British fossil fuel producer Shell’s flagship carbon facility – built on taxpayer money – has sold over $200M worth of emissions credits for reductions that never happened.

Shell, one of the world’s largest oil and gas companies, has made more than $200M by selling carbon credits for reductions that never happened, according to a new investigation by Greenpeace Canada.

These ‘phantom’ credits were sold under the fossil fuel giant’s Quest carbon capture and storage (CCS) facility, which was facilitated by an exclusive deal with the government of Alberta. This is the latest example of the fallacy that this technology can help large polluters reduce their emissions, something oil sands companies in Canada are currently advocating for.

“Selling emissions credits for reductions that never happened is the worst kind of hot air, because it literally makes climate change worse,” said Keith Stewart, senior energy strategist at Greenpeace Canada and author of the Selling Hot Air report. “The false promises and phantom emissions surrounding this project are a powerful illustration of why Canada needs a legislated cap on greenhouse gas emissions from the oil and gas sector.”

Taxpayer money covered ‘phantom’ credits that netted Shell $200M

Greenpeace Canada obtained documents via Freedom of Information requests showing that Shell lobbied for and received a two-for-one deal during subsidy negotiations with the Alberta government in 2020. It meant Shall was able to sell credits for two tonnes of CO2 for every one tonne its Quest facility actually captured, and keep all the profits in the process.

“These phantom credits provide no environmental benefit while enabling Shell and its partners to extract more oil from their oil sands operations because they don’t have to pay the full carbon compliance costs,” Stewart wrote in the report.

The Alberta government granted 5.7 million tonnes of credits to Shell as part of its battle to tackle criticisms of oil sands (petroleum deposits also called tar sands) as ‘dirty oil’ – the province is home to one of the biggest and most carbon-intensive oil deposits globally, where production has boomed. In 2008, it released a carbon plan that foresaw oil extraction continuing to increase, but greenhouse emissions going down with the widespread application of CCS.

With the subsidy (which was initially requested to be three-for-one), Quest sold credits to top oil sand producers and some of Shell’s own subsidiaries, with some of the largest buyers including Chevron, Canadian Natural Resources, ConocoPhillips, Imperial Oil and Suncor Energy.

The plant was launched as a pilot project that would capture and store 30 megatonnes of carbon annually by 2020. But in reality, Quest managed to negate just one megatonne of emissions in 2022, and capture less than a third of the emissions from the oil sands upgrading facility where it’s located and less than 1% of upstream emissions from the oil sands.

Shell had received $777M in subsidies from the provincial and federal governments by the end of 2022, as well as $406M in revenue from the carbon offsets. The actual emissions it has avoided make up 50% of the latter figure in this time, which implies that it has made $203M in additional ‘phantom’ credits. Taken together, it means Canada’s taxpayers have covered 93% of the costs of the Quest CSS project for Shell, which earned $28B in revenue in 2023.

“This was all legal, but that doesn’t make it right,” said Stewart. “Those who have polluted and profited the most must be held accountable.”

Shell buying more credits while weakening climate pledges

The report warns that this could become a recurring pattern. While government subsidies for Quest – which is jointly owned by Shell Canada, Canadian Natural Resources, and Chevron – have since been ended, an oil sands coalition called the Pathways Alliance is now similarly proposing to capture 10-12 megatonnes of carbon per year.

This amount is less than 15% of upstream emissions from the oil sands, and 2% of their full life-cycle emissions. Moreover, the proposal is premised on federal and provincial governments again paying for the lion’s share of the costs, despite these companies registering record profits.

Stewart argued that the greater danger, really, is the use of publicly funded CSS as a greenwashing-led PR strategy to avoid the need to change their core business. “We need oil companies to start phasing down production, while financially supporting the most vulnerable people, communities, and countries in their transition to clean, renewable energy,” he said.

Last November, the International Energy Agency warned oil companies against excessive reliance on CCS, noting that an “inconceivable” amount of CCS would be needed to cut GHG emissions at existing production rates. Carbon capture technology, which has been touted by many as a viable way to cut emissions, has come under heavy scrutiny in recent years, with some of the world’s biggest creditors found to have been ineffective in addressing the issue.

Shell, which is suing Greenpeace for a separate climate protest, is doubling down on these efforts – last year, it bought 16 million tonnes of credits (the highest of any company). It is the joint second-largest investor-owned oil polluter, responsible for 1.2% of global emissions since the 2015 Paris Agreement. One report has shown that Shell is among four other fossil fuel giants that could lead to the death of 11.5 million people this century – but the company has actually weakened its climate pledges.

“The pace of transition depends on action in many areas, including government policy, changing customer demand and investment in low-carbon energy,” a Shell spokesperson told the Guardian in March. “Our aim is to play our part in a balanced energy transition, where the world achieves net zero emissions without compromising on delivery of secure and affordable energy, which has improved so many lives, and which people will continue to need today and for many years to come.”

In response to the Greenpeace Canada report, Canadian energy and natural resource minister Jonathan Wilkinson told the Financial Times a two-for-one system for carbon credits was “probably not appropriate”. He added: “At the end of the day, the oil and gas sector and the oil sands firms in particular need to get going with respect to emissions reductions.”

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From one greenwashing scandal to the next, carbon offsets have developed a notorious reputation over the last few years. As more investigations call out their inflated claims and regulations clamp down on the sector, could the voluntary carbon market be suffering from a loss of faith?

Whether it’s soil, cookstoves, water bottles, or Taylor Swift, carbon offset credits have been the hotrod of climate discourse in the media (and governments). Touted as a way to feel better about your emissions and footprint – whether as an individual or a company – the sector has encountered heavy criticism over the years for its unsubstantiated, overstated and/or misleading claims.

In principle, carbon offsetting involves “cancelling out” emissions by investing in projects that promise to cut carbon elsewhere – think reforestation initiatives, clean energy production, or carbon capture projects. The idea is, by buying these ‘carbon credits’, you can ‘balance out’ the amount of carbon in the atmosphere.

But multiple studies and investigations have revealed that a lot of these crediting schemes are engaging in greenwashing, making promises they can’t fulfil and giving high-emitting corporations an easy way out. The $2B voluntary carbon market has also been dented by legislation like the EU’s upcoming greenwashing ban.

Even in the last month or so, there have been a host of stories uncovering how the capabilities of carbon offsets have been overstated, which begs the question: are we finally losing faith in the practice?

Clean cookstoves aren’t really clean

Last week, a study revealed that clean cookstove projects – a class of carbon credits that trade smoky fuels for alternatives like electric cookers – have been overstating their climate impact by around 1,000%. These schemes are presented as “nature-based solutions” that can bring health, social and environmental benefits to people in the developing world by enhancing air quality, reducing the time people spend collecting wood, and slowing forest loss.

Clean cookstove initiatives sell greenhouse gas reductions as carbon credits, allowing many buyers to label their products or services as carbon neutral. With 3.2 million premature deaths happening manually due to household smoke caused by cooking fuels, which cause 2% of global emissions, these are wildly popular too: between May and November last year, 15% of all carbon credits were issued by these cookstove schemes, which also registered the highest number of projects in this period.

