Carbon Credit Demand Set To Rise Under New SBTi Standard

Michelle You, co-founder and chief executive of carbon dioxide removal (CDR) marketplace Supercritical, expects demand for CDR to grow sharply over the next decade, following an update to the Science Based Targets initiative’s flagship corporate standard. She said the update could create demand for ‘hundreds of millions of tonnes’ of CDR a year. ‘So that is from a standing start of a million tonnes delivered to hundreds of millions,’ she added.

Corporate delegates touring a tree-planting project that generates high-integrity carbon credits. AI generated picture.

The update, known as the Corporate Net-Zero Standard Version 2.0 (CNZS2), introduces a ‘recognition mechanism for supplementary action’. The mechanism allows companies to apply removal, reduction and avoidance credits alongside direct reductions in their own emissions.

SBTi chief executive David Kennedy said direct emissions reductions remain central. Carbon credits, he said, can play a complementary role. ‘For companies who see value in contributing and helping to develop those carbon markets, which are needed, then we will recognise it, we will give it a legitimacy, and that combined with the increasing integrity that we will have, and already have,’ he said. ‘Those two things combined will unlock significant demand for credits and high-integrity credits in particular through our ongoing emissions responsibility.’

The update also drew praise from Annette Nazareth, chair of the Integrity Council for the Voluntary Carbon Market (IC-VCM), who said it would unlock further demand for removal, reduction and avoidance credits. ‘I can’t emphasise it enough how important it is, we believe, that the draft recognises something that many stakeholders have been discussing for years, which is that direct emissions reductions and mitigation beyond the value chain are not competing priorities,’ she said.

Nazareth said the two organisations’ work is ‘highly complementary’. The IC-VCM is the leading supply-side integrity body for the verified carbon market. She said the SBTi’s standard ‘provides guidance on how companies should prioritise emissions reductions and how carbon credits can be used within a credible corporate climate framework.’ The two bodies will ‘not be duplicating’ efforts, since the SBTi plans to recognise standards that already exist in the space.

The SBTi plans to publish further guidance by the end of the year, covering how the standard should be implemented and how carbon credits should be used. ‘We will recognise other organisations that are in the integrity space. We’re not going to invent integrity accreditation approaches ourselves where really good ones already exist,’ Kennedy said. Further guidance is expected on energy certificates, including biomethane and sustainable aviation fuel certificates (SAFc).

David Kennedy, the SBTi’s chief executive, also addressed a recently published draft net-zero standard from the International Organization for Standardization (ISO). He called it a ‘very useful complement’ to the SBTi’s framework, not a rival. The two bodies are working closely together, he said, given the ISO’s ‘huge reach’ across corporates.