By Chris Lang
The Taskforce for Scaling Voluntary Carbon Markets presented its final report at an online session during the 2021 World Economic Forum: “Carbon Markets: A Conversation”. The session was chaired by Nicole Schwab, Co-Director of the Platform to Accelerate Nature-Based Solutions at the World Economic Forum. The speakers were three members of the Taskforce: Mark Carney, UN Special Envoy for Climate Action and Finance; Bill Winters Group Chief Executive at Standard Chartered; and Annette L. Nazareth, Senior Counsel at Davis Polk; plus Bill Gates, co-founder of Microsoft, and one of the richest people in the world, with a net worth of about US$136 billion.
REDD-Monitor has written a series of posts about the Taskforce for Scaling Voluntary Carbon Markets. The Taskforce can be summed up in a single word: “madness”.
This post focusses on Gates’ contribution to the World Economic Forum conversation on carbon markets.
“Some of these offsets are very complicated”
Schwab asks Gates this question: “Bill Winters just mentioned technology. And we know that nature-based solutions are going to be a critical part of the solution to achieving net zero, but what else is needed?”
Here’s Gates’ reply – with my comments:
“Well I’d say the good news is that a lot of companies, ah, are taking carbon into account as they make decisions. They have, you know, some per ton hurdle price, ah, and they, you know, are going to stay away from investments that, ah, you know, are generating carbon, ah, because of that price signal. The big step, the next step there, is getting people to monetise those things, ah, and put that money into things that are, provably have an impact. Ah, and a number of companies now, ah, are willing to do that.”
Gates is talking about companies, like Microsoft, putting an internal price on carbon. In 2012, Microsoft introduced an internal carbon fee. In 2019, the company nearly doubled this fee to US$15 per ton on all carbon emissions. Gates doesn’t mention that this carbon fee didn’t prevent Microsoft from working with a series of massively polluting oil corporations including Chevron, Shell, BP, Equinor, and ExxonMobil.
Gates continues by responding to Schwab’s comment about nature-based solutions:
“Now some of these offsets are very complicated. Ah, you know, trees for example, ah, ah, have a 40-year lifetime on average, ah, so to match the carbon residency time you’d have to replant 250 times. And, ah, trees generally grow where there’s good soil and good, ah, water and so the number of places where you can do those 250 plantings is very, very small.”
Gates laughs as he says the word “complicated”. This is Žižek’s “liberating laughter” that Robert Watt refers to in his recent paper “The fantasy of carbon offsets”. This is the moment that Gates acknowledges that carbon offsetting involves an illusion, but that’s not going to stop him from pushing offsets.
I don’t know where Gates gets his figure of 40 years for the average lifetime of a tree. Obviously tree lifetimes depend on the species of tree. Giant sequoias, for example, can live for more than 3,000 years. The longevity of trees depends on where the trees are planted, and whether they are attacked by pests, burned down fires, blown over in hurricanes, dried out by droughts, or drowned in floods. As the climate crisis intensifies, tree planting is an increasingly risky proposition for storing carbon and cannot compensate for continued burning of fossil fuels.
Gates makes a valid point about the residence time of carbon dioxide in the atmosphere. Climate scientist Zeke Hausfather explains in an article on Yale Climate Connections that calculating the residence time “is a rather complex problem”.
If emissions were stopped immediately, about 50% of anthropogenic emissions would be absorbed with 50 years, and about 70% in the first 100 years. But absorption by sinks such as oceans and forests slows dramatically after that point. Another 10% would be absorbed after 300 years. The remaining 20% would stay in the atmosphere for tens or hundreds of thousands of years before being removed.
So Gates is arguing that planting trees will only succeed in addressing the carbon residence time problem if they remain in place for 10,000 years (250 x 40). And he notes that the areas of the planet suitable for tree planting are actually quite small.
“Ah, so, you know, over time the understanding and the quality of these efforts will go up, ah, you know, as I went to do offsets for myself personally, ah, in a long term offsets, ah, the prices were about US$400 a ton, you know that’s very, very high. And everything we think of here, it’s 51 billion tons of emissions and so everything has to be considered as a percentage of that.”
US$400 per ton is a pretty steep price for a carbon offset. Gates is presumably talking about Direct Air Carbon Capture – enormous industrial plants that suck CO2 out of the atmosphere.
In a CNBC news clip about Carbon Engineering, Steve Oldham, CEO of the company says, “One of our plants does the work of 40 million trees.” Carbon Engineering is funded by Gates as well as Chevron, BHP, and Occidental.
But Direct Air Carbon Capture is extremely energy-intensive. As a recent Greenpeace report notes, “Capturing three quarters of present CO2 emissions would require half of present global electricity generation and heat equivalent to half of final energy consumption.”
Back to Gates:
“For a company that’s an electric utility, a steel company, a cement company, any sort of industrial thing, ah, you know, you see the increase in price, ah, that they have to have, ah, is still significant, so, ah, innovation is going to be key to this as we do the carbon markets in parallel, ah, with funding the, the innovation activities.”
