120 --> 00:33:34,080 Speaker 1: things stand today. If you want to read more about 513 00:33:34,080 --> 00:33:37,040 Speaker 1: the dodgy world of offsets and how big brand names 514 00:33:37,080 --> 00:33:39,920 Speaker 1: continue to fall for them, check out a three part 515 00:33:40,000 --> 00:33:43,640 Speaker 1: investigation that Bloombergreen published recently. You can find it at 516 00:33:43,640 --> 00:33:46,560 Speaker 1: bloomberg dot com, slash green, or in the show notes. 517 00:33:47,680 --> 00:33:50,040 Speaker 1: I want to recommend the podcast A Matter of Degrees, 518 00:33:50,160 --> 00:33:53,280 Speaker 1: Doctor Catherine Wilkinson and doctor Leah Stokes talk about the 519 00:33:53,320 --> 00:33:56,200 Speaker 1: forces behind climate change and the tools we have to 520 00:33:56,240 --> 00:33:58,720 Speaker 1: fix it. They just put out a bunch of episodes 521 00:33:58,760 --> 00:34:03,000 Speaker 1: about what individuals can do. I recommend part to the Professional, 522 00:34:03,320 --> 00:34:05,640 Speaker 1: where you can follow along as an oil worker tries 523 00:34:05,680 --> 00:34:08,920 Speaker 1: to change jobs and go green. Thanks so much for 524 00:34:08,960 --> 00:34:11,439 Speaker 1: listening to Zero. If you like the show, please rate, 525 00:34:11,560 --> 00:34:14,800 Speaker 1: review and subscribe, Tell a friend or tell a cabin 526 00:34:14,840 --> 00:34:17,920 Speaker 1: trade expert. If you've got a suggestion for a guest 527 00:34:18,000 --> 00:34:20,400 Speaker 1: or topic, or something you just want us to look into. 528 00:34:20,760 --> 00:34:23,360 Speaker 1: Get in touch at zero pod at Bloomberg dot Net. 529 00:34:24,040 --> 00:34:27,280 Speaker 1: Zero's producer is Oscar Boyd and senior producer is Christine 530 00:34:27,360 --> 00:34:31,600 Speaker 1: riskoll Our. Theme music is composed by Wondering. Many people 531 00:34:31,640 --> 00:34:34,600 Speaker 1: help make the stories we featured on the podcast special. 532 00:34:34,640 --> 00:34:38,520 Speaker 1: Thanks to Natasha White and Demetrius Podcasts for their interminable 533 00:34:38,520 --> 00:34:42,520 Speaker 1: attention to detail. I'm Akshatti back next week.