By Virginia Furness
(Reuters) -Amazon has become the first company to sidestep a global standard for verifying carbon offsets that was developed by a non-profit funded largely by the U.S. technology conglomerate’s founder and executive chair, Jeff Bezos.
Amazon (NASDAQ:) is backing the development of a new standard that could allow the online retailer and cloud-computing provider to overcome a dearth of supply for quality-labeled offsets, enabling it to meet its target of cutting its greenhouse-gas emissions to zero on a net basis by 2040. Critics worry that the move could lead to market confusion and a compromise in the standards of carbon offsets.
Companies under pressure to curb their emissions can buy credits from developers of projects that absorb carbon, such as through reforestation. The market for offsets has remained small due to a limited number of projects that can verify their climate benefits.
Amazon told Reuters it has completed work on Abacus, a framework for verifying the quality of carbon offsets in reforestation and agroforestry. Amazon developed the standard with carbon registry Verra as an alternative to one developed by the Integrity Council for the Voluntary Carbon Market (ICVCM), the world’s biggest grouping of private sector and environmental groups dedicated to validating carbon offsets. Verra first announced it was developing the label with Amazon and its Abacus working group in 2022.
Bezos, through his $10-billion Earth Fund that he set up to tackle climate change, is one of ICVCM’s biggest donors, having plowed at least $11 million into ICVCM and sister organization Voluntary Carbon Markets Integrity Initiative since their 2021 launch.
Jamey Mulligan, Amazon’s head of carbon neutralization, said in an interview that the company evaluated and supported ICVCM’s work, but that it wanted a more ambitious standard.
“We want to ensure that every credit investment has a real, conservatively quantified and verified impact on emissions,” Mulligan said. He declined to comment on whether Bezos was involved in Amazon’s decision.
Bezos could not be reached for comment.
Alphabet (NASDAQ:), Meta (NASDAQ:), Microsoft (NASDAQ:) and Salesforce (NYSE:) have said they plan to buy up to 20 million metric tons of Abacus-certified credits.
Pedro Martins Barata, co-chair of ICVCM’s panel of experts, said he was worried about development of an alternative standard and that he hoped that Abacus would eventually be folded into ICVCM.
“Otherwise, you get again into a confusing state in the market where each set of companies will find their own standards they want to support and they will say that they’re a particular type of quality,” he said.
Martins Barata added that ICVCM was reviewing Verra’s methodology for developing carbon offsets from agroforestry and reforestation projects, and that if it approves it this could make the Abacus label compatible with ICVCM’s label.
Kelley Kizzier, director of corporate action and markets at Bezos Earth Fund and a member of ICVCM’s board, said Abacus is complementary rather than competitive to ICVCM. She also declined to comment on Bezos’ role.
“What we need to focus on is generating high-integrity (offsets). There is room for lots of actors to do that,” Kizzier said.
The label will be available within weeks, Verra said.
OFFSET MARKET
The $2-billion market for voluntary carbon offsets has remained small amid concerns by companies and investors that the underlying projects may not curb as many emissions as they claim.
The market accounts for offsetting 300 million metric tons of emissions annually, according to an Environmental Defense Fund analysis of data from financial information provider MSCI. Yet only a fraction of those offsets are verified, with ICVCM’s main quality label, CCP, accounting for 27 million tons.
“My main concern with the strategy remains with the idea that the purchase of these credits somehow ‘neutralizes’ Amazon’s impact. I don’t think it does,” said Gilles Dufrasne, policy lead at environmental non-profit Carbon Market Watch.
Deborah Lawrence, chief scientist at credit ratings firm Calyx Global, welcomed the label’s requirement to make public data on how much carbon the projects store but said it still had questions about Abacus’ ability to ensure the carbon removals are permanent.
“Their permanence position requires further investigation,” she said. “The way it is phrased is giving us pause, but their annual monitoring and making the results public are great ideas and raise the bar.”
Amazon generated 71.3 million tons of carbon dioxide equivalent emissions in 2022, according to its latest sustainability report, of which 54.98 million tons came from its supply chain.
It will take two to three years for projects to qualify for the Abacus label because many rely on trees growing and then developers proving how much carbon they absorb.
Mulligan said Amazon could become one of the biggest carbon-credit buyers, but that it would not use them in place of the company’s efforts to decarbonise its business.
He added that Amazon is currently reviewing more than 70 proposals from developers and expects to restore tens of thousands of hectares of degraded land.
Any developer can apply for the Abacus label provided they meet requirements of Verra’s methodology, which the Abacus working group, a team of scientists, non-governmental organizations and industry specialists helped develop.
Eron Bloomgarden, founder of Emergent, a not-for-profit organization that mobilizes private-sector funding for forest countries, said Abacus would help grow the carbon-offset market.
“The work of ICVCM is important but it’s insufficient for the growth of the market, because what we are trying to do is solve big existential challenges like climate change and biodiversity extinction,” he said.
