SBTi releases ‘mixed findings’ on carbon credit effectiveness in climate targets

The Science-Based Targets Initiative (SBTi) has released its research on the effectiveness of using carbon credits to achieve climate targets, warning that more work will be needed to draw conclusions from “mixed findings”.

The technical papers released today form part of a revision of the SBTi Corporate Net Zero standard, which governs climate target setting for thousands of companies around the world. 

The organisation announced in April that it was considering expanding the use of carbon credits – which are currently allowed for up to 10% of a company’s footprint – for Scope 3 emissions. The statement caused discord among sustainability professionals and revived the debate around the integrity of the voluntary carbon market. 

Independent review shows knowledge gaps on carbon credit effectiveness

Now, the SBTi is seeking feedback on the evidence it has received on the effectiveness of environmental attribute certificates (EACs) and carbon credits specifically (a 100+ page report), as well as the findings of an independent third-party assessment of such effectiveness and a Scope 3 discussion paper exploring preliminary insights.

Specifically, the independent assessment – a systematic review of peer-reviewed scientific papers comparing the effectiveness of carbon credits to other abatement strategies – identified significant knowledge gaps: out of more than 12,000 papers, just six met the quality criteria set by research firm Evidensia.

This led to the conclusion that “a systematic review of results cannot be conducted on such a small sample of papers as it would not produce a strong synthesis basis to draw robust conclusions”.

Ruling out carbon credits from outside the value chain? 

For NewClimate Institute, the papers published today “clearly point to the ineffectiveness of carbon credits to meet corporate climate targets”. The organisation welcomed the options laid out in the Scope 3 discussion paper, including “potential frameworks to encourage and enable companies to focus on critical emission sources through transition-specific alignment targets, ruling out the use of carbon credits from activities outside the value chain towards emission targets”.

The discussion paper makes it clear that the SBTi is still exploring the possibility of allowing companies to use carbon credits for abatement, but cites only three options: credits generated from mitigation activities such as emissions within the value chain; credits used to neutralise residual emissions (the aforementioned 10% threshold); and credits used to support ‘beyond value chain’ mitigation – one of H&M Head of Sustainability Leyla Ertur’s preferred options.

However, the SBTi warns that the discussion paper “is informative by nature and does not propose draft requirements or criteria”, meaning no option is officially off the table yet.

“The outputs released today are a critical step in understanding how the SBTi can develop a more sophisticated approach to Scope 3 to help more businesses set targets. The SBTi believes that direct decarbonisation must remain the priority for corporate climate action and looks forward to the extensive public consultation on the draft Corporate Net-Zero Standard,” said Alberto Carrillo Pineda, the Initiative’s Chief Technical Officer.