Money, Money, Money: Carbon Credits Greenwashing

2001 to 2023, there was a total of 488 Mha of tree cover loss globally, equivalent to a 12% decrease in tree cover since 2000 and 207 Gt of CO₂ emissions.

Fifteen billion trees are cut down every year. The global tree loss in 2019 was 24 million hectares, that’s an area the size of the United Kingdom. Deforestation, forest loss creates a number of negative impacts, ranging from carbon emissions to species extinctions and biodiversity loss.

In the wake of the 2015 Paris Agreement, in which world leaders agreed to keep global warming to under 2 degrees Celsius above pre-industrial levels, an increasing number of companies have sought to reduce their impact on the climate. Part of this is achieved by offsetting their emissions in a variety of ways, including carbon capture, preventing new emissions, or trading carbon credits, preventing deforestation.

Carbon credits once earned, can be traded through various means, including buying and selling them through carbon markets. In such markets, credits are traded like commodities – their price fluctuates according to supply and demand. Companies can purchase credits to offset their own emissions, demonstrating a commitment to climate action and potentially meeting regulatory requirements, without changing the emissions they produce from standard business operation.

Carbon credits are traded on two types of markets:

Compliance Carbon Market: this market is regulated and the entities within this market are required to purchase carbon credits to meet specific emission reduction targets. Examples include Regional Greenhouse Gas Initiative or the European Union Emissions Trading System.

Voluntary carbon market: companies and individuals can purchase carbon credits voluntarily to offset their greenhouse gas emissions. Credits are generated from projects aimed at reducing or removing carbon emissions (such as carbon dioxide) from the atmosphere. Examples: Verra’s Verified Carbon Standard, or the Climate Action Reserve.

One of the major problems surrounding these carbon offsets is that there is a dual goal of protecting the planet by limiting emissions and making money. Some projects are implemented in remote areas that are difficult to reach and scrutinised. Companies are using carbon credits to make claims of reducing emissions when most of these credits don’t represent emissions reductions at all or benefits in terms of biodiversity conservation capacity and local communities.

Journalist from the Guardian looked at Verra, the world’s leading carbon standard for the rapidly growing two billion U.S. dollars market, found that, the rainforest offset credits – among the most used by companies – are likely to be “phantom credits” and do not represent genuine carbon reductions. "90% of Verra's rainforest carbon credits do not represent real emission reduction". Two different groups of scientists – one internationally based, the other from Cambridge in the UK – Separately, looked at two-thirds of Verra 87 approved active projects. A number were left out by the researchers when they felt there was not enough information available to fairly assess them. While the Cambridge scientists found some deforestation had stopped, however, the areas were extremely small. Just four projects were responsible for three-quarters of the total forest that was protected.

South Pole, another company offering carbon credits. This company’s success or biggest moneymaker was a mega-project in Zimbabwe called Kariba, which South Pole claimed has prevented the annihilation of a forest nearly the size of Puerto Rico. Their business model: help finance projects that can credibly counteract rising levels of greenhouse gas, such as by stopping deforestation, and then sell the resulting credit to corporate clients who want to compensate for their own planet-warming pollution, again turned out to be all smoke and mirrors.

Source: South Pole

We must thank, the US Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), and DOJ U.S. Attorney's Office for the Southern District of New York, filed against CQC Impact Investors LLC ("CQC") in connection with a scheme to commit fraud in the carbon markets. The fraud involved emission reduction projects in Africa, Asia, and Central America from 2021 to 2023. Prosecutors for the DOJ accused the three of submitting false, misleading, and inaccurate data, Prosecutors also accuse them of deceiving investors that invested $100 million in the firm, relying on this data.

U.S. Attorney Damian Williams said:

“As alleged, Kenneth Newcombe and Tridip Goswami, among others, engaged in a multi-year scheme to fraudulently obtain carbon credits by using manipulated and misleading data. They then sold those credits to unsuspecting buyers in the multi-billion-dollar global market for carbon credits. The alleged actions of the defendants and their co-conspirators risked undermining the integrity of that market, which is an important part of the fight against climate change. Protecting the sanctity and integrity of the financial markets continues to be a cornerstone initiative for this Office, and we will continue to be vigilant in rooting out fraud in the market for carbon credits.”

Companies that buy carbon credit will continue to move from one innovative to another. Jerking responsibility. While the trading of carbon credits continue companies can legally pass responsible for their waste, or overspill. Polluting the planet.

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