• Daryll Griffith

Is Net-Zero Carbon the new green-washing?

Einstein famously said, “We can not solve our problems with the same level of thinking that created them.” Problem-solving in a capitalist society dictates that the solution generates shareholder wealth, therefore can a capitalist approach be depended upon to tackle a societal issue? I will address this by discussing the emerging and very vocal trend of Net-Zero Carbon ambitions in the world today.Net-Zero Carbon has become quite a popular term in the past few years as seen in the chart below where the number of articles written on the topic in the media post-2016 has increased by a compounded annual growth rate of 31% by December 2019. This is impressive but what is Net-Zero Carbon really and why has it become so popular?


Source: Media Cloud, https://sources.mediacloud.org/#/collections/58722749


Net-Zero Carbon as a concept emerged as a means for countries and non-state actors to set ambitious long-term goals to reach some form of carbon-neutrality [1]. By August 2019, nearly 20 countries agreed to Net-Zero policies and over 50 companies had committed to Net-Zero Emissions by 2050 as part of the Business Ambition for 1.5°C campaign. Large Multinational corporations including a few fossil fuel giants have been very vocal and ambitious with their aspirations as well[2]. Very few would disagree with the premise of Net-Zero Emissions; if you produce carbon emissions through the operation of your business, working towards offsetting your emissions sounds like a reasonable and admirable goal. Furthermore, emissions reduction is at the heart of the Global Agreement on Climate Change best known as the Paris Agreement, so, no one would disagree or question any effort to reduce the level of emissions in the atmosphere… right? The sudden and significant increase in the popularity of the concept highlighted above tickles the questioning mind, I mean, we’ve known about high levels of carbon emissions for quite some time, the Paris Agreement (2016) was the 21st Conference of Parties. Why now?



Source: Carbon Brief, https://www.carbonbrief.org/analysis-the-final-paris-climate-deal


The Paris Agreement and Net-Zero Carbon


The Paris Agreement as mentioned above was a historic turn of events for the International Climate Change Community. Not only did governments agree to act on climate change but so did large multinational corporations, particularly ones with sizable receipts for the existing climate crisis. The general consensus following the Paris Agreement was that more needed to be done and that government’s commitments were insufficient to address the incoming global crisis[3]. Despite this historical meeting, global greenhouse gas emissions continued to increase by 1.5% per year. The IPCC indicated a reduction of approximately 5% per annum is needed to limit global warming to 1.5°C[4]. Corporations and by extension investors have begun to recognize the potential of offsetting their emissions on their business models and how it can be used to create long-term value through investment in new technology as the prospect of a global carbon market emerged.


Carbon Offsetting


The world’s first and largest Carbon Trading market the EU Emissions Trading System (ETS) is currently valued at 164 Billion [5], and emerging markets in the U.S.A, China, and South Korea are expected to come online and increase the value of the global market significantly in the coming years. The carbon market operates on a cap and trade system, i.e, a reducing limit is set on how much a company can emit and if the limit is exceeded a fine or tax is imposed. This encourages companies to invest in emissions reductions and more energy-efficient practices over time, and this at scale gave rise to the concept of Carbon Offset Financing. Carbon Offset Financing can be achieved through a green revolving loan where the principal and interest from the loan are paid back through energy savings[6]. This article is by no means an assessment of the validity of the Carbon Finance mechanism, however an understanding of how corporations can access funds to offset their emissions is critical, and how such a system naturally favors the scale of large corporations for a feasible return on investment. With such a dependency on corporations to achieve this global goal, the larger philosophical question remains; should we trust corporations to solve a public issue given their mandate to increase shareholder wealth?




Source: Eco Insider. https://eco-insider.com/sustainable-versus-greenwashing/


A History of Green-washing


Naturally, a corporation will try to project a positive image of themselves for their shareholders, however, greenwashing and the fossil fuel industry go hand in hand if we take a brief look at history. In essence, greenwashing is “the act of misleading consumers regarding the environmental practices of a company or the environmental benefits of a product or service”[7]. The fossil fuel industry has a well-documented history of green-washing and this is advocated against by organizations such as Greenpeace, e.g, the “Will You Join Us Campaign”: Where a large fossil fuel company promoted the efficient use of energy while investing more into the extraction of fossil fuels [8]


Green-washing of the Net-Zero Carbon concept by the fossil fuel industry takes the form of declaring ambitious carbon targets and acquiring significant investment in carbon offsetting while the industry as a whole is set to invest USD $1.4 trillion globally into new extraction projects which according to the Global Oil and Gas Network would drive global oil and gas production up by 7 percent by 2024[9] and carbon emissions accordingly. Saying one thing and doing another as established above is the very definition of greenwashing. Overall, greenwashing has only limited benefits, i.e, perceived environmental performance, while it poses a major threat to perceived integrity, and has no true competitive advantage (purchase interest)[10]. In the case of fossil fuel production, green advertising may have the potential to influence the narrative regarding these companies and have consumers “forget'' about previous ills.




