Why Carbon Projects Are Essential for Achieving Net-Zero?

The world stands at a critical juncture, with less than a decade left to avert irreversible damage from climate change. Achieving a sustainable future requires significant financing, targeted investments, and global cooperation to address emissions impacts effectively. Carbon markets, especially through carbon offset projects, have the potential to contribute significantly to these goals, provided they become more robust and credible.

Over the past five years, carbon market infrastructure has evolved rapidly but remains highly fragmented. This fragmentation, along with several structural and operational challenges—such as a lack of trust in the environmental integrity, credibility, and additionality of carbon credits—impedes progress. While compliance carbon markets (CCMs) are well-established, differing regulatory requirements, climate ambitions, and development stages across jurisdictions prevent greater market convergence. Similarly, voluntary carbon markets (VCMs) are hindered by the sheer number of actors, making it challenging to monitor and validate underlying credits systematically and credibly. This has led to reputational risks and lower demand, with some companies excluding carbon credits from their climate pledges and net-zero targets.

Despite these challenges, the promise of carbon markets is substantial. They have the potential to mobilize climate finance, incentivize emission reductions, and promote sustainable practices. In 2022, the value of transactions in the voluntary carbon market (VCM) exceeded $1.2 billion. McKinsey estimates that demand for carbon credits could increase by a factor of 15 or more by 2030 and by up to 100 by 2050. Companies participate in VCMs voluntarily, often to further their net-zero or climate mitigation targets.

For carbon markets to accelerate progress towards net-zero goals, they must overcome structural and operational challenges, build trust in their environmental integrity, and ensure the credibility of carbon credits. By doing so, carbon markets can become a powerful tool in the global effort to mitigate climate change and achieve a sustainable future. Companies must stay informed about regulatory developments and adhere to best practices to maximize the benefits of their participation in carbon markets.

In the following sections, we will delve into how carbon markets and carbon credits can help achieve net-zero emissions. We will explore the different types of carbon projects, the role of carbon credits, and how these mechanisms contribute to a sustainable and decarbonized future.

What are the differences between net zero and carbon neutral?

Although the terms “net-zero” and “carbon neutral” both refer to the balance of emitted GHGs with avoided or removed emissions, there are few differences between them:

Why Net Zero Matters?

In the fight against climate change, achieving net-zero emissions is not just an option but a necessity. To limit global temperature increases to 1.5°C in line with the Paris Agreement, immediate and sustained efforts are required. Current climate policies predict a staggering 2.7°C rise in global temperatures compared to pre-industrial levels, which could lead to catastrophic environmental impacts. The science is unequivocal: the extent of global warming is directly proportional to the total amount of carbon dioxide (CO2) emissions added to the atmosphere by human activities.

To stabilize climate change, CO2 emissions must be reduced to zero. Delays in reducing these emissions will only exacerbate climate change. Other greenhouse gases, such as methane, must also be constrained to meet this goal. The Glasgow Climate Pact, reaffirmed at COP26, commits to keeping global warming to 1.5°C. The Intergovernmental Panel on Climate Change (IPCC) has emphasized that to achieve this target, global emissions need to reach net zero by mid-century.

Global Net-Zero Commitments

Countries worldwide are committing to net-zero targets, often supported by legislation and policy frameworks. The top ten countries responsible for carbon dioxide emissions include China, the U.S., the European Union, India, Russia, Japan, Brazil, Indonesia, Iran, Canada, and the United Kingdom. Many of these countries have set ambitious net-zero goals, such as:

- United States: Net-zero by 2050.

- European Union: Various member states aiming for net-zero by 2045 or 2050.

- Japan and Canada: Committed to net-zero by 2050.

- United Kingdom: Targeting a 78% reduction by 2038.

Why Won't We Reach Net Zero Without Carbon Markets?

Achieving net zero requires a comprehensive approach that goes beyond reducing current and future emissions. Even as organizations and individuals work to reduce emissions, a significant amount of historical carbon remains in the atmosphere. According to the United Nations Intergovernmental Panel on Climate Change (IPCC), removing atmospheric carbon is vital to meet the Paris Agreement goals. To restrict temperature increases to 1.5 degrees Celsius by 2050, we need to remove and store substantial amounts of carbon annually—up to ten billion tonnes every year. This underscores the necessity of carbon removal technologies and projects.

To claim net zero, a reduction of 90-95% in emissions is needed, but the remaining 5-10% can only be offset through carbon projects that sequester carbon from the atmosphere. Given the urgency of the climate crisis, it is crucial to begin offsetting in parallel with emissions reductions. This dual approach protects existing carbon sinks and supports sustainable development globally.

Additionally, many sectors such as aviation, steel, and freight face technological and logistical challenges that make complete decarbonization by 2050 unrealistic. These industries are vital to global supply chains, and their emissions are difficult to mitigate entirely. Carbon projects are essential for offsetting these residual emissions. Carbon offset projects help these industries reduce and remove carbon emissions from the atmosphere and are the only way to help them achieve net zero.

Furthermore, addressing Scope 3 emissions, which are the indirect emissions from a company’s value chain, is essential for achieving comprehensive climate goals. These emissions often constitute the largest part of a company’s carbon footprint. Carbon projects offer a practical solution for managing these emissions by providing the means to offset them. This approach allows companies to take immediate action while working on long-term strategies to reduce their Scope 3 emissions.

Ensuring Quality in Carbon Offsets with Satellite Data

Not all carbon offsets are created equal, which poses significant challenges for these markets. One way to ensure high project quality and help companies achieve net zero is by using reliable satellite data. Orbify offers powerful satellite data-powered insights through intuitive dashboards and map indicators, ensuring that the carbon offset projects contribute positively to global climate action. This enables companies to invest confidently in high-quality projects that align with their net zero strategies.

With Orbify, you can conduct baseline, additionality, and permanence analysis of your projects, along with co-benefits assessment. Additionally, you can gain critical insights into land use changes, biodiversity monitoring, soil characteristics, carbon stock, canopy height, historical deforestation rates, soil organic carbon, and more, offering a comprehensive environmental assessment of your potential carbon project.

With Orbify, buyers can assess project viability and make informed decisions that drive effective carbon sequestration and sustainable climate action. Our technology enables precise screening and management of carbon projects, ensuring they meet both immediate and long-term environmental goals.

If you want to know more about how to review carbon projects to achieve net zero, you can always talk with one of our experts!