The Complex Battle Against Climate Change: Carbon Credits, Carbon Removal, and Adaptation

In the next two decades, the world is expected to encounter multiple unavoidable climate hazards as a result of global warming reaching 1.5°C (2.7°F). Even brief periods of exceeding this threshold will cause severe and, in some cases, irreversible impacts. These changes will heighten risks for society, particularly affecting infrastructure and low-lying coastal areas. We are currently on track to reach this threshold given ongoing emissions trends. The consequences are far-reaching, with floods, wildfires, deadly heatwaves, and other extreme events affecting nearly every continent in 2023 and 2024. Research confirms that such heatwaves wouldn't have occurred without human-induced climate change.

As we confront these challenges, it is essential to understand and evaluate the effectiveness of various strategies such as carbon credits, carbon dioxide removal (CDR), and adaptation measures. These insights from recent CGIAR Climate Impact Platform webinars (3 and 4) offer valuable perspectives on these strategies and their practical implications.

The Impacts of Climate Change

Climate change is intensifying rapidly, causing extreme weather events, biodiversity loss, and significant changes to Earth systems. The World Economic Forum ranks these among the top global risks, potentially causing irreversible damage to ecosystems and societies. The IPCC warns that without immediate action, critical temperature thresholds could be surpassed, severely limiting our ability to adapt.

The impacts of climate change on society are interconnected: droughts affect food production and health, flooding causes disease outbreaks and infrastructure damage, and health issues can reduce productivity and food availability. However, the effects of climate change are not uniform; they vary across countries, regions, and even within communities, often differing between neighborhoods or individuals. Socioeconomic inequalities can exacerbate the vulnerability of underserved groups, who typically face higher exposure to hazards and have fewer resources to respond.

Food systems are particularly vulnerable. While adaptation and mitigation are possible, increased temperatures, droughts, water shortages, diseases, and extreme weather challenge farmers especially smallholder producers. Heat-related health problems also threaten farm workers and livestock.

Despite these projections, a future heavily impacted by climate change is not inevitable. Known challenges and solutions exist, with ongoing research uncovering new strategies. Experts emphasize that reducing emissions to zero swiftly can mitigate the worst outcomes. This requires investment in new technologies and infrastructure, which can create jobs and reduce health impacts, saving lives and healthcare costs.

Integrating Carbon Credits, Adaptation, and Carbon Dioxide Removal for Comprehensive Climate Action

Carbon dioxide removal (CDR) is integral to climate change mitigation strategies, with Carbon credits as instruments for monetizing CDR. Carbon credits represent tradable permits allowing the emission of one ton of carbon dioxide, to compensate for emissions through verified reduction projects like reforestation. These mechanisms can generate financial incentives for projects that not only reduce emissions but also remove carbon dioxide from the atmosphere, contributing to net-zero goals. Carbon dioxide removal (CDR) techniques, such as afforestation and direct air capture, often create carbon credits, which can be sold as offsets, providing dual benefits of emissions reduction and atmospheric carbon removal.

Adaptation focuses on adjusting to the impacts of climate change, such as protecting communities and ecosystems from adverse effects. Many carbon offset projects, particularly those involving nature-based solutions like reforestation or wetland restoration, can simultaneously enhance local resilience to climate impacts, thus integrating adaptation and mitigation efforts. This synergy allows for more comprehensive climate strategies that address both the immediate need to reduce emissions and the long-term requirement to adapt to a changing climate, aligning with global goals outlined in agreements like the Paris Agreement.

Carbon Credits: A Flawed System?

Most countries, institutions, companies, and individuals will continue to generate greenhouse gas emissions through their activities even as the world decarbonizes, meaning many are choosing to compensate for these 'residual' emissions. The most common approach for doing so is to purchase carbon credits.

The world's forests store an estimated 861 billion tonnes of carbon-equivalent to approximately 100 years' worth of anthropogenic emissions, at current rates-and with good husbandry could potentially store up to 226 billion tonnes more. Clearly, preserving and repairing forests is a vital element of mitigating climate breakdown. But, worldwide, forests are under threat, and financial and political incentives to clear land can often defeat attempts at regulation. One answer is to transfer some of the global benefits of preservation to forest communities, paying them to preserve the forest that they would otherwise have cleared and thus preserving the forest while compensating communities for foregone income.

