In June 2022, TED's climate initiative, Countdown, launched its Dilemma Series: events designed to look at some of the "knots" in the climate change space, where diverging positions have stalled progress and solidified into an inability to collaborate across differences. The event focused on the question: Is there a role for carbon credits in the transition to a fair, net-zero future? Through TED Talks and conversations featuring scientists, CEOs, activists, politicians, artists, frontline community leaders, investors and more, this film offers a 360-degree view of carbon credits -- a contentious subject that prompted some discomfort, disagreement and, ultimately, a renewed sense of possibility. It's an invitation to listen deeply, keep an open mind and get a little wiser on a complex topic. (Featuring, in order of appearance: Tamara Toles O'Laughlin, John Kilani, Nat Keohane, Julio Friedmann, Donnel Baird, Nili Gilbert, Al Gore, Inés Yábar, James Dyke, Tom Rivett-Carnac, Lindsay Levin, David Biello, Gilles Dufrasne, Kavita Prakash-Mani, Susan Chomba, Gabrielle Walker, Derik Broekhoff, Annette Nazareth)

So did you have a position on carbon credits coming into the day?

There must be something important in carbon market.

Otherwise, people have given up long time ago.

So I guess I came in today thinking, As a tool, carbon markets, carbon credits can be really valuable in creating the kind

Today, the carbon markets have no supply, no demand, no transparency, no regulation.

You buy a carbon offset from a forest, but now the forest is burned down, or they were gonna chop the tree down, but

We know that we need carbon removals to scale dramatically.

Different points of view can add to the collective wisdom.

How do we generate those connections that together move us forward?

The concern that I've got about net 0, I'm probably going to disagree about this, it might be taking away some of the sense of urgency.

We can be optimistic or we can be pessimistic, but the work looks the same.

Is there anything that struck you about carbon credits or carbon markets that you want to talk about?

Well, I'll wait until the session is over to give some considered opinions on that.

Throughout the world, we find ourselves faced with self-inflicted and interconnected problems that challenge our social fabric, our economic security, and the very ability of the earth to sustain us.

We're certainly not short on ideas to address these problems, but we often get caught up in arguments against 1 another, vying for supremacy instead of deciding on a course of action.

It begins by acknowledging the difference between choices and dilemmas.

You weigh The alternatives, decide and move on.

But often complex situations need both and thinking instead of either or.

They require us to hold competing values together rather than make straightforward choices.

I'm Lindsay Levin, co-founder of TED Countdown, and this is why we launched our Dilemma series to look at some of the thorniest issues in the climate space and see how, through deep listening and collaboration, we find pathways forward.

In our first Dilemma event, we tackled the question, is there a role for carbon credits in accelerating the transition to a fair net 0 world?

First, let's start with some definitions.

A carbon credit is a tradable permit that usually represents 1 ton of carbon either not emitted or removed from the atmosphere.

Carbon offsetting is the practice of buying carbon credits to compensate for carbon emissions generated elsewhere.

Carbon markets are where carbon credits are bought, sold, and priced.

Net 0 refers to a theoretical state in which overall human-produced carbon emissions are equivalent to 0, because any ongoing emissions have been compensated or offset by removals.

We'll explore why so many people have lost faith in how carbon markets and net 0 targets operate in practice.

We'll hear from people working in frontline communities to protect and restore nature and safeguard livelihoods.

And to close, we'll talk about solutions.

We hope this film will speak to those working in sustainability and beyond.

Whether you're directly able to influence the supply or demand side of carbon markets, or you're just interested in how we solve the climate crisis.

Let's start by hearing about some of the promises and pitfalls in a conversation between TED's David Bielo and Gilles Dufresne of Carbon Market Watch.

Now, carbon credits are being used as a big tool to neutralize otherwise growing emissions.

So, my short answer to this would be that they're not.

First, because there is a major concern around the actual quality of those credits that each are supposed to represent a full ton of CO2 that's been reduced or removed and permanently stored, but in reality, many of those credits actually don't represent that full ton of CO2.

In addition to that, many credits are used in inappropriate ways by companies.

For example, a company that would make a net 0 claim, a carbon neutrality claim for a specific product, but with these claims actually only covering 10 or 20 or 50 percent of the total emissions of that company or of the good.

It's misleading to the public, it's misleading to regulators, it's misleading to business partners.

It gives the impression that these companies, this product, doesn't have a net negative impact on the climate, when in reality, it certainly does.

So what does it mean when a company says it has neutralized the emissions from its products or activities?

Well, in most cases, it means a company has purchased a certain number of carbon credits.