But the study, published in the Nature Sustainability journal, revealed that nine in 10 of the 96 million certified cookstove credits don’t avoid the emissions they claim. The project’s sample, which covered 40% of these credits, found that cookstoves were over-credited 9.2 times. Extrapolating to the entire market, this rises to 10.6 times. Such overcrediting comes mostly from exaggerated estimates of stove adoption and use, underestimates of the continued use of the original stove, and high estimates of the impact of fuel collection on forest biomass.

The findings have been disputed by leading carbon certifiers Verra and Gold Standard. The latter, whose credits were found to be the highest-quality ones (over-crediting just 1.5 times), said it had interacted with the authors and taken suggestions. But Verra expressed disappointment over continued attention on the study, saying the findings were “at odds with the wider academic literature and expert view on this subject”.

Carbon angle on regenerative agriculture ‘oversold’

This is just one of a number of different developments hindering the voluntary carbon market. For instance, there has been a spotlight on regenerative agriculture and soil carbon sequestration. The agrifood system already accounts for a third of all global emissions, leading food companies to look for ways to cut their climate footprints: one way of doing so is by adopting regenerative farming practices.

But some say this will not solve the industry’s emissions problems, with questions raised over how much (and for how long) carbon can actually be stored in soils. As the Financial Times reports, scientists warn that “if sequestration seems too good to be true, it probably is”. Only a handful of agrifood companies disclose how much their net-zero goals depend on using land as carbon sinks, but Pete Smith, professor of soils and global change at the University of Aberdeen, told the publication that the numbers “simply won’t stack up” because soil can’t perpetually soak up carbon.

Climate experts have likened this idea of carbon storage in soil for offsetting emissions to the wider carbon offset market, which – as mentioned above – has been “derided by some campaigners as a vehicle for corporate greenwashing”. That still hasn’t stopped startups from selling soil-based carbon credits on the voluntary market. While regenerative agriculture “makes a lot of sense”, Smith feels “the carbon angle has been oversold”.

Danone’s water bottle battle

In the US, Danone is facing a class-action lawsuit for allegedly misleading consumers with a ‘carbon neutral’ claim on the packaging of its Evian bottled water. The plaintiffs argue that people “would understand and believe that the term ‘carbon neutral’ means the manufacturing of the product, from materials used, to production, to transportation, is sustainable and does not leave a carbon footprint.”​

In response, Danone stressed that “no reasonable consumer would interpret carbon neutral to mean that the product does not emit any carbon dioxide whatsoever during its entire life cycle”. It added: “One wonders how the plaintiffs think the product magically arrived from the French Alps to their homes without the emission of even a molecule of carbon dioxide.”

It’s a classic greenwashing lawsuit, but illustrates the problems posed by a lack of legal definitions for terms like ‘carbon neutral’. The WWF explained this in a public comment. “Failing to address these misleading claims allows both of the following hypothetical companies to claim carbon neutrality,” it wrote. “Company A: Reduces 99% of scope 1, 2, and 3 emissions. Buys carbon credits in a volume equal to the remaining 1% of emissions. Company B: Reduces 0% of scope 1, 2, and 3 emissions. Buys carbon credits in a volume equal to their total emissions.”

Is Taylor Swift burning red?

Carbon offsets aren’t safe from discourse even around the world’s biggest pop star, Taylor Swift. The 34-year-old has been in the news for her private jet emissions since 2022, when she was named the biggest celebrity polluter of the year. But the conversation was amplified recently when a now-defunct Instagram page called Taylor Swift’s Jets tracked her journeys on private jets and calculated her emissions to be 138 tons in just three months.

This equates to the annual emissions of 28 gas-powered cars or 16 homes, but Swift made further headlines after her representative pointed out that before the start of her record-breaking Eras Tour in March 2023, she “purchased more than double the carbon credits needed to offset all tour travel”.

But it’s unclear where the Anti-Hero singer bought these offsets from, and highlights the problem of misconceptions around carbon offsets on a global level. It will be interesting to see if Swift’s carbon credits would be subject to California’s new anti-greenwashing law. “If Swift or her companies have publicly claimed that the tour was carbon neutral or that it produced less climate impact than its actual emissions because of offset credit use, then arguably they have made a claim that is covered under AB 1305,” carbon market expert Danny Cullenward told the New Republic.

Lawmakers clamp down on carbon offsets

On to the regulations, then. Just like Swift’s carbon emissions may be affected by legislation, cases like Danone’s lawsuit would also become much less ambiguous with proper rules and definitions. This is what California has done with AB 1305, which mandates carbon offset sellers to disclose specific information about accountability measures if projects aren’t completed or don’t meet the target objectives.

Plus, businesses who buy these offsets and make claims like ‘net-zero’, ‘carbon-neutral’, etc. are required to be transparent about the accuracy of these claims, their progress, and whether they’re verified by an independent third party. Speaking of which, the bill includes third-party verification of all of the company’s GHG emissions, identification of its science-based targets for emissions cuts, and disclosure of the methodology used for the same.

Passed by governor Gavin Newsom, the aim is to introduce transparency and combat greenwashing, holding businesses accountable for claims they make about their climate impacts. Those found violating the law could be penalised $2,500 for each day that information about carbon offsets is unavailable or inaccurate on their website. This is capped at $500,000, which could potentially be recovered in civil actions.

Across the Atlantic, the EU has passed its own anti-greenwashing law, which will come into effect in 2026. It means companies can’t use terms like ‘carbon neutral’, ‘eco-friendly’ or ‘green’ without providing substantial “proof of recognised excellent environmental performance”. This will heavily impact the voluntary carbon market, as businesses buying these offsets won’t be able to make such claims.

“We are clearing the chaos of environmental claims, which will now have to be substantiated, and claims based on emissions offsetting will be banned,” said Biljana Borzan, a Croatian EU lawmaker.

For instance, airlines allowing travellers to pay a small fee to offset their flying emissions will no longer be allowed to make carbon/climate-neutral claims. “There is no such thing as ‘carbon-neutral’ or ‘CO2-neutral’ cheese, plastic bottles, flights or bank accounts,” said Ursula Pachl, deputy director of consumer advocacy group BEUC. “Carbon-neutral claims are greenwashing, plain and simple. It’s a smoke screen giving the impression companies are taking serious action on their climate impact.”

Gilles Dufrasne, global policy lead at Carbon Market Watch, added: “The EU is sending a powerful signal to the voluntary carbon market: the era of offsetting is over, and carbon credits can’t make up for buyers’ pollution.”

Voluntary carbon’s troubles – or are they?

Such legislation puts into doubt the credibility of carbon offsetting, and it’s crucial. The sector is set to be valued anywhere between $10B and $40B by 2040, but there aren’t enough trees to capture a sufficient amount of carbon to make up for our emissions, especially since it can take about 20 years for tree saplings to become viable for carbon offsetting.

