Cost of carbon offsets ‘could rise ten-fold’ in next decade

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A group of tourists takes a tour on the Sarapiqui river on a farm where plantations compensate the carbon footprint of its visitors, in Heredia, Sarapiqui, Costa Rica, on October 28, 2020. - Costa Rica reported that tourists will be able to offset the carbon footprint generated by their flights and land travel with the aim of supporting the green economy the country promotes internationally. The initiative includes tree planting, protection of hydrographic basins, natural regeneration, and implementation of agroforestry systems on farms. (Photo by Ezequiel BECERRA / AFP) (Photo by EZEQUIEL BECERRA/AFP via Getty Images)
Heredia, Sarapiqui, Costa Rica, where tourists can offset their flights by planting trees. (Ezequiel Becerra/AFP)

The cost of "offsetting" carbon emissions by reducing emissions elsewhere will increase ten-fold in the next decade, a new report suggests. 

Current prices are too low and must increase significantly to encourage investment in projects to remove carbon from the atmosphere, the Trove Research and UCL report says. 

The UCL researchers described the current carbon credit market as a "Wild West" – and suggested further regulation is needed. 

According to the research, prices are currently low due to a surplus in supply but are expected to rise five- to ten-fold over the next decade as more companies adopt Net Zero commitments. 

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Professor Simon Lewis of UCL said: "The current market in carbon credits is the Wild West where too often anything goes. 

“A clean-up and independent regulation is required, which will increase the price of carbon credits. 

“This is because in reality it is costly to remove carbon dioxide from the atmosphere. Overall it will be cheaper in the long-run to invest in moving to zero emissions rather than relying on offsets. 

“But for those emissions that remain, the true price of removing carbon from the atmosphere must be paid, as the alternative is greenwash."

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Guy Turner, CEO of Trove Research and lead author of the study, said: "It is encouraging to see so many companies setting Net Zero and Carbon Neutral climate targets. 

“What this new analysis shows is that these companies need to plan for substantially higher carbon credit prices and make informed trade-offs between reducing emissions internally and buying credits from outside the company's value chain."

A report from Greenpeace last month suggested that "forest protection" schemes used by airlines to allow "carbon neutral" flying are flawed. 

The research suggested that the calculations used by a major US non-profit to calculate carbon offsetting through some forest protection schemes can be flawed, Greenpeace claimed. 

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The report, by Greenpeace and The Guardian, examined 10 forest protection schemes administered by Verra, which administers the carbon credit standard VCS (Verified Carbon Standard).

Greenpeace and the Guardian claim that schemes which rely on predictions of deforestation that would have occurred without the scheme are often flawed. 

Greenpeace said in a statement this week: "Satellite analysis of tree cover loss in the projects’ reference regions, carried out by leading consultancy McKenzie Intelligence Services, found no evidence of deforestation in line with what had been predicted by the schemes.

"The offsetting market may not be fit for purpose because projects calculate their climate benefit using what some experts viewed as simplistic methodologies that fail to account for the impact of markets and governments on deforestation.:

Verra strongly denies the claims.

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