But there is a lot of unclarity around the actual quality of those credits, what do they represent, as well as the share of total emissions that's really being covered, that's really being compensated through the purchase of these credits.

And this issue of clarity, of transparency, and so I think that's really something that we need to seriously address right now in the current context of a booming market where there is a lot of interest, a lot of investment in growing it quantitatively, if we don't address the quality dimension of it, we're gonna grow a system in which there's not gonna be any trust, or that trust is progressively going to erode, and ultimately that will destroy the value of the system itself.

Sounds like something called greenwashing.

Can you give us some particularly egregious examples of that kind of activity?

Yeah, I think carbon-neutral fossil fuels is an obvious 1.

That many of you will certainly have heard of.

It is flawed conceptually and practically.

At a conceptual level, it gives the impression that we can continue to burn fossil fuels in the way we've been doing it for decades, exactly what has landed us in the crisis we are in today, and that somehow, magically, we can do this without having a net impact on the climate.

And that is fundamentally misleading and is damaging, it is harmful to our collective willingness to adopt the behavioral changes and the costly investments that we need to adopt in order to transition to a safer planet.

While we can agree that cutting greenhouse gas emissions as soon as possible is our ultimate goal, the idea of net 0 has inspired some pretty vigorous debate.

Here's Professor James Dyke of the University of Exeter with his concerns.

Within just a few years, net 0 has become the anchor concept for the world's plans to avoid disaster.

Its central premise is that the risks of climate change is that there is too much carbon dioxide in the Earth's atmosphere.

So it follows we must stop emitting more and even remove some of it.

Hopefully, by the middle of this century, any residual emissions will be balanced by technologies that remove carbon from the atmosphere.

But by introducing carbon removals into climate policies, we have set a trap, because it's incredibly seductive to rely on carbon removals in the future instead of rapid decarbonization now.

It gives the impression we are acting, so businesses don't need to change their models and governments don't need to propose bold action.

What this means is that it is now almost inevitable that we will be entering a warmer and more dangerous world.

How did the idea of net 0 become so compromised, so corrupted?

A key moment for the development of net 0 was the 2015 Paris Agreement.

The overall objective of this landmark climate treaty was that global warming should be limited to no more than 1.5 degrees Celsius to reduce the risks of devastating impacts.

Many scientists, including myself, were very skeptical that this was possible, given the absence of radical proposals.

But there was also a deep sense of responsibility to try to make the Paris Agreement work.

They soon discovered it was impossible to get their models to decarbonize as fast as 1.5 required if 1 assumed continuous economic growth.

The only way to make the models work was by introducing carbon removal.

More recently, attention has turned to DAC, direct air capture.

This would strip out carbon dioxide molecules directly from the air and then pump them to underground storage sites.

The technology is interesting, but attempts to scale up DAC face 2 fundamental challenges.

First, the process is extremely energy-intensive, requiring significant amounts of electricity and sometimes natural gas to run.

Second, safely storing carbon dioxide is not a trivial enterprise.

It's likely to be the case that every carbon storage site will need to be carefully tailored to the specific geological circumstances at the injection sites.

Now, such concerns with carbon removal are sometimes rushed away with a sheer enthusiasm that surrounds these technologies.

The assumption appears to be that large-scale carbon removal will work because it has to work.

Even if we assume these technologies do emerge at scale, it's likely they will be very expensive to run.

Some studies estimate many trillions of US dollars.

It's no evident economic benefit, since it's about clearing up carbon pollution and hiding it underground.

The time has come for us to voice our fears about net-zero policies, and that begins by leveling with the public about the Paris Agreement.

At the moment, we are desperately trying to manage the narrative and adjusting models in order to avoid acknowledging that the Paris Agreement is failing.

A 2021 survey conducted by the science journal Nature found that the majority of IPCC climate scientists who responded thought we were heading towards a catastrophic 3 degrees Celsius of warming.

Only 4% thought limiting to 1.5 was likely.

We can avoid climate catastrophe, But I fear we won't if we don't confront our wishful thinking around net 0.

As you can see, carbon markets are not uniformly delivering what they promise, and many believe they may actually be making things worse.

However, They are potentially a mechanism to provide investment in vital natural solutions.

And if done differently, could bring significant money to people and places that need it.

Here is Kavita Prakash Mani of Mondai Nature to talk about ways to ensure that local communities benefit from this growing industry.

Let me start by saying that a ton of carbon is not just a ton of carbon.

It embodies in its natural protection, community interests and benefits, as well as helping save us from disastrous climate change.

We have a lot of nature-based conservation organizations protecting and restoring our ecosystems, and they're all wondering how they can be part of this carbon market.

Their ability to monetize carbon that they sequester will be crucial for their long-term survival and the impact that we all want.

