It’s easy to despair about climate change. No immediate action seems plausible as a response the size of the challenge we face. Carbon neutrality is proving to be the business response that works right now and sets in chain the long-term transformation needed.
An immigrant to California, I came armed with a Ph.D. and desire to make the world a better place through developing technically efficient and beautifully designed products. I must live in one of the most desired climates in the world: sunny, dry, consistent weather in a majestic state with towering redwoods, granite boulders, and thundering waves crashing along the undeveloped Pacific coast.
But the fear of earthquakes has been replaced by being a prisoner to our climate. For two weeks last November, we lived in a smoke-filled haze under a glowing red sun; we drove wearing masks to prevent inhaling the particulate matter. And our challenges were minimal compared to the communities in Paradise and Camp whose town was destroyed by wildfire in eight hours: 90 people died and over 18,000 structures were burnt to the ground.
The IPCC report and the continual news of devastation from extreme weather (tsunamis, wildfires, floods, mud slides, bursting dams) are alarming. Watching Great Thunberg’s earnest pleas for action can make you feel impotent. How is it that our youngest see things so clearly?
There does seem to be a growing response from business. Carbon neutrality is becoming a standard business practice. Microsoft is carbon-neutral, as are MetLife, Lyft, Salesforce, Google and BCG. And it’s not just for the big corporates or West Coast entrepreneurs. Startups (Diamond Foundry), small-(Burts Bees) and medium-size companies (Fetzer Vineyards) are carbon-neutral, and even countries like Costa Rica, the UK, and Finland have made bold commitments.
These carbon-neutral programs mean organizations are delivering action now. And that speed is critical. While big technological solutions may be on the way, we do not have time to sit and wait. These organizations are measuring the greenhouse gas emissions for operating their business, manufacturing a product, holding an event, or running the country, and reducing them to zero. They are doing that by making their businesses more operationally efficient, using renewable energy, and financing external emission reduction projects: carbon offsetting.
As Patrick Flynn, sustainability lead at Salesforce, noted recently “Winning slowly is the same as losing.” Carbon neutrality is the baseline action for me: it marks the inflection point at which a company stops running “business as usual” and commits to the required low-carbon future. It enables business to account for carbon in its strategic planning, not as a shadow price—a hypothetical—but with a real price. Carbon neutrality provides a real cost per tonne of carbon emissions, which goes into the budget. When you measure your emissions and reduce them to zero through external instruments, you have an actual $/tCO2e (tons of carbon dioxide equivalent). This price can vary from $1 to $20/t depending on your procurement requirements.
Is it businesses’ role to become carbon-neutral? Now cities, public institutions, NGOs, states, and countries are also making carbon-neutral pledges. For each of these organizations, the path may be different, but fundamentally, the unifying factor is that you can’t get to zero today by changing your own operations. You function in an ecosystem, and your solutions will be from that ecosystem, too—some things you change in your own operations, some you will need to purchase externally. When you purchase externally, you want to choose products that are real, permanent, measurable, verifiable, and impactful.
The impact of those external projects is not just about enabling a company to claim emission reductions. The just transition to a low carbon economy means not only that the wealthy get to live in a clean environment, driving electric vehicles to renewable energy-powered, air-conditioned homes. Climate change is going to impact the most vulnerable people on our planet the hardest, and they are the least equipped to be able to handle it. Three billion people cook over open biomass fires. They should all have access to efficient cookstoves, and carbon finance can support that transition—probably far more cost-effectively than building a resiliency dam in Palo Alto.
Often I hear, “First we’ll get our own house in order, and then we’ll do the remainder, and finally, we’ll offset as a last resort.” To my mind, this approach misses the fundamental value of carbon offsetting: financing the transition to low-carbon technologies. “Technologies” can mean a ceramic water filter so that homes can avoid waterborne disease without boiling water on open fires, it can be a solar light that is charged at school to encourage children to attend and taken home so they can do their homework, or it can be a program to conserve forests and grasslands that store so much carbon.
A marginal abatement cost curve can help you understand the most effective opportunities to reduce emissions–plot cost per tonne of emissions avoided against the scale of reduction possible. The low hanging fruit—the energy efficiency projects—can result in savings, whereas transitioning to an electric vehicle system or combined CO2 recaptured from air are at the higher end. The cost of reducing a tonne of CO2e from an offset is typically in the range of $1 to $20/tCO2e.
This analysis is a helpful tool if you are purely focused on the economics and the cost of the transition. But it does miss one of the major opportunities of carbon markets: the value to communities, households, and ecosystems. Whether that’s providing access to clean drinking water, health benefits from no longer inhaling particulates in smoke, or access to healthcare and education that is now possible since the community has an income stream from preserving, conserving, and enhancing the nature-based carbon sink they live on, these impacts can be qualified, and increasingly quantified, as positive outcomes towards achieving the UN’s Sustainable Development Goals.
I arrived in California over 20 years ago, armed with a scientist’s reductionist approach to solving problems: isolate, hypothesize, test, and analyze. With what we know now, that piecemeal approach to reducing emissions is a completely inadequate response. Carbon neutrality is the circular economy at work for one crucial material: the atmosphere. One company may not regenerate or reuse all its emissions itself but does so through working with other organizations in the global system.
Through that sort of systems-thinking approach, carbon-neutral takes us a step closer to transformation.