Source: GQ, https://www.gq.com/story/wealthy-republicans-no-clue-how-taxes-work


Winners take all


In his book, Winners Take All, Anand Giridharadas postulates that large corporations and wealthy individuals have the power to monopolize the future through their wealth and influence[11]. Philosophically, preventing ecological collapse should be a loss to the fossil fuel industry and a win to society as we move towards a decarbonized planet, but does our capitalist society demand a win-win to address public issues? The Carbon market, in theory, allows for large polluters to reduce their emissions and create value for their business, but can they have their cake and eat it too? Creating value for business allows those with the requisite scale to have priority access to these large markets and capture investments that allow them to secure their business models and create additional revenue streams. In summary, we may be providing these companies with the opportunity to more effectively produce the very thing that got us to this point, essentially having them win the present, and the future while making any alternative solutions unthinkable or uneconomical. More scrutiny is welcomed if we are to allow large organizations to buy off their sins and wipe their slate clean so they can invest more into the problem and then sell us the solution to that problem.


Author

Daryll Griffith

Sustainability Analyst

Co-Founder of REgenTT

LinkedIn: https://www.linkedin.com/in/daryllgriffith/



References:


[1] 2020. Sciencebasedtargets.Org. Accessed March 7 2020. https://sciencebasedtargets.org/wp-content/uploads/2019/10/Towards-a-science-based-approach-to-climate-neutrality-in-the-corporate-sector-Draft-for-comments.pdf.


[2] Hub, IISD's. 2020. "177 Companies Have Pledged To Reach Net-Zero Emissions By 2050 | News | SDG Knowledge Hub | IISD". Sdg.Iisd.Org. Accessed March 7 2020. https://sdg.iisd.org/news/177-companies-have-pledged-to-reach-net-zero-emissions-by-2050/.


[3] 2020. Www3.Weforum.Org. Accessed March 7 2020. http://www3.weforum.org/docs/WEF_The_Net_Zero_Challenge_Part1.pdf


[4] 2020. Www3.Weforum.Org. Accessed March 7 2020. http://www3.weforum.org/docs/WEF_The_Net_Zero_Challenge_Part1.pdf


[5] Value of global CO2 markets hit record 144 billion euros in 2018: report

"Value Of Global CO2 Markets Hit Record 144 Billion Euros In 2018: Report". 2020. U.S..

Accessed March 7 2020. https://www.reuters.com/article/us-global-carbontrading-report/value-of-global-co2-markets-hit-record-144-billion-euros-in-2018-report-idUSKCN1PA27H.


[6] 2020. Efc.Sog.Unc.Edu. Accessed March 7 2020. https://efc.sog.unc.edu/sites/default/files/Financing%20Energy%20Efficiency%20Offsets.pdf.


[7] economy | Green Economy Coalition

"Green-Washing And The Economy | Green Economy Coalition". 2020. Green Economy Coalition. Accessed March 7 2020. https://www.greeneconomycoalition.org/news-analysis/green-washing-and-the-economy.


[8] Chevron’s “Will You Join Us” Greenwash Campaign

"Chevron’S “Will You Join Us” Greenwash Campaign". 2008. Greenpeace USA. Accessed March 7 2020. https://www.greenpeace.org/usa/chevrons-will-you-join-us-greenwash-campaign/.


[9] Resources – Global Gas & Oil Network

"Resources – Global Gas & Oil Network". 2020. Ggon.Org. Accessed March 7 2020. http://ggon.org/resources/.


[10] Making Green Stuff? Effects of Corporate Greenwashing on Consumers - Menno D. T. De Jong, Karen M. Harkink, Susanne Barth, 2018


[11] Anand, G. (2018). Winners Take All: The Elite Charade of Changing the World. New York: Knopf Doubleday Publishing Group.

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