This is a post about carbon credits and the challenge of turning work-related matters into fiction, so although the topic might seem a bit out there it’s really just as much about stories as everything else on this blog. However, it does have a slightly technical introductory few sections.
I first came across carbon credits properly while working in Russia – there were some Federal initiatives involving trees that might have produced some – but as with a lot of things out there, it went nowhere. A bit later, a friend and I had an abortive mad dash into Paraguayan property to do our own afforestation (tree planting) project. After digging around our connections it turned out we had someone on the Paraguayan supreme court; unfortunately what we didn’t have was a zero in the right place in the financial model my friend put together, and so fortunately I did not end up the proud owner of several thousand acres of field on a continent I’ve never visited.
Somehow, since then carbon credits have continued to come up in my life. Before I can talk about their relationship to narratives I first want to explain how they work in principle:
If you accept that global warming is happening and primarily caused by human activity, and that the consequences for things you care about (animals, people, coastal golf courses) are bad enough to do something, then you want to prevent the bad things from happening. You, an individual, can do whatever you want to combat global warming – stop driving, eat less meat – because you have decision-making rights over your own actions.
As a business, however, one is beholden to one’s shareholders and government regulations. Enough shareholders want money that businesses need to listen to them or face financial consequences in the form of a cratering share price, which means that even if you as a business are doing the right thing, you’ll probably find yourself without the money you need to do it. (This is a simplification as pressure can also go the other way.) Instead, we generally rely on regulations to nudge us to do good things, like not dumping our toxic waste in the nearest body of water, such as the swimming pool at the special needs school.
Forced to do the right thing, a business continues following this profit motive by finding the cheapest way to do it. First, you electrify your operations using renewables; then you make your furnaces more efficient; then you replace your fleet of polluting cars with electric vans; then you replace the natural gas in your furnace with biogas or hydrogen from renewable sources, and so on. You may have seen graphs showing the cost of each of these things or similar – they generally look like a series of steps, because each option is more expensive than the one before. (Here’s one from the World Bank).
Functionally, however, each decarbonisation lever has the same effect – one unit of a greenhouse gas, typically carbon dioxide, is not produced. The only difference is the price. If you want to save the planet, you start with the cheap stuff for the most impact at the lowest cost, then gradually work your way up as the governments increase the regulatory temperature (for example, through a carbon price or cap-and-trade system like the EU’s emissions trading system, or ETS).
Carbon Credits
Whence then carbon credits? Consider this: if the overriding goal is decarbonisation, why should a company do something when they can pay someone else to stop the CO2 emissions for less cost? For example, if my new green vans cost more than your improved insulation, why don’t I pay you to install more of it before I start paying the higher cost for my things?
This is the kind of environment where carbon credits come in. Trees absorb carbon for free, which is a lot cheaper than the fancy new catalytic cracker at my oil refinery. But some trees are under threat from deforestation. Now with my forestry manager’s hat on, if you pay me a dollar, I will gladly not chop these trees down and instead will take care of them for you. (The price essentially replaces the earnings I would get from cutting the trees down). To give another example, renewables displace carbon from a dirty electricity grid, and are pretty cheap too – why don’t you pay me for setting them up too? This idea of paying for making green decisions happen that otherwise would not is the way that carbon credits justify their own existence.
Carbon credits or offsets have had a rough history for a number of reasons, however.
The initial credits were avoidance credits, rather than removals. This means we avoided deforestation or avoided using our coal-fired power plants. The problem was that it was hard to quantify the amount avoided, which meant the system was vulnerable to fraud or things that looked like fraud. BP owns the biggest US offset company, and there’s potential that the offsets sold were not really protecting much of the land because it was too remote to be at any risk to begin with. Certain other oil majors (and not only them) have been criticised in the press (nothing new there) for buying “junk offsets”, which were cheap and of dubious benefit. Occasionally, we hear stories of Uyghur slave labour or other human rights abuses associated with projects.