After all, nature and climate are 2 sides of the same coin.

However, to get to those opportunities, we need to address some really systemic challenges.

Take, for example, the technical aspects that we have on any carbon credit.

Additionality, permanence, no leakage, baselining, all very difficult concepts for these small organizations.

Add to that measurement and verification.

How do we get pre-feasibility studies, feasibility studies, project development?

How do these small organizations take on these high costs when the price of carbon is very low to deliver these documentation.

But that's not the problem with the larger players, and there's a systemic imbalance of power.

Larger NGOs, companies, project developers all have access to international markets and institutional finance.

The smaller organizations see the opportunity, but just do not have the means to tap into it.

We should also look 1 level higher at governments.

Take, for instance, Indonesia, a country with the highest potential of carbon mitigation from nature-based solutions.

It's the third largest tropical forest, it has a coastline with mangroves, and it has 15 to 30 million hectares of peatland.

But the government has restricted any new projects from being developed, or carbon credits from being sold to the international market.

This has merit, because after all, developing countries also need to meet their nationally determined contributions.

And they do not have to sell cheap credits to developed countries that have already destroyed part of their environment or companies that are not decarbonizing.

However, it does restrict international finance from going into conservation and into communities.

Some countries are trying to get the markets to work.

In Asia, that's Vietnam and Cambodia, but we still do not have the right market mechanisms to ensure that it's equitable, safe, and the impact that we want.

As Kavita said, a ton of carbon is not just a ton of carbon.

To build on that, here's Susan Chamba of the World Resources Institute Africa to talk in more detail about all the things we miss when we think too narrowly about carbon benefits and nothing else.

So I'm going to talk to you about all the elements about carbon markets that have got nothing to do with carbon.

Our forests, peatlands, and oceans are more than the carbon that they store.

They are the foundation of livelihoods of billions of people who depend on them directly and indirectly.

They provide the hydrological functions that ensure we have rivers, we have lakes, and that we can grow food successfully.

They are also home to indigenous people who protect them with their blood, sweat and tears.

So when we lose these ecosystems, the livelihoods of local communities and indigenous people are adversely affected.

When you look at the way we design the carbon markets, we design them with various assumptions.

First of all, carbon markets perpetuate the notion that our forests and peatlands are all about carbon.

They overlook the ecosystem services that these ecosystems provide, such as clean water, healthy and nutritious food, biodiversity and its related services, such as pollination, pest control, and even nitrogen fixation.

Companies are prepared to pay for carbon because it helps them to tick either their compliance box or the public relation boxes.

But rarely do we couple that with the other ecosystem services that these natural ecosystems are providing.

Carbon markets perpetuate the notion that we can continue with our fossil fuel-driven lifestyles and offset our externalities and perhaps even our guilt on the poor local communities that are located in the global south.

In fact, nowadays, if a lot of projects provide a lot of ecosystem services, but are not solid on the carbon side.

They are often dismissed as poorly designed or poorly governed.

Carbon markets are based on complicated and costly reporting and verification systems.

And these end up taking up most of the revenue that is then coming from carbon.

And local communities get the leftovers, if they are lucky.

The value and the price of carbon compared to alternative land uses, such as mining, fossil fuel extraction, has been far too low for far too long.

And so what we are witnessing is governments in the global south continue to issue permits for mining, for oil exploration, in some of the most critical ecosystems, peatlands, forests.

So we've heard what isn't working and what existing carbon markets often miss on the ground.

Now let's dive into different ways of thinking that could reshape the system and actually generate the positive outcomes we want.

Here's Gabriel Walker of Rethinking Removals.

I think the carbon market is immensely powerful and immensely valuable.

And I do think we can use it as a powerful tool for helping to solve the climate crisis.

But I've also started to think that we've been thinking about it the wrong way.

There are 3 really big and important climate outcomes that the carbon market could help with.

So there's reducing fossil emissions as fast as possible, there's protecting natural carbon sinks, and there's removing CO2 from the atmosphere.

And I found that in lots of people's minds, those 3 get kind of smooshed together in 1 generic kind of offset.

But it's worth separating them out because those outcomes need different kinds of incentives.

If you start with the first 1, reducing fossil emissions as fast as possible, that's reduction credits.

Now, 1 problem with those is that they don't actually neutralize emissions.

So if I put a ton of CO2 in the air, and I pay you not to put your ton of CO2 in the air, my ton is still there.

It doesn't get you to 0, it doesn't neutralize.

And this is the realm of quite a lot of traditional offsets.

Another issue with them is they tend to be very cheap, less than 20 dollars a ton, so it can get immensely tempting just to buy loads of credits and not do the hard work of reducing your own emissions.