This is (forest) carbon offsetting - and it is failing.

CGIAR Climate Impact Platform Webinar 3, "Carbon credits: Can they be fixed?" featured Yale Environmental Economist Professor Rohini Pande who explained why carbon offsets are failing. Additionally, Dr Danny Cullenward, from the Institute of Carbon Removal Law and Policy, American University, Washington, DC, and the Kleinman Center for Energy Policy at the University of Pennsylvania, Philadelphia, weighed in on how and why carbon offsets are currently incompatible with the Paris Agreements, offering his views on carbon market design and oversight.

Carbon Credits : Can they be fixed?

Dr Danny Cullenward scrutinized the efficacy of carbon offsets and their alignment with the Paris Agreement. He highlighted the inherent challenge in the carbon credit market, which is built on unverifiable counterfactual scenarios-hypothetical situations of what would have happened without payment. "The project proponents seeking to earn credit for a climate-beneficial activity have the incentive to exaggerate the outcomes," he explained, stressing the difficulty in verifying counterfactual scenarios. This fundamental issue undermines the market's credibility, as it is impossible to observe or verify these scenarios.

"The actual financial flows are minuscule compared to major financial flows in the global investment system," Cullenward noted, emphasizing the discrepancy between the promise of carbon credits and their real-world impact. He pointed out that carbon credits peaked at around $2 billion in 2022, a stark contrast to the trillions invested annually in energy sectors. This issue of additionality is compounded by the market's reliance on avoided emissions rather than actual carbon removal, which Cullenward argued is insufficient for achieving the temperature stabilization goals of the Paris Agreement

Cullenward proposed a shift from the compensation model to the contribution model as a viable alternative. In this model, carbon credits are purchased and retired, but no permission is given to increase pollution or maintain pollution elsewhere, ensuring that carbon projects lead to net climate benefits. Cullenward emphasized that aligning carbon offsets with the Paris Agreement requires extensive industry changes and a collective willingness to adopt new practices that ensure genuine climate benefits rather than merely offsetting emissions.

Professor Rohini Pande echoed these concerns, pointing to the economic and regulatory shortcomings that have plagued carbon offset markets noting that "There's been no formal regulatory system that has been approved for this under Article 6(the Paris Agreement). And so as a result, we have no international regulator and we have rather a set of set of voluntary markets that have come out". Pande highlighted the conflict of interest in the certification process, where verifiers are paid by the project developers, leading to potential biases and exaggerated claims of emissions reductions.

Pande emphasized that the lack of regulation and conflicts of interest in the verification process further degrade the quality of carbon credits. "There are significant difficulties with measurement. Many of the formulas used to create baselines and predictions are proprietary," she explained. Pande also highlighted the challenges resulting from poorly priced carbon offsets: "The prices are too low, leading to significant underinvestment in new technologies. This situation constrains investments in deforestation prevention, reforestation, and carbon sequestration."

She suggested that more robust regulatory frameworks and independent verification could enhance the system's integrity and effectiveness. Both experts agreed that comprehensive reforms are needed for carbon credits to contribute meaningfully to climate goals.

Carbon Dioxide Removal: Potential and Challenges

The effectiveness of adaptation in reducing climate-related risks is known to decline at higher warming levels (Lissner et al., 2024). Carbon dioxide removal (CDR) is one way to stabilize temperature levels as stated in the latest CDR report, even though deep and sustained emissions reduction in all sectors remains the most important pathway for keeping within Paris-agreed goals. From these two facts, we ask: What do we know about adaptation and CDR in a warming world?

Webinar 4 from CGIAR's Climate Impact Platform webinar series explored this question, bringing together expert speakers from two different fields of climate research. Dr. Tabea Lissner, Research Director, Global Solutions Initiative and a Lead Author of the 6th IPCC Assessment, and Dr. Annette Cowie, Principal Research Scientist at NSW Department of Primary Industries, a Lead Author of the Intergovernmental Panel on Climate Change (IPCC) Special Report on Climate Change and Land and another Lead Author of the 6th IPCC Assessment.

