A team of Oxford University researchers has released an updated version of the flagship guidance on credible and net zero-aligned carbon offsetting. First published in 2020, this guidance for high-integrity carbon credits has been widely adopted by hundreds of organizations.

The revised ‘Oxford Offsetting Principles‘ offer clarifications to the original text, incorporating the latest scientific findings while warning that the vast majority of offsetting approaches are not delivering on their promises. 

They call for a significant course correction in carbon markets, warning that offsetting practices are falling short of their intended goals. The updated version emphasizes the need for offsetting to align with efforts to reach the Net Zero scenario. 

Unveiling the Flaws: Why Current Offsetting Approaches Fall Short 

Injy Johnstone, Research Associate at the Oxford Sustainable Finance Group in the Smith School of Enterprise and the Environment, highlights the shortcomings of current offsetting approaches saying:  

“The vast majority of current offsetting approaches are not getting us any closer to net zero emissions, and trust in the concept of ‘offsetting’ has been so badly damaged that some organizations are moving away from using the term at all.”

This situation prompted the revised version of the guidance. It provides essential guide for entities to develop offsetting strategies that truly contribute to achieving net zero emissions by 2050 or sooner. 

Amid mounting pledges to reach net zero, companies have increasingly turned to purchasing carbon credits to offset their carbon footprint. However, the market is currently facing significant challenges and increased scrutiny.

Carbon price have plummeted immensely. NGEO (Nature-Based Carbon Offsets) price steeply declined by 81% in trading in December last year. This sharp decline reflects the current breakdown in carbon offset markets and the erosion of confidence in them.

READ MORE: Is it the End of Nature Based Carbon Offsets? 

As companies grapple with the imperative to reduce their environmental impact, addressing the challenges facing carbon markets becomes increasingly urgent. This is where the updated Oxford carbon offsetting guidance comes in very handy. 

The guide focuses on four key elements for credible net zero aligned-offsetting, explained in details below.

The Updated Oxford Offsetting Principles

Principle #1: Cut emissions as a priority, ensure the environmental integrity of credits, and regularly revise as best practice evolves.

This principle, outlined in the figure below, presents a decision tree for users considering carbon offsetting. It’s important to note that these approaches are not strictly mutually exclusive or sequential. 

Principle 1 decision tree

Organizations have the flexibility to pursue multiple strategies, prioritizing emissions reduction efforts while also supporting high-integrity, net zero-aligned offsetting projects. Strategies can be continuously updated and refined as new solutions emerge. 

Principle #2. Transition to carbon removal offsetting for any residual emissions by the global net zero target date

Relying solely on carbon credits from avoidance or reduction projects is inadequate as a long-term strategy to achieve net zero. Any remaining residual emissions at the net zero target date must be counterbalanced by carbon removals. 

RELATED: Scaling the Carbon Removal Industry: The Urgent Push

The second principle emphasizes that it’s imperative for organizations to explicitly define their carbon removal targets and regularly reassess them to align with actual progress in emission reduction efforts.

Illustrative IPCC Pathways. Adapted from Figure 3.7 from IPCC WG3, showing different scenarios for meeting net zero in which emphasis is on negative emissions (IMP-Neg), renewables (IMP-Ren), or lowering demand (IMP-LD). These demonstrate that the global demand for offsetting capacity is much smaller in scenarios that maximise demand reduction and renewables. This is important because the global capacity for effective and affordable net zero-aligned removal and storage capacity is limited and uncertain, which raises concerns about well-resourced emitters taking up the available supply

Principle #3. Shift to removals with durable storage to compensate residual emissions  

The third principle underscores the critical importance of storing carbon in a manner that ensures permanence and minimizes reversal risk.

Recognizing the inherent risk of carbon unintentionally released back into the atmosphere, any strategy aimed at achieving net zero emissions must acknowledge and address this risk accordingly. Different forms of carbon storage, including biological and geological methods, exhibit varying characteristics depending on their deployment and management.

The figure below presents an example of a Net Zero Aligned Offsetting Portfolio. It provides an illustrative breakdown of the proportion of various project types useful to address residual emissions from 2020 to 2050. 