According to one investigation, 85% of offsetting projects commissioned by the EU have failed to reduce emissions, and only 2% of the covered projects and 7% of potential ones would have a high likelihood of reducing emissions. Another outlined how 90% of rainforest offset credits issued by Verra – which is the world’s largest offset provider – are “worthless”. The company claimed to have cut 90.9 million tonnes of carbon emissions, but only delivered 5.5 million tonnes of reductions.

Verra has additionally been accused of highly inflating its projects’ climate impacts, with some projects unsuitable for businesses to use for carbon offsetting as they aren’t equal to fossil fuel emissions. Another investigation revealed that 28 of its 32 projects analysed were essentially “junk”. In fact, 39 of the top 50 carbon offsetting projects (78%) were classed as junk or worthless due to failures undermining the promised cuts, while eight others (16%) looked problematic and were classified as ‘potentially’ junk.

And in November last year, a report suggested that Verra manages 41 plastic collection and recycling projects across 15 countries, but while 11 of its projects have been registered and three approved to issue credits, only one is actually doing so. And a fifth of its schemes are ending plastic to cement kilns for incineration, a charge levied on plastic credit marketplace PCX too. Only 14% of its plastic offsetting credits are generated from recycling, with the rest coming from incineration in cement kills.

All this has left consumers – and, you’d think, companies – disillusioned. But the carbon offset market is set to thrive this year, with only a 3% drop in demand from 2022-23. A bilateral deal between Switzerland and Thailand could open up a new branch of the global market, while some governments in Africa are taxing offsetting revenues to redirect them back into the communities where projects are located. Oil companies like Shell are doubling down – despite indicating a move away from the market: it bought 16 million tonnes of credits last year (twice more than the next on the list), just as the market opened up to a growing number of first-time purchasers.

Serafino Capoferri, analyst at financial firm Macquarie, told Semafor that the “fear of reputational damage may keep some buyers away, and a dip in prices also cut into the supply of new credits last year”, but barring any major scandals, “the carbon market has contracted as much as it is likely to”.

The key lies here: can carbon offsetting avoid any more scandals?

The post With Investigations and Regulations Against the Market, Are Carbon Offsets in Trouble? appeared first on Green Queen.

A new report by Break Free From Plastic and the Global Alliance for Incinerator Alternatives has revealed that there are serious flaws in the plastic offsetting, credits and neutrality markets, analysing the two major providers of these services, Verra and Plastic Credit Exchange.

Greenwashing is under the microscope more than ever before, with consumers calling for clearer communication and legislators clamping down hard. The EU has already finalised a ban on greenwashing, prohibiting companies from calling their products ‘carbon-neutral’, ‘eco-friendly’ or similar without substantial evidence.

One practice that’s widespread but has been found to amount to greenwashing is carbon offsetting. Carbon offsets don’t work, as many projects fail to do what they’re supposed to, and others have their impact miscalculated.

A new report – called Smoke and Mirrors – by eco organisations Break Free From Plastic and the Global Alliance for Incinerator Alternatives (GAIA) is now shedding light on plastic offsets, spotlighting two of its major proponents: Verra and Plastic Credit Exchange (PCX). The investigation, which builds upon reporting from Bloomberg and investigative journalism non-profit SourceMaterial, has found that there are serious flaws in the system, and is calling for tighter legislation and greater awareness around the topic.

Verra backdated its plastic credits

The report revealed that Verra – which manages the largest voluntary carbon programme in the world – has 41 plastic collection and recycling projects across 15 countries, and estimates that its existing projects could generate over 9.3 million credits worth $4.67B in revenue (if each is sold for $500 per tonne). However, while 11 of its projects have been registered (which requires third-party auditing) and three approved to issue credits, only one is actually doing so.

There are also serious concerns about additionally – a key offsetting concept, referring to the requirement that the credits are paying for an activity that wouldn’t otherwise have happened without the credits’ financial support. Eight of Verra’s projects (19.5%) – applying to issue over 1.1 million credits – have been in operation for seven years, before being certified to sell credits. So if these projects are approved by Verra, they will already be credited for this period.

In fact, 83% of Verra’s projects have been in operation for over a year, while 42% have been operating for over five years – all of which could be credited retroactively. This counteracts Verra’s claim that the finance from plastic credit sales can help develop waste management infrastructure “that is otherwise not viable without the revenue from the crediting mechanism”.

Additionally, over a fifth (22%) of Verra’s projects are sending plastic to cement kilns for incineration, raising concerns about potential climate implications. Experts stress that Verra’s failure to ensure additionally undermines the plastic credit market, as it approved projects that are already in operation. The report is the latest in a growing list of investigations against Verra, which have found that 94% of the carbon credits produced by 29 of its projects present no benefit to the climate, and that its Redd+ scheme isn’t fit for purpose.

“Verra is pushing to have plastic offsetting enshrined in a future plastic treaty when they only have one single project actually issuing credits,” said Emma Priestland, corporate campaign coordinator of Break Free From Plastic. “Plastic offsetting is a particularly shady form of greenwashing that lulls companies, policymakers and consumers into a false sense of security that their plastic footprint is being excused by someone, somewhere, collecting waste. But the terrible reality is it actually harming communities by sending plastic to be burned in cement kilns.”

PCX rewards burning over recycling

PCX is a plastic credit marketplace that also has a plastic footprint calculator and “provides opportunities to invest in both small and large projects aggregating and recycling through its infrastructure fund”.

Plastic credits aren’t only generated from recycling. The Smoke and Mirrors report found that only 14% of PCX’s credits are generated from recycling, despite this being the most prominent way credits are marketed. The rest (86%) comes from co-processing, which is an industry term for incinerating waste in cement kilns.

These credit schemes support plastic burning, which releases harmful toxic chemicals and greenhouse gases and presents no environmental benefits. In fact, PCX charges less for projects sending plastic waste to cement kilns than for those that recycle.

The report highlights how the PCX website claims it encourages “the elimination of unnecessary plastic while providing opportunities to enable a circular economy through prevention, reuse, substitution and recycling to avoid plastic waste from leakage into nature”.

Additionally, PCX rules mandate companies to submit their reports to third-party auditors, but this validation isn’t taking place in the majority of cases. Analysis by SourceMaterial shows that 60% of PCX’s net-zero-certified credit records had no third-party auditor.

“Plastics contain thousands of toxic chemicals that create health risks to humans and the environment. Heating and burning plastic wastes produces even more toxic chemicals and should not be considered an ethical corporate practice that provides environmental benefits,” said Therese Karlsson, science and technical advisor at the International Pollutants Elimination Network. “This situation shows the urgent need for reducing plastic production and eliminating toxic chemicals from plastics.”

‘Destined for history’s scrap heap’

The report concludes that these serious flaws in financing, additionality, transparency, basic auditing requirements and plastic removal show how this practice is just a corporate greenwashing tool.

“Having sabotaged the climate change convention with worthless carbon credit schemes, the offsetting industry is now setting its sights on the plastic treaty, where it promises to wreak similar havoc,” said Neil Tangri, science and policy director at GAIA. “Offsetting allows polluters to escape responsibility, assuring the public that the problem is solved when in reality, it is growing out of control.”

