Carney Says Carbon Offsets Must Be Limited to Residual Emissions

(Bloomberg) -- The use of carbon offsets should be a last resort to cover only a small fraction of emissions if the world is to achieve meaningful decarbonization, according to Mark Carney, the co-chair of the Global Financial Alliance for Net Zero.

The “best practice” is “really that those offsets are at the end of a process of reducing absolute emissions,” Carney said during a presentation in Oslo hosted by Norges Bank Investment Management. “So it’s the residual emissions.” 

A landmark agreement was struck earlier this month at the COP26 climate summit in Scotland to create a global market for carbon offsets. After a six-year deadlock, negotiators agreed on rules addressing international emissions trading as well as a United Nations-controlled market place. Demand for offsets is soaring as net-zero commitments turbo-charge a race to slash emissions.

Carney last year teamed up with Bill Winters, the chief executive of Standard Chartered Plc, to create a task force of business leaders, bankers, scientists and others to establish unified rules for voluntary markets. They estimate that the offset market could be worth $100 billion by the end of the decade, up from just $300 million in 2018.

Carney said on Tuesday it’s his clear impression that “you can only be a participant as a buyer” of carbon offsets “if you have a credible de-carbonization plan.”

Michael R. Bloomberg, the owner and founder of Bloomberg News parent Bloomberg LP, is co-chair of GFANZ.

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