Adaptation in a Warming World

Dr. Tabea Lissner emphasized the increasing need for adaptation due to the rising climate impacts and extremes observed today. "Of course, already today we see that climate impacts are increasing, and we see increasing extremes across the world; adaptation is absolutely essential." She however noted the limited understanding of current adaptation measures' effectiveness in reducing climate risks, stating, "To date, we actually have a very limited understanding of how much adaptation is able to do." Lissner highlighted that adaptation is context-specific and poorly represented in global climate models.

A key project in this area is the Global Adaptation Mapping Initiative, which found negligible evidence of risk reduction outcomes from adaptation and identified the temperature-agnostic nature of many assessments. Lissner explained, "This is an initiative that we started in the context of the IPCC report as well and is a collaborative network of almost over a hundred experts across the globe where we actually did a systematic screening of almost 50,000 papers that assess current adaptation" Notably, adaptation options are effective at 1.5°C of warming, but their effectiveness declines sharply with higher levels, dropping to a median of 46% at 4°C. "The outcomes of the studies are to be honest quite scary," Lissner added

Dr. Lissner also addressed the risk of maladaptation, where adaptation measures could worsen the situation, especially in vulnerable regions like Africa. "Quite concerningly I guess over Africa and the Continent where we also see the largest adaptation gaps. There's quite a strong potential for co-benefits… But we then actually see in almost 3 quarters of the assessed data points there's actually maladaptation or negligible effects of the adaptation outcomes." This risk increases with higher levels of warming, underscoring the critical need to understand and improve adaptation strategies to effectively mitigate climate risks.

The Essential Role of Carbon Dioxide Removal in Achieving Net-Zero Emissions

Carbon dioxide removal is human activity that captures carbon dioxide (CO₂) from the atmosphere and stores it for decades to millennia. There are many Carbon dioxide removal methods, which cover a variety of ways to capture and store CO₂. These methods have different levels of readiness, potential, and durability. Each method has sustainability risks that could limit its long-term deployment.

According to the second edition of The State of Carbon Dioxide Removal, alongside rapidly reducing greenhouse gas emissions, the scaling up of novel CDR and the expansion of land-based CDR are urgent priorities if we are to meet the temperature goal of the Paris Agreement.

Dr. Annette Cowie, discussed the crucial role of Carbon Dioxide Removal (CDR) in mitigating climate change. She explained that to meet the Paris Agreement goals, the world needs to reach net-zero emissions by balancing greenhouse gas emissions with removals. "under the Paris Agreement, the goal is to limit warming to well, below 2 degrees, and preferably no more than 1.5 degrees. The Paris Agreement also identifies that in order to do this, the world needs to reach the position of net 0. So, emissions need to be balanced by removals in the second half of the century"

Cowie emphasized that reducing emissions remains the top priority, but CDR is crucial for counterbalancing hard-to-abate residual emissions. "The deployment of carbon dioxide removal to counterbalance hard to abate residual emissions is unavoidable if net 0 greenhouse gas emissions is to be achieved"

The recent "State of Carbon Dioxide Removal" report, which Cowie co-authored, reviews 15 CDR methods, including land-based approaches like reforestation and novel methods like direct air carbon capture and storage (DACCS). Despite the promise of these methods, she highlighted a significant gap between current CDR deployment and the levels needed to meet the Paris Agreement goals, stating, "there is, unfortunately, a rather large gap between the proposed levels of carbon dioxide removal in countries' strategies and what we need to meet the temperature goal of the Paris agreement"

Linking Discussions to Real-World Effectiveness

The insights from the CGIAR webinars align with broader scientific and policy discussions on climate action. Both carbon credits and CDR have roles to play but are not standalone solutions. Carbon credits need stringent regulation and transparency to be effective, while CDR must be scaled responsibly alongside aggressive emissions reductions. Adaptation remains vital but must be part of a comprehensive strategy that includes mitigation and innovative solutions.

The urgency for action cannot be overstated. As highlighted by the World Wildlife Fund, we must move beyond promises to tangible actions that reduce emissions, enhance resilience, and protect our planet's future​ (World Wildlife Fund)​. Integrating the lessons from these webinars can guide more effective and holistic climate strategies, ensuring that we address the multifaceted nature of climate change comprehensively.

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