A number of big companies decided to create in-house carbon credits despite criticisms against offsets.
GSK, Volkswagen and Total are among the corporate firms that continue to lean on carbon credits to offset carbon emissions.
Corporate carbon offsetting means a polluting company buys a carbon credit to make up for the carbon it emits. Existing carbon offsetting schemes are facing backlash due to the poor quality of some offset projects.
Moreover, large companies seeking to use carbon credits to offset their emissions are coming under scrutiny, as carbon offsets are exploited in developing countries where most projects operate.
Carbon offsets are controversial. Some groups raise concern that heavy reliance on carbon offsets led to corporate greenwashing. Others believe that it can discourage companies from directly cutting their carbon footprint. Overall, there’s a consensus in the sector to ensure that corporate offsets don’t replace or delay urgent actions to decarbonize.
GSK Plc, one of the world’s leading pharma companies, believes that carbon offsets are a crucial tool that moves capital needed for health, nature, and climate.
“Just because it’s [carbon offsetting] not perfect doesn’t mean we’re going to step out. We’re going to lean in and make it better,” Adele Cheli, director of sustainability partnerships and strategy of GSK said.
An industry expert once said that companies with their own offsetting projects can manage the impact and quality of their offsets better than buying from carbon credit brokers.
GSK aims to be carbon neutral by 2030 while planning to use offsets until at least 2045. The London-based pharma believes that in-house carbon credits can offset any emissions it can’t get rid of.
GSK has been leaning on the carbon capture power of mangroves in the coastal areas of Indonesia. The pharma company partners with First Climate, a carbon project developer in its mangrove project in Java seeking to restore mangroves in more than 2,500 hectares. In exchange for its funding support, GSK expects to generate up to 140,000 carbon credits every year from the project.
The company even plans to produce as much as 2 million carbon credits each year for its own offsetting purposes. It has more upcoming projects to get all the credits it requires beyond this decade.
German carmaker Volkswagen is even more ambitious, setting a goal of generating 40 million credits each year by 2030. That’s understandable though because the automaker emits around 30 times more carbon than the drug maker.
That goal makes up about 25% of the amount of offsets that global companies bought and retired last year. Bloomberg reported it to be at 155 million.
Volkswagen AG seeks to reach net zero emissions by 2050. It partnered with a local carbon project developer to develop its own carbon credit generating venture called “Volkswagen ClimatePartner GmbH.”
The goal of the program is to offset emissions from the carmaker’s electric vehicle production supply chains in Europe. It has eight projects underway which includes forests and savanna protection. The venture’s director said that they expect to generate the first carbon credits by 2025.
A representative from the big oil and gas industry, TotalEnergies, can’t agree more with the German automaker. The energy firm’s former executive of nature-based climate solutions said that investing in offset projects now is a good start. It can produce good credits in five years time.
Total SE aims to support nature-based projects with $100 million each year. It is meant to have its own natural carbon sinks that can suck in a total of 5 to 10 million tons of carbon each year starting in 2030.
The oil giant is investing in projects that protect forests, regenerative agriculture, and wetlands.
Other corporates are also turning their focus and investment to carbon credit projects that can offset their huge carbon footprint. Shell, Chevron, Barclays, and Bayer AG are among those who are investing millions of dollars in nature-based climate solutions such as reforestation, mangrove restoration, and regenerative agriculture.
The Taskforce for Scaling Voluntary Carbon Markets (TSVCM) survey indicated that market size in 2030 can grow into ~$50 billion at the high end of estimates. That means about 200 times growth for the carbon offset market within a decade.