This depiction reflects what an outcomes-based portfolio on the path to net zero could look like, not a current market representation.

Principle #4. Support the development of innovative and integrated approaches to achieving net zero 

This last principle underscores the importance of proactively stimulating the development of carbon removals. This principle emphasizes that actors should not solely rely on offsetting via carbon credits but should explore a range of levers to drive progress in this area. 

It advocates for entities to signal and commit today to procuring carbon removals to offset residual emissions. This may involve advanced market commitments or other mechanisms aimed at fostering the development/deployment of carbon removal technologies. 

Large companies are investing in various carbon removal projects to help scale it up. Tech giants, like Microsoft, Amazon, and Apple, are in the frontline, pre-purchasing carbon removal credits to develop novel CDR methods.

Nature and Governments Have Roles to Play 

The revision also underscores the important role of nature-based solutions as part of carbon removal approaches. It calls for mitigation efforts to extend beyond organizational net zero targets. 

Overall, the revised Oxford Offsetting Principles offer a comprehensive framework for offsetting strategies grounded in the latest scientific evidence. The authors further emphasize the urgent necessity for regulatory intervention. 

They assert that governments, standard setters, and other stakeholders must swiftly implement regulations to guide the market away from low-quality credits and low-integrity offsetting strategies. This regulatory action is crucial to ensuring the integrity and effectiveness of carbon offsetting practices to meet global climate goals.

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In a frenzied race against a looming carbon time bomb, tech behemoths are grappling with the environmental ramifications of their sprawling data centers worldwide. These data centers, essential for powering today’s digital infrastructure, have emerged as greedy consumers of energy, particularly as the demand for artificial intelligence (AI) continues to skyrocket. 

As AI becomes increasingly integral to various industries, the energy demands of data centers are exploding. This, in turn, calls for urgent action to mitigate their massive environmental footprint.

AI’s Energy Appetite: Unleashing Data Center Emissions 

Between 2010 and 2018, there was an estimated 550% increase globally in the number of data center workloads and computing instances.

Data centers and transmission networks collectively contribute up to 1.5% of global energy consumption. They emit a volume of carbon dioxide comparable to Brazil’s annual output. 

Hyperscalers like Google, Microsoft, and Amazon have committed to ambitious climate goals, aiming to decarbonize their operations. Hyperscalers are large-scale, highly optimized, and efficient facilities. 

However, the proliferation of AI poses a huge challenge to these objectives. The energy-intensive nature of graphics processing units (GPUs), essential for AI model training, magnifies the strain on energy resources. 

According to the International Energy Agency (IEA), training a single AI model consumes more power than 100 households in a year.

Per another source, the amount of computing power needed for AI training is doubling every 6 months. Fifty years ago, that happened every 20 months, as seen in the chart below. 

More alarmingly, in just over a decade, the computing power used for AI model development has increased by a staggering factor of 10 billion. And it would not slow down.

Industry estimates forecast that power use can go up to 13% by 2030 while the share of global carbon emissions would be 6% for the same year.

The Cost of AI: Balancing Power and Progress

The climate risks posed by AI-driven computing are profound, with Nvidia CEO Jensen Huang highlighting AI’s significant energy requirements. Jensen projected a doubling of data center costs within 5 years to accommodate the expanding AI ecosystem.

For instance, compute costs for training advanced AI models like GPT-3,  boasting 175B parameters, and potentially GPT-4 are predictably substantial. The final training run of GPT-3 is estimated to have ranged from $500,000 to $4.6 million. 

Training GPT-4 could have incurred costs in the vicinity of $50 million. However, when factoring in the compute required for trial and error before the final training run, the overall training cost likely exceeds $100 million.

On average, large-scale AI models consume approximately 100x more compute resources than other contemporary AI models. If the trend of increasing model sizes continues at its current pace, some estimates project compute costs to surpass the entire GDP of the United States by 2037.

According to computer scientist Kate Saenko, the development of GPT-3 emitted over 550 tons of CO2 and consumed 1,287 MW hours of electricity. In other words, these emissions are equivalent to those generated by a single individual taking 550 roundtrip flights between New York and San Francisco.

