EDITORIAL: SBTi's long-awaited updates on net-zero strategy leave the market 'waiting'

Quantum Commodity Intelligence – The Science Based Targets initiative (SBTi) published 'long-awaited' updates on its plans for its revised Corporate Net-Zero Standard (CNZS), although realistically, apart from a discussion paper on potential revised options for setting Scope 3 (value chain) emissions, anything more concrete is going to wait until late in the year.

Long-awaited in the sense that the voluntary carbon market and other keen watchers of climate action had been wanting more clarity since a series of communications earlier this year led to confusion and backtracking, and, probably, SBTi's chief executive stepping down.

But, despite no less than four 'technical outputs', we seem none-the-wiser on carbon credit use for value chain emissions until the end of the year. Some potential scenarios were outlined in the discussion paper – three specifically related to carbon credit use in some form. Although SBTi pointed out that the options were just illustrating potential uses, and were not exhaustive.

Carbon credits

Those three were using carbon credits to support the neutralisation of residual greenhouse gas (GHG) emissions; carbon credits from mitigation activities within the value chain are used to "substantiate" value chain GHG emissions reduction; and carbon credits to support beyond value chain mitigation. These ideas, and the rest of the report's contents on setting goals for Scope 3 emissions, are the SBTi's initial thinking on possible changes, with stakeholders able to send comments up until September 12.

SBTi's other papers related the effectiveness of so-called 'environmental attribute certificates' and carbon credits, based on analysis of articles and evidence submitted to call for evidence. The conclusion that I take from those papers is that SBTi feels that more research is needed before it can make a final decision.

However, others seemed to see this differently saying that the SBTi has concluded that there is no scientific evidence to support the use of carbon credits. Funny, how some people read things in a way that back up their own agenda, even if that's not how the text reads in its totality.

The ambiguity of the papers – effectively 'kicking a decision down the road' until the end of the year – has not gone down well in the VCM. Particularly given the mixed messages that have been coming out of the SBTi since April.

"The headline for me is that final guidance on these topics won't be available until 2025," said Nathan Truitt, executive vice president of climate funding at The American Forest Foundation, in a social media post. "This is frankly unacceptable in a world where lack of clarity from SBTi is absolutely inhibiting corporate investments both inside and outside of the value chain," he said.

"All of this leads me to a depressing but also liberating conclusion... SBTi is not going to be the organisation that provides leadership for companies as they seek to both decarbonise and drive broader progress towards a 1.5 degree scenario," he added.

Missed opportunity

Others described as a "missed opportunity" the July 30 publications, which coincidently came days after Air New Zealand  announced it was ditching 2030 climate goals and withdrawing from the SBTi.

The airline cited difficulties in buying fuel-efficient airplanes and  sustainable aviation fuel (SAF), as well as regulatory issues, among the reasons for the decision.

Rubicon Carbon's chief science officer Jennifer Jenkins, described the decision as an "excellent example of why the approach currently taken by SBTi just isn't workable for companies".

She said that this would not be the last example of companies backtracking on goals. "We'll begin to see even more companies pulling out of their voluntary commitments before the Corporate Net Zero Standard is complete, a year and a half from now," she added.

And herein lies the problem. Everyone had been waiting for something from SBTi in July and now we are all waiting until the end of the year for what will only be a draft document open to consultation and finalised some time next year. So much for more clarity.