The authors write that collecting plastic waste and burning it in cement kilns “is not removing plastic from the environment, it is simply turning it into another form of pollution”. Marian Ledesma, a zero-waste campaigner at Greenpeace Southeast Asia, said: “By burning plastic in cement kilns, it damages ecosystems, harms our health and drives climate change, while letting plastic production remain unrestrained… Countries must reject plastic credits to protect people and nature.”

“Businesses that wish to act more sustainably are better served by reducing plastic use across their operations, and not by attempting to offset it,” states the report. “Governments looking for additional finance for waste treatment should develop well-thought-out Extended Producer Schemes, taxation systems on plastic producers and advocate for a dedicated fund in the future Global Plastics Treaty.”

“Financing must go into badly-needed Just Transition funds for Global South societies, not private payoffs to consultancies and paper-pushing firms,” added Tangri. “If countries fail to learn the lessons of the disastrous carbon market, the plastics treaty will similarly be destined for history’s scrap heap.”

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Stop pretending planting trees can justify fossil fuel emissions.

By Mark Schapiro, Capital & Main

Fossil fuel companies are no longer denying the realities of climate change — which many of them reported on privately for decades. Instead, they’re attempting to position themselves as key players in the “low-carbon transition.” And key to that is the companies’ embrace of the mantra of “net-zero” emissions. As we sweat through what a climate scientist has called a “gobsmackingly bananas” heat wave — three record-breaking months from July through September — the claims of net zero emissions are becoming ever more deeply entwined with fossil fuel companies’ public relations strategies.

Net zero is the idea that emissions in one place — an oil refinery or the cars and planes using its products — are balanced out by the removal of carbon dioxide in another place. The elegance in that equation, which may make sense in a classroom, gets messy when it turns out that most of those other places intended to balance fossil fuel emissions are trees, which absorb CO2 and are located primarily in tropical forests.

Carbon Brief’s net-zero findings

The difficulty in tracking emissions reductions based on promises to reduce deforestation in such distant and complicated ecosystems has prompted a rising chorus of scientists, think tanks, U.N. officials, research institutions and journalists who say it’s time to blow apart the system of carbon offsets. It’s time to return to the heart of the matter, they argue: reduce greenhouse gas emissions where they’re produced. Cut through the PR smokescreen, and it becomes clear that the carbon offsets approach to net zero emissions produces practically zero results.

At a conference of international investigative reporters last month in Gothenberg, Sweden — most of whom came from outside the United States and were affiliated with the Global Investigative Journalism Network — a repeated theme was accountability of the fossil fuel companies for the massive damage from climate change. On panels and in the hallways, there was a sense that it was time to challenge oil and gas companies’ promotion of net zero climate strategies.

The rise of net zero has fueled a rise in what’s known as the “voluntary carbon market,” — a multibillion market for the buying and selling of carbon offsets. At the conference,  Jim Footner, director of the British-based climate research firm ARIA (analysis, research, insight, action), said that about 100 countries and more than a third of the world’s largest corporations have net zero targets. “Net zero is a veneer,” Footner said: “An empty space that companies can promote without being specific.”

I was on a panel with Leo Hickman, editor and director of Carbon Brief — a U.K.-based research institution and publication that deals with the economics of climate change and carbon markets. He shared the institution’s recent findings: 

• Two-thirds of the world’s biggest companies with net zero targets are using carbon offsets to help meet their climate goals while emitting equal or greater amounts of greenhouse gasses.
• More than half of offsets purchased by the biggest oil and gas companies were based on a promise either to prevent deforestation or to replant trees in degraded areas. And most, Carbon Brief concluded, overstated their effects.
• Most of the offsets were based in developing countries. Chevron’s primary offset projects were in Colombia; Comcast’s were in China, Sierra Leone and Cambodia; Shell’s were in Peru; and Bank of America’s were in Indonesia.

Most forest-based offset projects — the heart of net zero claims – played no significant role in decreasing deforestation, a recent study in Science concluded. That study assessed the veracity of emission-reduction claims in 26 offset projects in six countries.

For journalists, any claims to offsetting emissions by preserving trees in a distant forest warrant some immediate questions:

• Who is verifying that promised emission reductions are occurring?
• Is there an independent third party who can confirm that forests where an offset has promised to save trees has actually prevented them from being cut down or burned in a wildfire? Such fires are a higher possibility with each new year of rising emissions
• Is the replanting of trees in degraded areas, another key claim of the offset industry, actually taking place as promised?

From oil and gas to finance: net-zero is everywhere

An Associated Press investigation cited in the Carbon Brief report asked such questions when they discovered that offsets claimed by oil companies Shell and Total were in forests that were still being deforested. Similarly, in areas of Brazil and Cambodia claimed as offsets by Marathon Oil, steel producer  ArcelorMittal S.A. and Uber, deforestation rates actually increased, according to U.K.-based Climate Home News. A collaborative investigation by The Guardian and German newspaper Die Zeit, meanwhile, found that 90% of the projects ostensibly validated by American company Verra were in fact “worthless” and delivered nothing close to the carbon sequestration that companies — including Shell, Disney and Gucci — claimed.

Concern over the veracity of offsets that are central to most net zero claims is rising even among financial authorities. The U.S. Commodity Futures Trading Commission’s Whistleblower Office in its Division of Enforcement issued an alert last summer calling on whistleblowers to come forward to report any instances of “fraud or manipulation” in the carbon offset marketplace.

In addition to oil and gas companies, the finance industry jumped on the net zero bandwagon. Two-thirds of the world’s 50 largest banks, and 37 of the world’s 50 largest asset managers  publicly committed to net zero portfolio targets, according to the New Climate Institute. The think tank, made up primarily of financial and policy analysts, concluded that most of the commitments were a diversion from real emission reductions.

While claiming net zero aspirations, the dozen biggest oil companies are meanwhile channeling at least $100 million a day through 2030 in search of new deposits of oil and gas — the burning of which would virtually guarantee the increase in global heating would exceed two degrees Celsius. And of course, every offset that’s not actually offsetting anything translates into more greenhouse gasses released into the atmosphere. Increasingly sophisticated and insightful research and news reporting suggest that there’s plenty of source material for journalists to put the spotlight on net zero claims by the fossil fuel industry and its many enablers in the finance and PR industries.

The challenge for journalists has shifted. Thankfully we’re long past the kabuki theater days of ‘he said, she said’ reporting on the evidence for climate change. Now it’s about separating the fact from the fiction in the responses by industry, and everyone else, to the climate crisis.

This article by Capital & Main is published here as part of the global journalism collaboration Covering Climate Now.

The post The Net-Zero Challenge: Carbon Offsets Need to Stop appeared first on Green Queen.

The state of California has passed new climate laws that are meant to curb greenwashing linked with the voluntary carbon offsetting market, requiring companies and offset providers to be more transparent in their claims and disclosures. Here are the new rules.