Not to mention that such figures account for the emissions directly associated with developing or preparing the AI for use. Other sources of emissions are not included. 

RELEVANT: How Big is the CO2 Footprint of AI Models? ChatGPT’s Emissions

Solutions to Reduce Data Center Carbon Footprints 

To mitigate data center emissions, industry players have pursued various strategies, including investing in renewable energy and using carbon credits. 

While these initiatives have yielded some progress, the escalating adoption of AI requires additional measures to achieve meaningful emission reductions.

Google’s load-shifting strategy exemplifies a promising approach to addressing this challenge. It synchronizes data center operations with renewable energy availability on an hourly basis.

By deploying sophisticated software algorithms, Google identifies regions with surplus solar and wind energy on the grid and strategically ramps up data center operations in these areas. 

The logic behind the approach is simple: Reduce emissions by upending the way data centers work. 

The tech giant has also initiated the first initiative to align the power consumption of certain data centers with zero-carbon sources on an hourly basis. The goal is to power the machines with clean energy 24/7.

Google’s data centers are powered by carbon-free energy approximately 64% of the time, with 13 regional sites achieving an 85% reliance on such sources and seven sites globally surpassing the 90% mark, according to Michael Terrell, who spearheads Google’s 24/7 carbon-free energy strategy.

Cirrus Nexus actively monitors global power grids to identify regions with abundant renewable energy. Then they strategically allocates computing loads to minimize carbon emissions. By leveraging renewable energy sources and optimizing data center operations, significant reductions in carbon emissions were achieved. 

The company was able to cut computing emissions for some workloads and the clients by 34%. It uses cloud services offered by Amazon, Microsoft, and Google. 

Navigating the AI-Driven Energy Crisis

In recent years, both Google and Amazon have experimented with adjusting data center usage patterns. They do it both for their internal operations and clients using their cloud services. 

Nvidia offers another solution to this AI-driven power crisis – green computing accelerated analytics technology. It can slash computing cost and carbon footprints by up to 80%. 

READ MORE: Nvidia’s Accelerated Analytics Can Cut Computing Cost and CO2 Footprint by 80%

Implementing load shifting necessitates collaboration between data center operators, utilities, and grid operators to mitigate potential grid disruptions. Still, this strategy holds immense promise in advancing sustainability goals within the data center industry.

As the demand for AI soars, addressing the energy requirements of data centers is paramount to mitigating carbon emissions. Innovative strategies such as load shifting offer a pathway towards achieving carbon neutrality while ensuring the reliability and efficiency of data center operations in an increasingly AI-driven landscape.

The post The Carbon Countdown: AI and Its 10 Billion Rise in Power Use appeared first on Carbon Credits.

Indigo Ag, a pioneer and trusted ally in sustainable agriculture, has announced the successful completion of its third carbon crop, solidifying its position as an industry leader in carbon programs. 

With 163,048 carbon credits produced, Indigo Ag stands as the sole company to accomplish three carbon harvests at scale. The program demonstrates continued growth, marked by year-over-year increases in the number of participating farmers, fields filed, and credits generated.

Harvesting Hope: Farmers Lead the Charge in Carbon Sequestration 

Since its launch in 2019, farmers engaged in Indigo Ag’s carbon program have sequestered or abated nearly 300,000 metric tons of carbon dioxide. The corresponding carbon credits are rigorously verified and issued by the Climate Action Reserve, one of the leading carbon registries globally. 

Each metric ton of sequestered CO2 generates one carbon credit.

To date, farmers participating in Indigo Ag’s sustainability initiatives, Carbon and Sustainable Crops, have collectively earned over $12 million. Payments for the third carbon crop are scheduled for March 2024.

Indigo’s carbon farming program offers companies seeking a market-based approach to capture and store carbon in soils, a credible, nature-based climate solution. The generated credits represent the efforts of farmers who have embraced Indigo’s climate-friendly farming practices, known as regenerative farming. Examples include planting cover crops and reducing soil tillage.

