Jim Hourdequin is one of the planet’s biggest sellers of carbon offsets—the widely used instruments that are supposed to act as a balm for the rapidly overheating climate. His company earned $US53 million from these environmental transactions over the past two years.
Forest owners can’t sign up all their trees for carbon payments. Each credit is supposed to represent 1 ton of carbon dioxide that’s been absorbed because of a change in behaviour triggered by the promise of carbon payments. The problem with carbon markets, he says, is that weak rules have created strong incentives for landowners to develop offset projects that don’t actually change the way forests are managed, and therefore do little to help the climate. Most forest carbon projects, including some from Lyme, fall into this category, Hourdequin says. “I believe in being intellectually honest about it,” he says.Take Lyme’s first carbon project, which it developed a decade ago in mountains east of Nashville.
Hourdequin isn’t the only one who sees that the market is at a crucial inflection point. Kyle Harrison, who closely tracks carbon offsets as the head of sustainability research for BloombergNEF, a clean energy research group, published a report in January that offered wildly divergent scenarios for offsets.
“I want carbon offsets to be respected as a solution,” Hourdequin says. “The future of this market is going to be about behaviour change. We’re all going to have to design projects that are going to actually change practices and remove CO₂ from the air.” He rationalised the project’s lack of climate benefits as a necessary first step. “People thought these were the things that were needed to get this market started,” Hourdequin says. “You’ve got to make it an easy win for the landowner to sign up for a 100-year obligation. Nobody really knew what they were getting into.”Lyme began developing a string of carbon projects.
Lyme has since scaled back some of its harvests in West Virginia to collect higher annual carbon payments, which could help the atmosphere. But in total, the company has received credits for the property that vastly exceed the climate benefits. Last year, Hourdequin began tinkering with a simple idea to fix the market: instead of looking for forests that can generate lots of offsets with few changes, what if this whole approach was flipped on its head? Start with honest-to-goodness carbon savings by planning to cut fewer trees and see how much it would cost to implement.
Some buyers are willing to pay more – Microsoft says it averages $US20 per ton, and Bill Gates spends $US600 per ton to neutralise emissions from his private jet – but many others are paying less. Delta Air Lines declared itself carbon-neutral last year after purchasing 13 million offsets at a cost of $US30 million, or about $US2.31 per ton.
But carbon market observers hold out hope that a major seller of carbon credits such as Hourdequin could help push the market toward improvement. “Our belief is that transparency is good,” says Matthew Potts, chief science officer at Carbon Direct, which advises companies on carbon reduction strategies. “It’s nice that producers of projects are speaking out.”Big offset buyers haven’t exactly jumped at Lyme’s new $US60 credits.