The second guest of our Another Angle series on carbon credits is Dr Injy Johnstone – a prominent expert in climate law and a Research Fellow at the University of Oxford. A key figure behind the Oxford principles, she is helping transition the carbon market away from avoidance-based credits toward permanent carbon removal.
From defining the international standards of carbon market to navigating the corporate net-zero claims, Dr Injy’s rigorous legal perspective anchors the financial and infrastructural sides of our series in a real-world accountability.
Your work focuses on The Oxford Offsetting Principles – a global benchmark that tells companies to stop just paying for not polluting and start prioritising carbon removal projects (like soil sequestration). Why is this shift so important?
Climate science tells us that for any chance to keep warming below two degrees, we need to ensure that we pursue any and all possible emission reductions. At the same time, we know that there will be emissions that will still exist at net zero which are unbeatable. In fact, as we show in the State of Carbon Dioxide Removal report, we likely need 7-9 billion tCO2e of removals by mid-century up from 2 billion today. Building a carbon removal industry on the required scale comparable to today’s global energy industry is no mean feat. It requires not only careful research and innovation but critically also investment in order to build the necessary scale. Starting yesterday is our only option. Every dollar invested in building out this future public good is not only best practice offsetting today, but also a smart investment against future compliance obligations.
From a legal side, what are the biggest risks for companies when they buy cheap or low-quality carbon credits, and how can they make sure their net zero claims are actually grounded in high-quality assets?
Companies face immense risks when investing in low-quality credits, though the fallout depends on the use case. If credits are retired for compliance, a company risks breaching legal schemes and being forced to pay remedial action and/or fines. However, in the world of net zero targets, reputational damage is much more common. Climate harms also occur – especially when carbon credits are bought to offset against emissions that may have otherwise not occurred. Ultimately, we have to ask: has this action raised our climate ambition or undermined it?
Fortunately there are very many steps that companies can take to help reduce this risk. It starts with the mitigation hierarchy: ensuring that carbon credits supplement – rather than replace – internal action as defined by the SBTi and Race to Zero. This makes internal decarbonisation a prerequisite; you can’t just buy your way out of the problem without doing the internal work first. Next, companies can do their homework on how to apply the Oxford Principles for Net Zero Aligned Carbon Offsetting. This means double-checking that every credit they buy represents a real, new reduction in CO₂ (additionality) and that the carbon will stay stored for the long term (permanence). Carbon credit rating agencies and carbon insurers can also help inform the risks associated with this. As the technology behind emissions reductions and removals is also constantly evolving, companies must always keep their offsetting strategies under review to ensure that they are still staying true to a truly net zero aligned course.
Right now, the voluntary market is much less regulated than official systems like the EU ETS. The price of carbon is high in some markets and low in others. What needs to happen so that a tonne of carbon has the same recognised value everywhere, whether it’s regulated by a government or bought voluntarily?
Carbon exists at different prices because the cost of different interventions behind the carbon credits – such as avoidance, reduction or removal – is vastly different.
Opportunities for mitigation projects vary significantly around the world, and we must understand that removals and reductions impact the atmosphere differently when it comes to reducing warming. In the future, durable carbon removal might allow for a stable price per ton of CO₂ but for now we must pursue every possible way to cut emissions at their actual cost in each region. This could result in a wide range – from energy efficiency projects that actually save money for every ton of carbon mitigated to pioneering removal technologies that can cost well over $1,000 per ton.
That is why it is vital for companies to map where their own opportunities sit on this price spectrum and what they can do to catalyse mitigation from that price point – whether through cutting their internal emissions, external investments or a combination of both (as recommended in the Oxford Principles for Net Zero Aligned Carbon Offsetting).
