Major battle looms over what counts as a carbon credit

UN move to define new global market has implications for the carbon removal industry

GENEVA - A few sentences in a note from an obscure United Nations group have ignited a firestorm in the carbon removal world. At issue is a beguilingly simple question: What counts as a carbon offset? The document - a draft to define a new global carbon market, released in May - elevated naturebased solutions like planting trees while downplaying the role of carbon dioxide removal (CDR) using machines or other forms of technology.

Both natural and technological approaches can be effective ways to stave off the most catastrophic impact of global warming.

The demarcation might not sound like a big deal, but to the carbon removal industry, it is existential.

Another UN-backed group, the Intergovernmental Panel on Climate Change (IPCC), has warned. that the world will almost certainly need to remove billions of tonnes of carbon a year from the atmosphere by mid-century to limit warming to 1.5 deg C.

The market for carbon offsets is estimated to be about US$2 billion (S$2.7 billion) today. By mid-century, BloombergNEF projects it could grow to anywhere from US$160 billion to US$624 billion annually. (In a separate analysis, BloombergNEF found that relying on carbon removal alone could cause the market to reach nearly US$1 trillion by 2037.) If the UN declares nature-based solutions the one and true way to remove carbon from the atmosphere, it could effectively ice a growing industry out of the very market it is trying to serve, potentially imperilling the climate in the process.