(37b) Counting Your C's: Opportunities and Risks Associated with Carbon Credits

As consumers, investors and government agencies increasingly demand products to be “low carbon”, more and more companies have committed to reducing carbon emissions or becoming “net-zero”, and many will soon be required to disclose emissions under new regulations such as the European Union Corporate Sustainability Reporting Directive (CSRD) or the State of California Climate Corporate Data Accountability Act (SB 253) and Climate‐Related Financial Risk Act (SB 261). To reach these goals and meet disclosure requirements, companies need to understand the carbon footprint associated with their feedstocks, production processes and products and adjust.

Carbon credits, an instrument in the emerging carbon market, can assist companies reach “net-zero” emissions. However, parties engaging in this market may want to understand the origin of potential credits, the accounting process for estimating the value of the credits, and potential risks associated with such a transaction. Lawsuits have been brought against parties engaged in the carbon offset market, and critics have raised concerns that carbon credits facilitate greenwashing rather than removing greenhouse gases from the environment. California businesses participating in the voluntary carbon offset market will also soon be required to disclose their purchases under the Voluntary Carbon Market Disclosures Act (AB 1305).

Life cycle assessments (LCAs) are a commonly used tool to calculate carbon footprints and inform carbon credit generation. In this talk, we will discuss potential pitfalls and risks when conducting LCAs and comparing the results of LCAs. We will show that LCAs are one tool that informs carbon credits offered in the marketplace, and chemical engineers are critical to conducting accurate and comprehensive LCAs. We will close by presenting our experience in evaluating potential carbon credit offerings.