The role of carbon credits in accelerated corporate action

ETC generally endorses the high-ambition corporate strategies set out by SBTi’s CNZS V2 as an important step in helping to scale critical carbon dioxide removals and proposes three additional considerations for corporate carbon credit use:

1. Companies should base their use of carbon removals credits on their decarbonisation costs relative to revenue. Some firms – such as tech or services companies – will have high ability to pay, whereas those with higher costs, such as steel companies, can make a greater impact by focusing on their own emissions reductions instead of purchasing credits.
2. Alongside ambitious Scope 3 emission reduction targets, companies that have low costs of decarbonisation should be required to gradually scale up purchase of carbon removals credits to address residual Scope 3 emissions – mirroring and adding to SBTi’s proposed Scope 1 removals targets.
3. Additionally, SBTi have an opportunity to recognise companies that choose to be ‘net-zero’ today. For example, while on their net-zero pathway, companies can choose to purchase high-integrity carbon removals to address 100% of their ongoing emissions from today. Official recognition of this can drive further, responsible action.

On a 1.5°C-aligned pathway, 10 GtCO₂e/year of removals is required by 2050 (equivalent to around 20% of global emissions today being removed), but we are off-track to achieving this, currently removing only 2 Gt GtCO₂e/year. Corporate demand for carbon credits is crucial to help stimulate deployment of critical carbon removals solutions.