Gulf will need to embrace carbon offsetting to meet climate goals

09 May 2023 Consultancy-me.com 5 min. read
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In order to avoid worsening the effects of climate change, governments must embrace carbon offsetting and the voluntary carbon market. This is especially true for Gulf Cooperation Council (GCC) countries, all of which have set ambitious climate goals to meet the Paris Agreement commitments.

The GCC countries – namely, Saudi Arabia, United Arab Emirates, Oman, Kuwait, and Bahrain – will need to need to do more to reduce carbon emissions to meet the Paris Climate Agreement goals, the landmark 2015 international treaty aimed at averting a further rise in global temperatures beyond 1.5 degrees (3.7 fahrenheit) above pre-industrial levels.

Carbon offsetting – the strategic reduction of emissions in one area to make up for emissions elsewhere that are hard to abate – will be key for the region moving forward, according to is report from global consultancy firm Bain & Company.

Getting to net zero will require carbon offset strategies and efforts to reduce emissions

The normalization of buying and selling carbon credits will incentivize the development of effective carbon reduction strategies.

The global voluntary carbon market works by linking available carbon credits with the needs of organizations and investors who seek to decrease their carbon footprint. Carbon credits, created by offsetting, are tradable certificates that represent the right to emit one metric ton of carbon dioxide (CO2) or an equivalent amount of other greenhouse gases, such as methane. These credits can then be bought and sold on the voluntary carbon market.

Put simply, carbon credits provide a financial incentive for organizations to reduce their emissions and work towards sustainable development. If an organization reduces their expected CO2 emissions, they can sell their credits, and if they produce too much CO2, they need to buy more credits or may risk being fined by watchdogs.

Around 2 gigatons of CO2 will need to be offset by 2030 in order for the world to be on course to achieving net zero emissions by 2050, according to the analysis by Bain & Company. That will require a huge increase in carbon abatement strategies like nature based solutions and carbon capture. Some industries, like freight and air travel, are harder to abate than others.

Top-line reduction of CO₂ emissions should be complemented by investment in carbon offsets, which can help companies reach net zero sooner

Nature-based solutions (NBS) are actions or policies that make use of the power of nature to remedy climate issues. These can include things like stopping deforestation and conserving or restoring natural ecosystems that act as a buffer against natural disasters. For example, Qatar has planted mangroves in around 5 kilometers of coastline, a powerful measure against soil erosion.

The process of carbon capture and storage (CCS) has been used to reduce carbon emissions, with varying degrees of effectiveness. This involves capturing CO2 – often from fossil fuels burned in power plants – and processing it to be pumped into underground reservoirs. This process reduces the amount of CO2 released into the atmosphere, but it has also been criticized as not effective enough to meaningfully reduce emissions and a potential pollution hazard in the case of leaking storages.

The voluntary carbon market is growing rapidly worldwide

Although there have been some promising initiatives in the voluntary carbon market, such as the establishment of exchanges, the practice is still relatively new in GCC countries. For that reason, there is currently not much supply and demand for carbon credits in the region, as compared with other regions.

Some criticism of the voluntary carbon market has claimed it does not do enough or is even counterproductive. Verra, which is considered the world’s leading organization for certifying carbon emissions reductions, uses a carbon offsetting standard that was shown to be seriously faulty, according to reporting from the Guardian and Die Zeit.

In recent years, many countries and international organizations have made huge commitments to transform their economies to become carbon neutral. For example, in the Gulf region, Saudi Arabia has promised to reach net zero carbon emissions by 2060, and UAE and Oman hope to reach this same goal by 2050.

The European Union has promised to reach net zero emissions by 2050, a monumental goal that could cost over $30 trillion, as per high-level analysis by McKinsey & Company.