The new AB 1305 bill – which comes into effect on January 1 – will apply to businesses in California that sell carbon offsets or make claims about their climate-friendly achievements like emissions reductions or net-zero statuses.

Written by assembly member Jesse Gabriel, the Voluntary Carbon Market Disclosures Business Regulation Act was passed alongside two other climate disclosure laws that relate to greenhouse gas emissions and climate risks.

What is the AB 1305 Bill, and why was it proposed?

The new bill requires carbon offset sellers to disclose specific information about accountability measures if projects aren’t completed or don’t meet the target objectives, and businesses who buy these offsets and make claims like ‘net-zero’, ‘carbon-neutral’, etc. to be transparent about the accuracy of these claims, their progress, and whether they’re verified by an independent third party.

It would include third-party verification of all of the company’s GHG emissions, identification of its science-based targets for emissions cuts, and disclosure of the methodology used for the same.

Part of the reason why the law is being passed is because companies that purchased carbon credits were not previously required to disclose these. So California’s aim is to introduce transparency and combat greenwashing, holding businesses accountable for claims they make about their environmental impacts.

Who does AB 1305 affect?

AB 1305 affects two primary entities: businesses that sell carbon offsets, such as Verra, the Gold Standard Foundation, Climate Action Reserve, American Carbon Registry, SCS Global Services, and Green-e Climate, and companies that buy these purchase from the former to offset their carbon emissions.

But it’s important to note that this only applies to public and private companies that operate in California and make eco claims (anywhere in the world) OR purchase carbon offsets OR to businesses that market voluntary carbon offsets in the state – though what ‘operating’ means is undefined.

AB 1305 is one of a few bills signed by California Governor Gavin Newsom, who has also passed the Senate Bills 253 and 261. The former mandates regulators to set up disclosure rules for companies with revenues exceeding $1B annually by 2025, which will impact about 5,300 companies, including the likes of Apple and Wells Fargo. These companies will need to disclose their operational and electricity-related emissions by 2026 and report their scope 3 emissions (from across the supply chain and consumer use) by 2027. SB-261 applies to businesses with over $500M in annual revenue, which will apply in 2026.

How are voluntary carbon offset sellers affected?

So what does this mean for the voluntary carbon market? If you’re a seller, you need to disclose information across four aspects on your website:

• General details: Companies will need to reveal the protocol used to measure emissions reductions or carbon removal benefits, the location of the offset site, as well as the start date and timeline. They’ll also need to disclose the dates and quantities of when a specific amount of emission reductions begins, whether the scheme relies on carbon removal or avoided emissions – in the event that the project covers both actions, companies will need to break down the offsets from each.
  
  Moreover, there needs to be transparency around an offsetting project’s adherence to legal standards and third-party verification, and sellers will need to communicate to businesses whether the durability of GHG reduction – the amount of time over which an offset project is set to maintain its GHG cuts – is less than the atmospheric lifetime of carbon emissions. Finally, the total emissions reduced or removed on an annual business should be revealed on sellers’ websites as well.
  
• Accountability measures: If projects don’t meet their targets, there need to be measures in place, including what actions sellers will take – either directly or via contractual obligations – if carbon storage measures are reversed or future emissions cuts don’t materialise.
  
• Calculation methods: Companies will also need to disclose the date and calculation methods needed to independently verify the number of emissions cuts or removal credits issued using the protocol. ‘Protocol’ here refers to a documented set of procedures and requirements to help quantify the emissions being reduced.

How does it affect businesses buying offsets?

If you’re a business buying voluntary carbon offsets from sellers and making claims about net-zero emissions, carbon-neutral products, or actions that don’t add carbon to the atmosphere or actively reduce GHG emissions, your website needs to have the following information:

• The name of your carbon offset seller and registry.
• The project name, as listed in the registry and the identification number.
• The project type, including whether the offsets purchased came from carbon removal, avoided emissions, or a combination of both, plus the location of the offsetting site.
• The specific protocol used to measure emissions reductions or removal.
• Whether there’s an independent, third-party verification of company data and the claims listed.

What happens to companies that don’t comply?

Disclosures by both carbon offset sellers and buyers must be updated each year. Companies that violate the new law will be levied a penalty of $2,500 for each day that information is unavailable or inaccurate on their website. This fine has a maximum amount of $500,000, which can be assessed and recovered in civil actions.

Why is voluntary carbon market regulation so crucial?

The voluntary carbon market is a $2B industry, and it’s predicted to reach between $10B and $40B by 2040. But it’s a sector inundated with serious failings, as multiple investigations have revealed. As we in a previous story, carbon offsets don’t really work in most cases.

Experts say there aren’t enough trees to capture a sufficient amount of carbon to make up for our emissions, especially since it can take about 20 years for tree saplings to become viable for carbon offsetting. Additionally, carbon offsetting can be passed on to low-emitting developing countries, with projects shown to harm local populations or displace indigenous communities.

One investigation found that 85% of offsetting projects commissioned by the EU have failed to reduce emissions, and only 2% of the covered projects and 7% of potential ones would have a high likelihood of reducing emissions. Another outlined how 90% of rainforest offset credits issued by Verra, one of the world’s largest providers, are “worthless” – the company claimed to have reduced 90.9 million tonnes of carbon emissions, but only 5.5 million tonnes of cuts were actually delivered.

Verra has also been accused of highly inflating its projects’ climate impacts, with some projects unsuitable for businesses to use for carbon offsetting as they aren’t equal to fossil fuel emissions. And yet another investigation revealed that 28 of its 32 projects analysed were essentially “junk”. In fact, 39 of the top 50 carbon offsetting projects (78%) were classed as junk or worthless due to failures undermining the promised cuts, while eight others (16%) looked problematic and were classified as ‘potentially’ junk.

This is why California’s new law is so important. “Consumers deserve to feel confident that carbon offsets are actually resulting in meaningful emissions reductions,” said Gabriel. “This legislation will provide critical transparency and accountability to ensure that corporations are meeting their climate goals and that we are protecting our planet for future generations.”

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Last week, the EU finalised a new law designed to curb greenwashing, which will ban the use of terms like ‘carbon-neutral’ from product claims. Who does this affect, when does it come into effect, and what can’t you say anymore? Here’s what you need to know.

In March 2022, the EU laid out a proposal for its Empowering Consumers for the Green Transition directive, looking to ban companies from promoting misleading claims about the sustainability credentials of their products. Now, the EU has tentatively agreed to vote the proposal into law, which would effectively ban greenwashing in the region.

It’s designed to help consumers spot greenwashing. A 2021 poll across four EU countries revealed that 53% of consumers can’t identify greenwashing claims on product packaging. It followed a study the year before by the EU Commission, which found 53.3% of environmental claims made by companies were “were vague, misleading or unfounded” and 40% “completely unsubstantiated”.

Here’s what you need to know about the EU’s proposed greenwashing ban.

Who does it affect?

The crackdown on greenwashing is expected to impact multiple industries – essentially, of course, all companies that sell consumer products. But the ones most affected would include the food and beverage sector, the travel industry (including aviation), fashion and clothing brands, as well as technology and appliance companies.

