On November 18, 2019, a coal-fired power plant in Obilić near Pristina, Kosovo, emitted thick smoke.
Ognan Teofilowski Reuters
If the company is to achieve its 2050 net zero greenhouse gas emissions target, the carbon offset market could grow by as much as 50 times.
This is based on a new report from Bank of America, Released to customers on Friday and more broadly Monday, with the title “Carbon Offset: Net Zero Volunteer Heroes.”
“Net zero” emissions means that an entity eliminates as much emissions as it releases, and can be considered “carbon neutral”. According to the World Resources Institute, A non-profit global research organization.
The first step in achieving net zero emissions is to reduce emissions as much as possible. Any remaining emissions that have not been completely eliminated can be calculated by removing an equivalent amount of emissions from the atmosphere, The World Resources Institute says. Greenhouse gases can be removed from the atmosphere by restoring forests (trees remove carbon dioxide from the air during photosynthesis) or more technical means (such as direct carbon capture technology).
Bank of America stated in its report that the current carbon offset market is “still relatively small.” Bank of America stated that the offset issued in 2020 is equivalent to eliminating or avoiding 210 million metric tons of carbon dioxide emissions, which is equivalent to 0.4% of global emissions.
There are four main carbon offset registries: Proven Carbon Standard, or Verra; Gold standard; this U.S. Carbon Registry; with Climate Action ReserveAccording to the report, the market started in the US Carbon Registry about 25 years ago, which was then called the Environmental Resources Trust.
The Bank of America report stated that the cost of carbon offset is between US$2 and US$20 per metric ton. It is undeniable that the range of emissions that can be eliminated is wide and “provides a relatively cheap way to decarbonize.”
The Bank of America stated in its research report that governments around the world have set a goal of achieving net zero emissions between 2050 and 2060, but they are unlikely to achieve these goals. “Current policies are still not enough to fully incentivize the changes necessary to achieve these lofty goals, whether through carbon pricing or other means,” said the report from the Global Commodity Research Department.
According to the report, many companies voluntarily set their own emission targets, and these established targets will increase the demand for carbon offsets.
Bank of America stated that achieving net zero energy emissions by 2050 will require approximately 7.6 gigatons of carbon dioxide to offset or remove. Bank of America said this would mean offsetting market growth by as much as 50 times. The bank said that the low end of demand growth for carbon offsets will at least quadruple.
Early in the life cycle of the carbon offset market, projects include chemical processing as well as industrial and manufacturing projects. But the report said that currently forestry, land use and renewable energy projects account for about 80% of carbon offset projects. According to the report, this “may be due to people’s growing interest in nature-based solutions” and the decline in the price of renewable energy sources such as wind and solar.