Carbon credits have potential…. and potential problems
- Media Manager
- Aug 20, 2023
- 1 min read
Tearsheet
Written By: Rabab Ahsan
Published: August 21st, 2023
At our current of emissions we will surpass our carbon emission limits within the decade.
Banks have a crucial role to play in this emerging industry of carbon offsets, but there are rising concerns about efficacy and transparency in this nascent space.
We are worryingly close to running out of our global “carbon budget”, which is the amount of carbon we can emit without raising the temperatures by 1.5 C. Only about 250 billion tons of carbon can be emitted without crossing this threshold. At our current rate of 54 billion tons of emissions every year, we will surpass thresholds before this decade is over.
One method that can be used to dampen this acceleration in emissions are carbon offsets. These are tradable rights or certificates which correspond with activities that lower the amount of CO2 in the atmosphere. The funds from the purchases of carbon offsets can be put towards funding projects that fight climate change, and this method can serve as an alternative to taking individual actions that would lower carbon emissions.
Purchases of carbon offsets are expected to hit $100 billion a year by 2030, according to Deloitte. These increases are influenced and accelerated by the embedding of carbon offset purchases in daily customer purchases. For example, Aspiration offers digital products that enable banks, payment processors, retailers, and travel booking platforms to embed “climate action” products into their payment and checkout flows.