Apart from the consumer sector, this ban is also set to heavily impact the voluntary carbon market, which deals with carbon offsets and credits. These practices have been proven not to work, and with the new regulation, their efficacy to claim they’re green will be further diminished.

For example, airlines that offer an offsetting option for travellers who pay a small fee will no longer be allowed to make carbon/climate-neutral flying claims. “There is no such thing as ‘carbon-neutral’ or ‘CO2-neutral’ cheese, plastic bottles, flights or bank accounts,” said Ursula Pachl, deputy director of consumer advocacy group BEUC. “Carbon-neutral claims are greenwashing, plain and simple. It’s a smoke screen giving the impression companies are taking serious action on their climate impact.:

Gilles Dufrasne, global policy lead at Carbon Market Watch, added: “The EU is sending a powerful signal to the voluntary carbon market: the era of offsetting is over, and carbon credits can’t make up for buyers’ pollution.”

What can’t you say now?

The EU’s new directive has a list of terms companies can’t use on product labels any more. Perhaps the most striking one is ‘carbon-neutral’, a widely used term across industries. A 2,000-person survey has found that while 40% of consumers are confident in interpreting ‘carbon-neutral’ labels, while the majority still don’t know what the term means.

The terms the EU Parliament and Council agreed ban include:

• Carbon-neutral
• Climate-neutral
• Environmentally friendly
• Eco-friendly
• Eco
• Green
• Natural
• Biodegradable
• Carbon-friendly
• Carbon-positive
• Energy-efficient
• Bio-based
• Biodegradable
• Nature’s friend
• Ecological
• Environmentally correct
• Gentle on the environment
• Broader statements including the words ‘conscious’ and ‘responsive’

While this is not an exhaustive list, the idea is to ban generic environmental claims, unless companies can provide “proof of recognised excellent environmental performance relevant to the claim” – which could include compliance with official EU regulations or recognised green labelling schemes.

“For example, the claim ‘biodegradable’, referring to a product, would be a generic claim, whilst claiming that ‘the packaging is biodegradable through home composting in one month’ would be a specific claim, which does not fall under this prohibition,” explains the EU’s directives document.

The EU also stresses that companies can’t make an environmental claim about the entire product when it actually refers to only a specific aspect. “This would be the case, for example, when a product is marketed as ‘made with recycled material’, giving the impression that the entire product is made of recycled material, when in fact it is only the packaging that is made of recycled material.”

Biljana Borzan, a Croatian EU lawmaker, said: “We are clearing the chaos of environmental claims, which will now have to be substantiated, and claims based on emissions offsetting will be banned.”

What else is banned?

The EU has also agreed to other anti-greenwashing measures. A big one concerns product durability and guarantees. Companies will need to declare product life spans, and the ban will also apply to the introduction of features that are designed to limit a product’s durability – a 2018 EU Commission study found that 82% of consumers report having difficulty evaluating a product’s durability and lifespan.

Companies will also be obligated to be more transparent about repairability and product guarantee, as well as software updates (specifically notable for tech companies). This means businesses aren’t allowed to market their products as repairable if they aren’t or claim that software updates are necessary “if they only enhance functionality features”. Unless proven, they can’t make durability claims about “usage time or intensity under normal conditions”, which would force people to replace products earlier than necessary (like printer ink cartridges).

“We have achieved an excellent deal for consumers. 60% of European consumers are not even aware a [minimum two-year] legal guarantee comes with all products,” said Borzan. “That changes today, with a reminder to be present in every shop in the EU and also in some cases on packaging.

She added: “Also, a new extended guarantee label will show clearly which products last longer, so it will be easier to buy more durable products. We have also negotiated a strong stance on early obsolescence. We shouldn’t advertise products that fail too early.”

When does the EU’s greenwashing ban come into effect?

To be turned into a law, the proposal will need to get final approval from the EU Parliament and Council, which is expected in November. Although theoretically, it is possible that this is denied, it’s against precedent and procedurally rare for such votes to be rejected.

If and when the directive does get approved, EU member states will have 24 months to implement changes and incorporate the new rules into their law. This means that, if greenlit, many forms of greenwashing will effectively be banned in the EU by 2026.

While the EU’s vote on this directive signifies progress, movement on two related laws also addressing climate-related product claims and empowering citizens has been stagnant. They are the Green Claims Directive and the Carbon Removal Certification Framework, both of which were introduced earlier this year.

“Consumers have a crucial role to play in the green transition, so it’s good news they will have more information to make sustainable choices when buying food, new clothes or home appliances. The new EU rules will enable consumers to navigate through a sea of green claims and choose durable products that live up to expectations,” said Pachl.

“Generic environmental claims are popping up everywhere, from food to textiles. Consumers end up lost in a jungle of green claims with no clue about which ones are trustworthy. Thankfully, the new rules are putting some order in the green claims’ chaos. Companies will have to explain why a product is environmentally friendly. This is crucial if we are to guide consumers to make more sustainable consumption choices.”

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Many businesses use carbon offsetting as a way to bring down their emissions totals and mitigate their environmental impact, but a slew of recent investigations into the practice have found that offsets are deeply flawed and not doing what they promise.

All businesses are in the business of cutting emissions – and with the acute climate crisis the planet is facing, they ought to be too. They also ought to be doing better, despite so many introducing net-zero targets in the near future. That’s because many use carbon offsets as a way to ease their impact on the climate.

Put simply, carbon offsetting involves companies “cancelling out” their emissions by investing in projects that promise to reduce carbon elsewhere, like reforestation initiatives, clean energy production and more recently, carbon capture projects. By buying these so-called ‘carbon credits’, you can ‘balance out’ the amount of carbon in the atmosphere.

It’s a practice so widespread that carbon offsetting is its own industry – the voluntary carbon market is worth $2B. There are a whole host of firms that act as carbon certification bodies, including the Gold Standard Foundation, Climate Action Reserve, American Carbon Registry, Verra, the UN’s Clean Development Mechanism (CDM), SCS Global Services, and Green-e Climate – to name just a few, with no globally agreed-upon standard. These organizations help to ‘verify’ carbon reduction projects and then sell them to corporations as carbon credits.

So what’s the problem? Well, carbon offsets – while a seemingly good idea in theory – don’t really work in most cases. Some say there aren’t enough trees in the world to capture enough carbon and make up for our emissions, not to mention that it can take an average of 20 years for tree saplings to become viable for carbon offsetting. Carbon offsetting is also difficult to verify and quantify, and its impact doesn’t start soon enough (and most projects don’t last long enough, for that matter). It can also be passed on to low-emitting developing countries, and some projects have been shown to harm local populations and in a few cases, displace indigenous communities. Finally, in multiple instances, the investigations found that the emission reduction initiatives would have happened anyway, so should not be counted as credits.

Carbon offsets are also used as a way for companies to avoid cutting emissions – hey, if you can just balance your emissions by paying a certain amount of money, why stop and think about reducing them in the first place?