In theory, credits should be of a “high standard”, letting them also command a relatively high price. Credits are typically verified by registries in a fairly complex process to ensure they are real and have a real impact. Credits that bring co-benefits – like employing local workers or providing a biodiversity boost – can often charge more as a result too. There are audits, site visits, and other costs for developers. But bad projects do slip through the cracks, and given this is very much a nascent market, wrongdoers have a big negative impact on the market’s overall reputation.
What Market?
Carbon credits are not monolithic. The pressure placed upon companies by the EU is not the same that a consumer-facing business might place on itself on behalf of its customers. Hence, we have two market types where carbon is traded. The compliance markets, if they allow credits at all for emissions reductions, set strict quality requirements. The voluntary market, which is where most of the carbon credits that we think of are sold, typically allows much more flexibility. That’s because your credits are your own business – the businesses buying voluntary credits are doing so because they voluntarily want to say they are decarbonising and not because their governments are regulating them to. Yet…
This can be a bit confusing. Especially because, for example, oil and gas companies are largely not forced to decarbonise operations via regulators, whereas other industrial players like steel producers in the EU are part of the ETS, mentioned above and so have to. (Or close down and take their business elsewhere…) Oil and gas give the voluntary market a bad name, but the main players are actually technology companies and other “services” companies – financials, consulting, insurance. Apart from the technology companies, these have tiny emissions and nobody is telling them to do anything about them, except potentially their employees or clients. So, after they turn the lights off in the office and buy renewable electricity, they might chose to get involved with the VCM (voluntary carbon market).
Avoidance or Removals?
As I mentioned, back in the day (and still now in fact), the main type of credits were avoidance credits. They were a mess of fogginess and occasional fraud, so some forward-thinking companies now generally avoid buying them: it’s not often that you see a business boasting of a big purchase of avoidance offsets. But there is another type – removals. Instead of preventing a tree from being felled, you can plant a tree. Or several hundred thousand. This is a much clearer direct impact, and more easily measurable. (One tree absorbs x tonnes of CO2 over y years vs the z tonnes of absorption of whatever was there before).
Trees are pretty cheap still, but there are other ways of helping the world decarbonise. The most obvious comparison with afforestation is direct air capture, or DAC. You might have heard of Climeworks in Iceland, or 1PointFive in the US. Gigantic fans suck carbon out of the air at a gigantic cost in electricity and other resources. (Carbon is a bother, but as it’s not a big percentage of the air we breathe, you need a lot of air going through your fans to extract enough of it to make a difference). DAC is extremely expensive as a result of this, so its credits are too, even though, according to the International Energy Agency, we basically need it in every possible scenario where future generations are not very mad at us.
Now, companies are proud of buying removals credits – it’s easy to find press releases on the topic from companies like Microsoft or Klarna – and so they should be. They may be under pressure from activist investors or want to boost their reputation amongst consumers, but generally, they are doing a good thing they didn’t need to do. In moral terms, they are almost doing a supererogatory action.
Ways of thinking about removals
We need carbon credits of this sort to decarbonise the world. Removals aren’t greenwashing, and they are fairly rigorous if not perfect. The huge number of avoidance offsets which certain companies, mainly oil majors, have banked up… might be closer to that. As soon as we talk about greenwashing, we get to the standard metaphor by which people explain carbon credits, the one I have deliberately avoided using until now – that of an indulgence.
So, indulgences… In early modern Europe, knights had a problem. They wanted to go on crusades and rape and murder vast numbers of innocent (infidels), but they knew this just might contradict a thing or two written in the Bible. One way out, which became widespread in plenty of other contexts, was through indulgences. Essentially, you are paying for the road to Heaven to be cleared of obstacles a little. It made perfect theological sense because the priests thought it up, and it had the benefit of requiring the knights to do absolutely nothing about their actual behaviour.