And that is not where we should be putting the money.

But where reduction credits can help is in creating clean infrastructure in places where it wouldn't have happened otherwise.

So, if you think about it that way, that's the outcome you're trying to get to.

Then the incentives to build around reduction credits, the highest-rated reduction credits, will be the ones that drive money towards building clean infrastructure in the global south.

And the cheapest coal-fired power plant to shut down would be the 1 in the global south that was never built in the first place.

Second 1, protecting natural carbon sinks.

Now, these already exist in the carbon market, like the reduction credits.

And like reduction credits, they don't neutralize emissions.

I put a ton of CO2 in the air, you stop a ton coming out from a sink, my ton's still in the air.

There isn't a separate category called protection credits yet.

And I think it's worth separating them out, because it's hugely important to drive money towards protecting those things, rainforests, Peatlands.

So then what incentives do you build around?

What are the highest-rated protection credits?

Maybe the ones maybe with the biggest carbon stores.

Maybe the ones that protect the most biodiversity.

Maybe the ones that drive the money towards the communities that are actually there husbanding and protecting those stores.

OK, third category, we've heard a lot about this.

That's taking a ton of CO2 out of the atmosphere and keeping it out.

So unlike the other 2 categories of credit, removal's credits really do neutralize emissions.

If I put a ton of CO2 in the air, I pay you to remove a ton, you get to 0, because what goes up does come down.

Those are the only category of credits that can be used to claim net 0.

They do already exist in the carbon market, a really tiny percentage of the total, and we're going to need an awful lot more of them.

So at the moment, every year, we're removing durably maybe 100, 000 tons of CO2.

And according to the IPCC, carbon removals are now unavoidable to get to net 0 by 2050, and by 2050, we're going to have to be removing billions of tons.

So to get from 100, 000 tons to billions of tons, we're going to have to start really small in this almost non-existent industry and scale it up to the gigaton scale, affordably, without causing other undesirable side effects and making sure that these removals are real.

And we've got to get the cost down very quickly, the way that we did for solar and wind.

So that's the objective, that's the outcome that we're trying to achieve.

So that's a way to reorganize our overall thinking around carbon credits, but how should companies reshape their thinking?

Here is Derek Brokhoff of the Stockholm Environment Institute.

Net 0 has become the dominant paradigm for climate ambition.

Many countries have announced net-zero targets, and so many companies are doing the same.

Today, I want to challenge the idea that companies should emphasize achieving net-zero for themselves, rather than focus on how best to contribute to global net 0.

Quote, "'A company is not carbon neutral, it contributes to neutrality.

Let me explain why I believe it's essential to make this distinction.

Current net 0 frameworks presume that companies should imitate, at a corporate level, what must happen globally.

That is, reduce their own emissions as far as possible and balance out the emissions that remain with carbon dioxide removals.

Yet this notion is already leading to a perverse effect on how companies spend their mitigation dollars.

According to at least 1 study, just a handful of companies have already pledged more removals than the entire world could provide.

At a global level, removing carbon dioxide from the atmosphere will be essential for limiting global warming, as the IPCC, for example, has made abundantly clear.

But having corporate actors purchase removals in bulk to achieve their own mini versions of net 0 misses the forest for the trees.

The world desperately needs to reduce emissions.

To move the world towards net 0, companies would do better in the near term to both reduce their own emissions and help others do the same.

The idea of achieving net 0 at a corporate level is self-centered.

We need to change the narrative from, we're no longer part of the problem if we've neutralized our emissions, to, we are part of a global solution to climate change.

This means not just imitating what needs to happen globally, but instead taking actions that beneficially advance a global net-zero outcome, including by prioritizing emission reductions over removals in the near term.

From a scientific perspective, there's no reason why the correct level of emissions for any given actor should be net 0.

What is fair and feasible could be net positive, 0, or negative emissions.

Companies should focus on making equitable contributions to global goals, including through near-term support for emission reductions outside their value chains.

Third, connect with larger policy efforts.

No company acting on its own can solve the climate crisis.

We urgently need to focus attention on collective action.

Companies that are truly committed to net 0 need to support climate policies at all levels of government and internationally that advance an equitable, comprehensive and coordinated global transition.

We know many people think carbon credits and the idea of net 0 are deeply flawed, but do they have to be?

In our next talk, Annette Nazareth of the Integrity Council for Voluntary Carbon Markets lays out a set of required core principles to build a market that delivers robust, quantifiable and climate positive outcomes.

See all TED Countdown transcripts on Tedtalk

Is there a role for carbon credits in the transition to a fair, net-zero future?