These are just some of the reasons why multiple investigations have found that carbon offsets aren’t a viable solution to reducing emissions. Here’s a detailed timeline of these.

2017: EU Commission

In 2017, the European Commission released a study revealing major flaws in carbon offsets from the UN’s CDM. It found that 85% of offsetting projects commissioned by the EU failed to reduce emissions, and predicted that 73% of the potential supply of CDM’s credits between 2013-20 would be unlikely to have “environmental integrity” – i.e., ensuring that emission reductions are additional and not overestimated.

Only 2% of the cover projects and 7% of potential ones would have a high likelihood of reducing emissions. “CDM still has fundamental flaws in terms of overall environmental integrity,” the report read. “It is likely that the large majority of the projects registered and CERs issued under the CDM are not providing real, measurable and additional emission reductions.”

January 2023: Joint investigation into Verra

In January, a joint investigation by the Guardian, German weekly Die Zeit and investigative journalism non-profit SourceMaterial uncovered damning stats about one of the world’s leading carbon standards, Verra. The nine-month investigation consisted of three studies (two peer-reviewed, one in pre-print at the time) and found that more than 90% of the Washington, DC-based firm’s rainforest offset credits were “worthless”.

Verra, whose carbon credits have been used by the likes of Disney, Shell, Gucci, EasyJet, Leon and BHP (among dozens of others), claimed to have reduced 90.9 million tonnes of carbon emissions – but the analysis found that only 5.5 million tonnes of reductions were actually achieved. Additionally, researchers found that 94% of the credits produced by 29 of Verra’s projects presented no benefit to the climate, and should never have been approved.

Meanwhile, seven of these projects – known as Redd+ schemes – had between 98% and 52% less reduction than what Verra’s system claimed, while one had 80% more impact. The report also cited a 2022 University of Cambridge study of 32 Verra-approved projects, which found that the threat to forests – or the baseline scenarios of forest loss – had been overstated by around 400% on average.

Additionally, one of the offsetting schemes – a flagship project in Peru – was linked to serious human rights issues. The Guardian was shown videos of local residents showing their “homes being cut down with chainsaws and ropes by park guards and police”. The local community also mentioned forced evictions and tensions with park authorities.

The pre-print study that contributed to the above investigation has since been peer-reviewed and published in the Science journal. In response to the reporting, Verra refuted the claims made by the researchers. “It is absolutely incorrect to say that 90% of Verra-certified REDD+ credits are worthless,” its legal, policy and markets chief Robin Rix told the Guardian. “The article bases this false claim on extrapolations of three reports by two different groups, who assessed a small number of projects using their own methodologies.”

September 2023: UC Berkerley’s research into Verra

Verra was the focus of another study, this time by the University of California, Berkeley’s Carbon Trading Project. The research found that Verra’s Redd+ projects are not fit for purpose and are open to exploitation, stating that these rainforest conservation schemes are not a suitable approach for carbon offsetting and calling for different methods to protect ecosystems like the Amazon and Congo basin.

The study accused Verra of reporting highly inflated environmental impacts, with these projects actually being unsuitable for companies to use for carbon offsetting as they aren’t equal to fossil fuel emissions. These results were based on five quality factors of Redd+ projects: durability, forest carbon accounting, community safeguards, deforestation leakage, and baselines. The researchers found widespread shortcomings in all these metrics.

A majority of these credits didn’t have a positive effect on the environment, and the projects frequently underplayed the risk of displacing deforestation elsewhere. Auditors were found to have failed to enforce Verra’s own rules on generating carbon credits.

On top of that, the study found that some of Verra’s Redd+ projects had led to the displacement of vulnerable forest communities, in spite of safeguards that were designed to prevent harm to these populations.

The report suggested governments and companies focus on stopping the root causes of deforestation, support plans to help Indigenous people conserve forests, and adopt an approach of contributions to enable rainforest conservation, instead of buying offsets.

In response, Verra said: “We are committed to transparency, and have built an ecosystem of processes and relationships to develop consensus standards and methodologies that support climate action. It is important to note that the vast majority of findings and recommendations from this research align with extensive and systematic work to update the Verified Carbon Standard (VCS) Program that has been carried out by Verra over the last two years.”

September 2023: The Guardian and Corporate Accountability’s findings

Another Guardian investigation, this time in collaboration with non-profit Corporate Accountability, devised a system classing most offset projects as ‘junk’. Projects were labelled likely junk “if there was compelling evidence, claims or high risk that it cannot guarantee additional, permanent greenhouse gas cuts among other criteria”.

The report analysed the top 50 carbon emissions projects globally, based on the number of credits sold and representing a third of the total voluntary offset market. It found that 39 of these 50 (78%) were likely junk or worthless, owing to failures that undermine the promised emissions cuts. Eight others (16%) looked problematic and were classed as potentially junk, while the efficacy of the remaining three couldn’t be determined properly (due to a lack of information about quality and/or accuracy).

These projects included forestry schemes, hydroelectric dams, solar and wind farms, waste disposal and greener household appliances schemes across 20 (mostly) developing countries, which have retired/sold a total of 343 million carbon credits. Of these, 267 million were classified as junk, with 61 million being potentially junk.

A total of $1.16bn worth of carbon credits traded from these 50 projects were worthless, with an additional $400m of credits potentially junk – that’s $1.56bn, which is higher than the GDPs of Samoa, Marshall Islands, Kiribati and Tuvalu combined. This is important because most of these top 50 offset projects are in the Global South, a region that has disproportionately borne the brunt of the world’s problems, despite accounting for a much lower amount of emissions than countries in the North.

“These findings show that the voluntary carbon market is flawed and basically a fraud, allowing the west [sic] to offset their emissions and continue business as usual at the expense of the Global South,” Indian climate adviser Souparna Lahiri told the Guardian. “The carbon market and the rich west, for the last 25 years has actually done nothing to mitigate the climate crisis, rather, protected their high-emitting industry, production, consumption and lifestyle. It’s a story of continuing and widening inequity and climate injustice.”

Of these 50 projects, nearly two-thirds (32) were certified by Verra, and 28 of these were classed as junk. Verra disputed these findings, pointing to research and a study of 40 Redd+ projects that found deforestation and degradation declined in the first five years of implementation.

Carbon offsetting is not a viable solution

While efforts have been made to bring about more legitimacy to this industry – a new global initiative is helping businesses choose better carbon credits and introduce more transparency to the sector – there are counterarguments about how the funds raised could help with deforestation, and as things stand, carbon offsets don’t work.

They are a form of corporate greenwashing – and yesterday, the EU voted to ban businesses from claiming that their products are carbon-neutral. The law, which will come into force in 2026, aims to protect citizens from misleading sustainability claims.

“We need more standardisation of what a high-quality credit looks like,” Annette Nazareth, co-chair of the Integrity Council for the Voluntary Carbon Markets (which introduced the aforementioned carbon credits guide), told the Guardian. “We want to take out the uncertainty and create a market of high integrity so that there can be much greater confidence and corporations can invest.”