Returning to now, carbon credits seem similar because they let companies continue polluting with only a small cost to them. They seem useless and a source of greenwashing in the same way that indulgences were heaven-washing. Hence, the comparison smarmy commentators like to make.
But it is a false one for most credits. Unlike Indulgences, which had no central registry at the Vatican nor any monitoring, reporting, and verification (MRV) setup, credits do try to do what they say. Nobody can verify the effects of indulgences – which may still have worked – but we can verify the carbon taken from the air by the growth of a tree’s bulk, for example. Most companies buy removals after they have done the cheap and easy stuff, like purchasing renewable energy – not instead of this. Removal purchases are thus an extension of good behaviour, rather than an alternative to it as in the case of the crusaders.
Carbon Credits and Literature
The problem is that the indulgences metaphor is a damn good one, and hard to avoid considering once you’ve first encountered it. It largely prevents us from considering carbon credits as themselves. Rather than simplifying a topic, it blocks it from view and pats itself on the back for it.
I’ve been thinking a lot about my work recently, about how I might transform my experience of it into some kind of story if decided I wanted to. (The thought abutting that one is that I should finally read David Foster Wallace’s The Pale King). Nobody wants to read about carbon credits within a story – they need to stand in for something else. My own, mildly technical introduction, is already far too much. If we used them in a narrative, they would need to be part of some human story, and the problem is that most of the human stories I can tell about carbon credits are ones where the credits themselves are the villains.
The indulgences analogy is very easy. A story about credit fraud practically writes itself, especially since you can just use a real story of the sort I linked above and add the details. Aren’t credits a great example of how humanity will never do the right and proper thing (decarbonise industry) and will instead take some stupid, easy option (buying credits)? Another option, one slightly more positive about the credits themselves, would be to have a story about an afforestation project somewhere in the US that then burns down in a wildfire. Man vs nature, anyone? That’s pretty classic. But it also says that we were selling semi-permanent carbon storage, which has, in fact, just gone up in smoke – and hence, again, readers are made to doubt the integrity of carbon markets. (For this kind of situation, a certain percentage of offsets are kept on hand by registries as insurance, but again, that’s not an exciting story, so I leave it in brackets).
The problem with the credits is that if they are done properly there’s no story to them except a good one. A local community given new jobs, biodiversity supported, carbon removed. That’s not the stuff of drama or tragedy; it’s not really the stuff of anything at all except life as people actually live it.
It’s irresponsible to take something which is both necessary and much maligned and continue the slander begun by the (relatively) ignorant. If I wrote one of the stories above, as a writer I would be doing damage, just for a metaphor. What do I do as someone mindful of the meanings that might be read into a story? My company has a sewage sludge project – now there’s another thing ripe for a metaphor. But the metaphor it’s ripe for is a positive one, and hence not worth writing except in a press release – society makes a lot of waste, but companies want to improve (valorise) that waste and bring value back to consumers. In this case, as a type of fertiliser feedstock, I think. All this also fits into general narratives about the circular economy we need to move towards to be more sustainable. (Another option for our story – what my company does is literal shit. Again, a mean image that does nothing.)
Business is generally boring because it has no interest in creating stories, only value. What this means is that the only stories it creates are negative ones, created by mistake and scandal. A story is only ever a hit to the share price. Yet you believe the business or wider industry is doing something good, why should you write such stories or think them up? I like my job, and generally approve of my company’s direction. I spent six months where sustainability decisions were happening and not once did I catch a whiff of greenwashing. That’s not a story.
The general dearth of stories in my present professional existence is a bit of a bother to this budding writer. I hope this brief exploration of the pitfalls of using carbon credits to tell a certain type of story indicated the challenge I keep coming across when I try to turn my work into any kind of engaging story. Still, I have quite a long time left in the workforce, so I’ll keep thinking and see what other stories I may yet find in that place where I am obliged to spend most of my waking hours.