Written by – Dr. Kaviraj Singh, Founder and Managing Director, Earthood,
– Gowri Natarajan, Public Policy Consultant
What is often thought of as a faraway future is currently our reality Climate change. It is happening to the earth and to all of us – to the water we consume, to the air we breathe, the food we eat and evidently our health and longevity. As the world grapples with this and the new realities of the post-pandemic era, global recovery is becoming harder for countries. The clock continues to tick, whether we take it seriously or not. But let us get serious and look at some interesting statistics:
● The global average temperature in 2022 is estimated to be about 1.15 [1.02 to 1.28] °C above the 1850-1900 average.
● 2023 saw the second warmest March on record according to two internationally recognized datasets which feed into World Meteorological Organization’s State of the Global Climate reports. 2015 to 2022 are likely to be the eight warmest years on record.
● Data from key monitoring stations show atmospheric levels of carbon dioxide, methane, and nitrous oxide continue to increase in 2022.
● Average annual atmospheric levels of carbon dioxide (CO₂) reached a record high of 418.56 parts per million (ppm) in 2022, a year-on-year increase of 0.5 percent.
● Some nations’ coastlines have seen triple the average rate of sea level rise posing threats as high as sinking of countries to loss of civilizations.
● Global mean sea level has doubled over the 30 years (1993-2022) of the satellite altimeter record.
● 250 and 400 million people will likely need new homes in new locations in less than 80 years.
● For the monitored glaciers globally, an average of just over 30 m reduction in ice thickness has been observed since 1957 (vs 2022)
As a reaction to this bleak climate in the world, multilateral agencies and Governments came together to design frameworks and committed to action plans. The Paris Agreement of 2015, COP Summits under UNFCCC, SDGs, Earth Summit, World Sustainable Development Summit to name a few. Over the years, especially after the Paris Agreement came into force, more and more stakeholders were able to appreciate the extent of efforts and complexities of adaptation for this to succeed, in terms of time, processes, policies, investment, rehabilitation and more.
In the last few years, Governments, policymakers, businesses, and not-for-profits have been collaborating and mulling over combinations of solutions that might create an ecosystem for a sustainable future that does not trade off with development.
One such milestone of an idea was ESG. A closer look at the evolving and dynamically growing ESG frameworks across the world shows that it has outgrown its role as a sustainability parameter to a business attractiveness parameter.
A recent report by KPMG (2022), cited that 79 percent of the top 100 companies in India publish a standalone ESG report. This is a definite success in the right direction, especially for one of the fastest growing developing nations in the world.
It is one to adhere to frameworks and a completely different game to commit and act towards offsetting environmental damage caused by organizations. And this is where the entire carbon offsetting and carbon credits game becomes interesting and tricky. Carbon credits give organizations the right to emit GHGs and trade if they emit more than their allocated limit.
Carbon offsets are driven by third parties that invest in reduction of GHGs that are then sold to organizations emitting GHGs. In simple terms, carbon credits drive businesses to invest in sustainable practices; carbon offsets drive businesses to invest in organizations that are sustainable.
This makes the entire carbon sequestration equation quite complicated as businesses can continue to pollute as long as they can fund organizations that can “offset” it for them.
In light of this complexity, we definitely have set ourselves an ambitious goal of a net-zero emissions world by 2050. But are we on track? The global voluntary carbon market was valued at US$2,004.85 million in 2021 and is expected to reach 17.11 billion by 2027. But data shows that issuance of carbon credits dropped by 21% in 2022 to 279 metric tonnes, compared to 2021.
Investor sentiments, geopolitics, business trends; pretty much anything in the world tips off the scale against businesses invested in carbon offsets.
While the voluntary carbon offset market is making a steady progress, the business and the carbon offset project developers are still waiting for the complex article 6.4 rules to come out which will set the framework for compliance carbon offset market for the world.
Everyone everywhere is trying to solve climate change, all at once. This ever-evolving amalgamation of solutions is driven by different stakeholders, different agendas, for a different
Outcome; yet grounded in tackling climate change. Now that the goal is identified and locked, how do we get there?
● Need for accountability to global commitments (at SDGs, COP, Paris agreement etc.) – It is not enough to commit to emission reductions and net zeroes. Countries need to follow through their commitments and lead with examples for others.
● Invest in climate finance – The world needs more funds, especially from the developed nations to help developing countries adopt better technologies, infrastructure, and solutions for a greener future.
● Focus on energy transition – Renewable energy (solar, wind, hydro) are our saviours when it comes to reducing dependence on fossil fuels. The world is already moving to electric mobility, it is only a few years till we move away from diesel/ petrol fueled vehicles.
● Design robust national and international policies to incentivize businesses to offset pollution caused by their operations – Sectors such as transport, textiles and agriculture are known culprits in terms of their adverse impact on the environment.
Governments need to adopt policies and engage levers that incentivize responsible businesses. This must be combined with enabling an ecosystem of citizen-centric awareness that questions and drives businesses to be more accountable to the Govt. and environment at the same time.