Nat Keohane, president of the US Center for Climate and Energy Solutions, added that companies must not use carbon credits as a “get out of jail free” card, arguing that these credits “should be complementary, not a substitute” to cutting emissions.

But in a business-as-usual, as the many investigations detailed above demonstrate, carbon offsetting appears to be more of a climate fairytale than a viable, credible solution to reducing global greenhouse emissions. “Offsetting should be axed. It cannot work in its current form, and carbon markets must evolve into something different,” Gilles Dufrasne, policy lead on global carbon markets for Carbon Market Watch, told the Guardian. “The focus should be on getting money to the right place, rather than getting as many credits as possible.”

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A global initiative to boost the $2B carbon offsetting market has released guidance to help companies choose better carbon credits and introduce more transparency to the unregulated sector. With carbon offsetting demands growing to accommodate net-zero targets, the independent body aims to issue labelled credits by the end of the year.

The global carbon offset market is unregulated, which makes it hard for companies to gauge which credits are good, with questions over the industry’s poor transparency and the environmental quality of projects. To combat this, the Integrity Council for the Voluntary Carbon Market (ICVCM) has published its criteria for projects to achieve its new Core Carbon Principles (CCPs).

Speaking to FoodNavigator, an ICVCM spokesperson said: “The past year has seen a number of companies withdraw from earlier commitments to purchase carbon credits as concerns mounted over the quality of credits on the market.”

They added that the issue wasn’t a lack of good carbon credits, but rather a difficulty for buyers to distinguish between the good and the bad. The sector is filled with bilateral transactions, with minimal standardisation and no central exchange, meaning companies must carry out extensive due diligence in-house. Some have found that the credits they bought turned out to be of lower quality than they initially thought. “This has reduced confidence and purchases, which ultimately means less finance for projects to reduce and remove carbon emissions,” the spokesperson said.

“It is expected that this [new guideline] will give buyers greater confidence and drive up both purchases and prices for high-quality credits, increasing finance for impactful projects and providing incentives for developers to improve standards,” they added.

The result of a 60-day deliberation between stakeholders in the voluntary carbon market and scientific and industry experts, the 10 core principles are spread into three categories: emissions impact, governance and sustainable development. Additionality, permanence, robust quantification and prohibiting double counting make up the first part, while effective governance, tracking, transparency and third-party validation and verification compose the governance category. The last one, meanwhile, involves sustainable development benefits and safeguards, and contributions towards net-zero transition.

Currently, it isn’t mandatory for a business retiring a carbon credit to disclose its name, but under the new standards, registries retiring CCP credits will need to identify on whose behalf the credits have been retired. And once a credit has been retired, it can’t be traded or used to meet climate targets by another company.

‘Carbon-neutral’ claims and greenwashing concerns

According to FoodNavigator, the carbon credit framework advises companies to follow a ‘climate contribution’ approach, where “carbon credits are not counted towards, nor represent compensation for, a company’s remaining value chain emissions”.​ It refers to using credits for climate mitigation, rather than making claims that a company has canceled, counterbalanced or netted out its emissions.

A spokesperson from climate action organisation Science Based Targets Initiative said this could lead to pushback against carbon-neutral claims, historically the most widely used climate-related ‘achievement’ used by businesses. The term can have multiple connotations – some feel it can facilitate a company’s climate mitigation action beyond its value chain, while others find it conceals the impact of firms that haven’t decarbonised.

This confusion has also led to a reduction in carbon credit investment out of fear of being accused of greenwashing. It echoes a recent poll by the Chartered Institute of Marketing that revealed that 45% of marketing professionals have come under pressure from clients to provide more ‘green’ marketing, but the demand for such campaigns is outpacing education in this sector.

Many of the surveyed marketers don’t feel comfortable working on such projects as they fear they’ll be accused of greenwashing, and almost half (49%) said they had spoken to their employer or client about the reputational and legal risks accusations of greenwashing have brought in the last five years.

Companies have been using carbon offsets – which include measures like tree planting – to cut emissions and meet their net-zero plans for years, but this practice has been criticised by many experts, including Greenpeace. One argument is that there aren’t enough trees in the world to offset everybody’s emissions, and there likely never will be.

“We do expect this will have a significant impact on the market,” ICVCM COO William McDonnell  told Reuters, “but we can’t prejudge the pre-designed assessment process we are about to start.”

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Carbon offsets are enabling large polluting corporations to avoid tackling their own emissions, says Greenpeace. Experts warn that without a rapid phasing out of fossil fuels and meaningful cuts in emissions, offsets alone will come far too short to tackle the climate crisis. 

Large corporations are using offsets, such as buying carbon credits or funding tree planting and solar power projects, as part of their efforts to reach “net-zero”. But these moves amount to nothing more than a facade, says Greenpeace, which is urging firms to take meaningful steps to cut their own emissions and divest from fossil fuels. 

“There’s no time for offsets,” warned Greenpeace executive director Jennifer Morgan, in an interview during the recent Reuters Impact conference. “We are in a climate emergency and we need phasing out of fossil fuels.”

What are carbon offsets?

Carbon offsetting has become a popular route for businesses to reach their “net-zero” ambitions, especially as companies face greater public scrutiny over their role in fuelling climate change. Instead of actual emissions reductions, offsetting is the idea that emissions can be compensated through projects like planting trees. 

The popularity of such schemes is expected to drive the carbon offset market into a $50 billion industry by the end of this decade, according to the Taskforce on Scaling Voluntary Carbon Markets. 

Greenpeace and other environmental NGOs have been critical of the disproportionate focus on offsetting programs, saying that these plans often assume that the impact of offsetting can be realised immediately. In reality, trees take years to grow to their full carbon storage potential.

Making drastic cuts to a business’ own operations and transitioning its supply chain away from hydrocarbons, on the other hand, does translate to immediate results. 

Morgan described offsets as “pure ‘greenwash’ so that the companies, oil companies, can continue to do what they’ve been doing and make a profit.”

Slash emissions for real impact

One of the other major issues when it comes to carbon offsets is the way businesses report on their environmental impact. A study conducted by CarbonPlan found that almost 30% of all forest carbon offset programs it analysed in California had overestimated the amount of carbon emissions it had compensated for. 

The research group described the trend as a “systematic over-crediting” problem that “effectively allow[s] pollution to continue”. 

Morgan’s latest call for companies to cut their own emissions comes after multiple statements Greenpeace has made against carbon offsets as the predominant form of climate action. 

In June, the organisation’s senior campaign manager Maik Marahrens warned of the misleading impact of carbon offsets and other technological fixes like carbon capture storage, and wrote: “There is no other way to solve the climate emergency than immediate and massive reduction in fossil fuel emissions.”

Scientists have also pointed out that in order to reach the Paris agreement goals, the planet must make drastic changes to its food system. In one landmark study, experts concluded that even if fossil fuels were to be eradicated immediately, the climate goals are still “out of reach” without a transition away from animal agriculture. 

Lead image courtesy of Pexels.

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