I think Gates is suggesting that a carbon market could provide funding for Direct Air Capture technology. But it’s not really clear, and no one asks him to clarify.
No one looked happy when Gates finished talking:
“Bootstrapping the market”
After asking Carney and Nazareth a question each, Schwab turned back to Bill Gates. She asked him, “How do you see the role of private sector climate commitments to drive the scaling up of voluntary carbon markets and what is the risk of getting this wrong?”
Gates replied as follows:
“Well I think the way forward here is to connect the, ah, this private sector, these private sector payments [coughs] to innovation. If you just have, you know, some wealthy companies that are in the industrial sectors where the extra green cost would make their products uncompetitive, if they’re just dealing with their portion it’s a very small percentage. On the other hand, if you’re taking this offset money and you’re bootstrapping the markets for the difficult products like green cement, green steel, green aviation fuel, then you can start the learning curve and as you get that volume and learning curve then these premiums can come down.
“Because after all, you know, to be at zero by 2050 all the products that middle income countries buy for shelter and lighting and transport, you know, are going to have to come at such a small premium that they’re willing to shift all their purchasing, and so taking, ah, the lesson from solar energy where country policies drove up those volumes and, ah, the prices came down and now shifting that to the hard areas, ah, including industrial, ah, and things like, ah, green hydrogen, if we can take this money and start those learning curves, ah, ah, and so we’re driving up the volume and causing success and more innovation to get those premiums down then I see these voluntary carbon markets and the acceleration of innovation through the marketplace as really coming together, ah, and giving us that chance of getting to zero.”
Gates has carbon offsets back to front. The whole point of carbon offsets is that companies continue to pollute and use offsetting to claim that they are doing something about the climate crisis. Offsetting is one of the reasons that we still face ever increasing greenhouse gas emissions, because it’s a distraction from the urgent need to leave fossil fuels in the ground.
“The best money ever spent on climate”
Schwab read out questions from viewers of the World Economic Forum’s video. “This one on a slightly different angle is a question from Jules Kortenhorst, RMI, and his question is ‘The focus of the report is the market for offsets, but as Bill Gates highlighted, we need to actually establish the pricing of the carbon attributes in the real economy to drive innovation and create the solutions for hard to abate sectors. Do you see the possibility to expand the voluntary carbon market scale-up move in that direction?'”
Bill Gates replied as follows:
“I think [coughs] some of the best money ever spent on climate was what Germany and Japan did buying solar panels when they were still being sold at a high premium cost which I call the green premium. And so companies willingness to fund activity, we need to connect that to the innovation cycle because after all if a green product is very high priced, there’s no market for it but if you drive that volume up, then that price delta can come down.”
According to Gates, then, the best money ever spent on climate was spent by two governments. They did not spend their money on carbon offsets, but on solar panels.
What Gates doesn’t mention is that Germany also kept its coal mines and coal-fired power plants open for way too long. And in 2006, Germany illustrated the problems with carbon markets by insisting that the number of allowances issued to polluting industry under the European emissions trading system should remain at a level that was way too high to have any meaningful impact on polluting corporations.
“And so I do think that, ah, really proving to people that the quality of these offsets is strong that’s over the next few years we’ll do better and better on that, but the other is the idea that this catalytic impact and getting some of this money to go into together the tough, the hard parts, the high green premium parts and getting those on the learning curve and getting companies to do that and, you know, buy all their buildings with green cement, green steel, and bootstrap like solar panels we want to give credit to those companies because that learning curve is the only way that you get the entire market for those products to shift to green.”
In his paper “The Fantasy of Carbon Offsetting”, Robert Watt notes that when critics of offsetting highlight problems with offsetting projects, offsetting proponents acknowledge these as bad projects, but not as a challenge to the whole idea of offsetting. This is what Gates is doing here.
Historically, there have been large numbers of dodgy offsetting projects. A 2016 study by Öko-Institut found that 85% of offset projects used by the EU under the Clean Development Mechanism failed to reduce emissions. So all Gates can do is to wave his arms around and tell us we’ll do better over the next few years.
“A dangerous distraction”
Obviously, none of the people in the conversation mentioned the fact that the world’s richest 10% produce half of global greenhouse gas emissions. Or that the world’s poorest 3.5 billion people contribute only 10%.
Gates’ carbon footprint is vast. In a 2019 paper, Stefan Gössling at Lund University estimated that in 2018 Gates was responsible for 1,600 tons of CO2 emissions. And that was just from flying.
No one in the World Economic Forum’s carbon markets conversation made any mention of the need to keep fossil fuels in the ground, let alone any suggestions for how that can take place. Further proof, as if it were needed, that the market-based approach is “doomed to failure and is a dangerous distraction from a comprehensive regulatory and standard based framework”, as Kevin Anderson, Professor of Energy and Climate Change at the Tyndall Centre at the University of Manchester, puts it.