The murky world of carbon credits

The environment we live in is getting hotter and more volatile. We know the planet cannot sustain a growing population running businesses that pursue profit above all else. The consumption-based economy that’s been tightening its grip on society for at least a generation has led to a world awash with single-use plastics and electronics built in obsolescence.

Concerns in this regard are at the foundation of The Sin Gusano Project. I (Jon – SG founder) became enthralled with this pre-industrial product and its incredible diversity of flavour that reflects the heritage and terroir of the place its from. At their traditional best, agave spirits are produced in harmony with their local environment with entirely regenerative and sustainable practice.

The ambition of this project is to share the delights of exceptional agave spirits while using them as a link to a more sustainable culture and less consumer driven society, with a view to taming destructive consumption habits.

Of course, in creating this link, and in creating finished products, and in shipping those products across the world, we are inadvertently generating waste of our own, as well as some carbon emissions. Rather than ignore those emissions as an inevitable consequence of doing business, we analyse and offset them, with a view to understanding and reducing them as far as possible.

It’s been an interesting learning curve. As a subject, carbon offsetting seems to be something that provokes quite strong reactions in people. Some say it’s impossible to stop producing emissions so there’s no point trying. Some say the world of offsetting is full of fraud, corruption, and ‘greenwashing’. Some say it’s already hard enough to run a business and it’s foolish to add this extra cost and complexity to an operation on a voluntary basis. Having just completed our second-year analysis and offset, I have sympathy with all those opinions.

It might help at this point to explain the basic idea of carbon offsetting: There are various project around the world that extract carbon from the atmosphere. The most obvious type of project is one that plants trees or other vegetation. Trees pull in carbon dioxide via photosynthesis, thus more tress = less carbon. The problem in this capitalist world is that planting trees in not profitable. In fact, you probably need to pay a lot of people to do it. So, if you’re running a tree planting project you can apply to various bodies for funding via the sale of carbon credits. Someone comes to assess how much carbon your project will suck out of the atmosphere and grants you carbon credits to sell to fund the project. One carbon credit is one tonne of CO2. So, if your project is predicted to reduce the carbon in the atmosphere by 100 tonnes, you get 100 credits to sell.

The obvious next questions are – how can they be sure about that carbon reduction? And how much is a credit worth? And this is where it all becomes a lot murkier. By its very design a carbon credit is a tradable entity, which means markets have formed for people to buy and sell them. At this stage of carbon credit evolution large oil companies like BP have desks of traders buying up credits as cheap as they can. As regulations come into play that limit the emissions companies can make, carbon credits give the right to make more emissions penalty free. These markets are quite new, and the value of the credits traded on them is determined in part by the quality of the project validation process (the guys who come to see how many trees the original project has planted). This is a big topic, and if you’re interested to get more into which bodies carry out this type of validation there’s a lot of info to be found via google.

What you really want is a project validated to a ‘gold standard’ methodology. But that’s not actually required to achieve certified carbon neutral status, and it’s certainly not always what you’ll be offered. And even if you insist on gold standard as we did, we’re still not completely sure of the calculations. In the process of our offset I’ve been offered varying quality credits at varying quality prices (between UD$2 – US$30 per credit). It’s even possible to buy credits that have already been retired on the UN offset database. This database is where credits go to die when they should no longer be tradable… i.e, you create the carbon, you buy the offset to mitigate it, you retire the credit. But in this process, I’ve heard stories of people selling on their carbon credits after using them for a supposed offset – that would be grade-A greenwashing.

And it’s not just tree planting projects that can apply for carbon credit funding. In this process we’ve seen projects that hand out energy saving lightbulbs to families in rural Mexico, and a project outside of Delhi, India that burns rubbish to create power (the idea being that despite being quite dirty, it’s cleaner than digging up more coal). The list goes on, and the devil is in the detail… what’s the quality of the analysis that’s been done on the project? Is it gold standard? There’s quite obviously a lot of room for backhanders and corruption in this process.

BUT… what’s the alternative? We can’t go on creating endless carbon emissions. The current system is a long way from perfect and it’s open to greenwashing abuse. But we’re a small business that set out to do things better, and in turn ask more of our customers. We’ve taken the step to offset via gold standard certified re-planting projects. The project that generated the credits for our just completed 2021/22 offset is based in Australia and it’s about creating a natural corridor for wildlife through land that was devastated by mining and industrial farming - read about it here.

Part of the deal with carbon offsetting is displaying this information publicly. You can find all the details on the carbon reduction page of our website – the full analysis from spirit production to home delivery including the offset link. You’ll often hear people talk about being carbon neutral, but if they can’t show you their analysis and offset certification they may well be engaged in greenwashing. We believe we’re doing a lot more that most businesses, but given how murky this all is, we’re choosing to call our efforts ‘carbon reducing’, rather than ‘carbon neutral’.

To give you the headlines of our report: in the 2021-22 financial year this project generated 18 tonnes of carbon while turning over 1,500 litres of agave spirits. That means for every litre of our spirits, 11kg of carbon entered the atmosphere. That emission factor includes everything we do, from driving to rural communities, to buying boxes and bottles, to my personal air travel, etc. Even so, I found that number quite shocking.

The good thing is we now know where the emissions come from and can use that knowledge to drive business decision going forward. The emissions created from the actual making of mezcal are a relatively small proportion of the total created by this business (check out the linked peer reviewed phd paper we used in the analysis). It’s the dry goods (bottles and boxes) that create most of our emissions… 52% to be precise, compared to just 17% from the production of the liquid inside the bottles… it’s all in the report.

We’re already 100% plastic free (aside from possible something in the layering of our bottle labels, which we plan to investigate), but at this stage I’m very interested to work on reusable packaging and a bottle return programme. Watch this space and we’ll see what happens to that emissions factor over time. And ask your favourite businesses what they’re doing about their carbon emissions.