The program is serving 5.5 million enrolled acres, 2,000 enrolled farmers, and issued 133,000 carbon credits.  

Dean Banks, CEO of Indigo Ag, remarked:

“Our record-breaking third carbon crop reinforces that farmers can earn money and have a real and measurable impact leveraging agricultural soil as one of the world’s largest carbon sinks.”

Indigo’s latest batch of credits signifies the sequestration or abatement of 163,048 metric tons of CO2 by U.S. farmers across 28 states. The growth of Indigo’s carbon program emphasizes the increasing adoption of sustainable farming practices, with remarkable year-over-year increases: 

333% surge in new acres, 
297% rise in new fields, and 
215% uptick in new grower participation.

Furthermore, Indigo collaborates closely with its expanding network of over 25 agribusiness partners to provide unique insights and support growers in advancing their transition to sustainable practices.

In September last year, the U.S.-based company raised +$250 million led by Flagship Pioneering. The goal of the funding was to further grow Indigo’s sustainable agriculture programs and bolster farmers’ revenues with carbon credits. 

READ MORE: Indigo’s $250M Raise Boosts Agricultural Carbon Credits Generation

Indigo Ag’s Carbon Credits Gaining Traction

The company has broadened its network of carbon credit buyers by partnering with Watershed. It’s an enterprise climate platform that assists companies in measuring, reporting, and acting on their emissions to allocate credits to their corporate clientele.

Industry analysts predict that corporate demand for high-quality carbon credits will continue to surge. BloombergNEF’s (BNEF) report suggests that restoring trust in the market could encourage companies to buy billions of carbon credits annually. This can potentially increase prices to $238 per ton and bring market value to over $1 trillion yearly by 2050. 

In this case, Indigo Ag foresees its soil carbon credit commanding higher prices in future crop cycles. 

The ag tech firm is currently one of the only companies providing corporations with high-integrity soil carbon credits on the voluntary carbon market (VCM). This enables them to secure future buyer commitments with purchase prices ranging from $60 to $80 or more, depending on delivery time. 

The forward price curve will result in increased earnings for the participating farmers over time, Banks further added. 

Growing Green: Indigo Expands Carbon Program

Indigo is expanding its eligibility criteria for the 5th carbon crop, covering the 2023-24 planting season. It is also currently open for farmer enrollment.

Part of the expansion is adding more eligible crops for its sustainability programs, including hemp, perennial and annual alfalfa, millet, collard greens, and four perennial legumes. This offers farmers additional options for program eligibility, alongside existing crops such as corn, soy, and cover crops.

Furthermore, Indigo is collaborating with industry partners to streamline data importation and entry processes for farmers. It works whether they are importing data from spreadsheets or their FSA 578 insurance forms. Product enhancements include historical data validation and the capability to spread out carbon harvests.

More details on the fourth carbon crop will be shared in early 2025 when credits are slated for delivery.

Indigo Ag’s success in completing its third carbon crop marks a big step forward for sustainable farming. By helping farmers fight climate change and earn money, the company is making agriculture greener and more profitable. 

RELEVANT: Agricultural Carbon Credits and Carbon Farming Guide

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Canada’s federal carbon pricing policy is a pivotal component of the nation’s efforts to combat climate change. The Parliamentary Budget Officer’s latest estimates show that it will yield over $5 billion in revenue from federal sales tax over the next 7 years. 

However, concerns are raised as to why there are no specific plans to channel the revenue to climate programs. The federal government also scaled back carbon tax rebates for small businesses. 

The estimated figures come from a private member’s bill put forward last fall by Conservative MP Alex Ruff, aiming to entirely remove the sales tax from carbon pricing.

RELATED: Saskatchewan to End Carbon Tax on Natural Gas & Electric Heating

Canada’s Carbon Tax Revenue and Redistribution Framework

In an era increasingly characterized by environmental responsibility, Canada’s carbon pricing policy was initially hailed as a bold stride toward fostering a sustainable future. However, the revelation that the revenue from the tax lacks specific earmarks for environmental initiatives has sparked widespread concern. 

Critics argue that without a targeted focus on climate action represents a missed opportunity in the fight against global warming. 

According to law, revenue generated from the carbon price must be redistributed to households and businesses through rebates and granting programs. 

The PBO projected that the redistribution will amount to about $600 million in 2024-25, growing to $1 billion annually by 2030-31, alongside the increase in the carbon price itself. Over the period from April 2022 to March 2031, this could accumulate to $5.7 billion.

These projections include revenue from the 8 provinces and 2 territories subject to the federal carbon pricing system. They also include British Columbia, Quebec, and Northwest Territories, which have their own systems. Thus, the federal carbon pricing system do not apply in those 3 jurisdictions.

Source: Environment and Climate Change Canada (ECCC)

Directing these funds towards climate action can help the country achieve its 2030 greenhouse gas emissions targets.

The carbon pricing framework was structured with the intention that 90% of the funds collected from consumers and smaller businesses would be allocated to individual households in the form of rebates. 

The remainder of the funds was designated for Indigenous communities, municipalities, hospitals, and schools. The ultimate goal is to facilitate energy efficiency upgrades through a range of programs.

To date, over $100 million has been disbursed through these programs. Approximately $35 million was allocated to small businesses, $60 million to schools, and around $6 million to Indigenous communities.

Scrutiny Over Carbon Tax Rebates for Small Businesses

But the scrutiny over the $5 billion income from the carbon price continues to intensify. It is further compounded by recent developments, particularly the reduction of carbon tax rebate percentages for small and medium-sized enterprises (SMEs). It sparked strong reactions from business communities nationwide. 

The Canadian Federation of Independent Business (CFIB) has been particularly vocal in its opposition, launching a petition against these alterations and advocating for immediate measures to support affected businesses.

The CFIB estimates that small businesses contribute up to 40% of the government’s total carbon price revenues. However, Clean Prosperity, an economic and climate change think tank, suggests a lower estimate, placing it closer to 25%.

Small businesses were never slated to receive more than 7% of the carbon price revenues back. Moreover, this allocation is now diminishing further, dropping to 5%.

The incentives were intended to assist businesses in covering a portion of the expenses associated with acquiring energy-efficient equipment. They also cover initiatives on upgrading buildings and operations to reduce fuel consumption. The targeted businesses are in emissions-intensive and trade-exposed sectors, but these haven’t yet been defined. 

Clean Prosperity’s executive director, Michael Bernstein, commented on the issue:

“Even two years ago, we calculated that there was enough money within the HST [Harmonized Sales Tax] on the carbon tax to fund a one-percentage-point reduction in the small business tax rate in provinces where the carbon tax applied.”

Bernstein further noted that SME businesses contribute around one-quarter of Canada’s carbon price revenue, according to their estimates. Since 2019, the government has yet to disburse about $2.5 billion from this income owed to small businesses. 

Perspectives and Proposed Solutions

Dan Kelly, CFIB President and CEO, argued that businesses require assistance to mitigate the financial impact of carbon pricing. He particularly remarked that:

“The whole principle of a carbon tax is you tax carbon-based activities and you give the money back so that then people make decisions to use those dollars in lower-carbon activities.”

Conservative spokesperson Sebastian Skamski affirmed the party’s commitment to eliminating carbon pricing. While Conservative MP Alex Ruff’s proposal to remove the sales tax from carbon pricing serves as an interim measure, the party advocates for broader exemptions and reductions to alleviate the burden on businesses.

READ MORE: Canada Faces 2 Carbon Issues: Shaky Carbon Tax and Missed Emissions Goal

However, Minister of Finance Chrystia Freeland’s office didn’t express openness to utilizing GST and HST revenues to bolster rebates. Katherine Cuplinskas, a spokesperson for Freeland, said that the government promises a portion of carbon price revenues to be returned to businesses. However, no specific details were provided. 

Canada’s carbon pricing policy generates significant revenue but lacks specific allocations for climate programs. Reductions in rebates for small businesses raise concerns. Balancing revenue generation, fair redistribution, and business support is crucial. Transparent communication and flexible policy frameworks are needed for effective climate action and economic stability.

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