REDD myth no. 7: “Carbon markets can be fixed”

“The offset industry, riddled with conflicts of interest, is not fixable."

Serious failures with carbon projects have been exposed through scientific research, NGO investigations, and media reports. Carbon market proponents claim that these are just a few “bad apples”. The projects were cherry picked, they say, and the critiques are ideologically biased. The methodologies have improved since then, they say. Of course REDD isn’t perfect, they say, but we are learning from previous mistakes. New methodologies and safeguards will address past problems, they say. When done correctly, they say, offsets can have a genuine impact on addressing the climate crisis.

The list of media reports exposing fundamental flaws with carbon trading is long. REDD-Monitor has been documenting this research and reporting for more than 16 years. Here’s a short selection of some recent articles:

• Mark Hillsdon, “The controversial plan to pay for restoring Brazil’s degraded lands with eucalyptus earnings,” Ethical Corporation Magazine, 20 December 2024.

• Marcel Hooft van Huysduynen and Janneke Juffermans, “Miljardairs gebruiken jagers-verzamelaars om CO₂-uitstoot te compenseren. ‘Nieuwe vorm van kolonialisme’,” Trouw, 6 December 2024.

• James Dyke, Jamie Shutler, and Peter Cox, “We have officially advised our university to ditch carbon offsets – and focus on cutting emissions,” 22 November 2024.

• “Greenwashing: Wie läuft der Zertifikate-Handel?” ORF, 11 November 2024.

• Andy Brown, Philippe Auclair, Jack Kerr, Samindra Kunti, and Steve Menary, “FIFA ignores new sponsor Aramco’s dismal record on carbon emissions,” Play the Game, 5 November 2024.

• Ties Gijzel and Mira Sys, “Met zelfregulering probeert de omstreden CO₂-markt zichzelf te redden,” Follow the Money, 8 August 2024.

There are many, many more articles, exposing human rights abuses, land grabbing, and conflicts linked to carbon offset projects.

In one of its series of “Facing the facts: carbon offsets unmasked”, the Dutch NGO Centre for Research on Multinational Corporations (SOMO) writes that,

Responding to these exposés by focusing narrowly on things that it can appear to ‘fix’ (such as methodologies, safeguards, and guidelines), the industry has provided itself and its customers with a tool for endless obfuscation and dissembling. The reality is that the core problems of the offset industry are not fixable. First, the industry is based on a set of assumptions that do not match scientific reality. Second, the offset industry is riddled with serious conflicts of interest, which are inherent to the system.

SOMO deals with each of these in turn.

False equivalences

Creating a carbon market required turning greenhouse gas emissions into a fungible, tradable commodity. This means conflating different gases, geographies, biological processes, sociological contexts, and timelines. These false equivalences are hard-wired into carbon trading — and they do not stand up to scrutiny.

• Fossil vs Biotic carbon: The underlying assumption of REDD is that the carbon released from burning fossil fuels is the same as the carbon released from vegetation. Fossil carbon is stored deep in the earth until it is extracted and burned. Biotic carbon is stored for comparatively short periods of time and circulates between the atmosphere, land, and seas. When fossil fuels are burned, the process cannot be reversed. In terms of the climate, these are two different types of carbon. The emissions from burning fossil fuels cannot be traded against carbon temporarily stored in trees if we are to stand a chance of addressing the climate crisis.

• Temporality: When an aeroplane flies, greenhouse gases are released immediately into the atmosphere. Offsets operate on a different time frame. It can take decades for a tree to fully absorb all the carbon calculated under an offset project. “In other words,” SOMO writes, “the emissions that were supposedly compensated will already impact the climate now, while the theoretically ‘equivalent’ reductions of the ‘offset’ project will only materialise later (if at all, given the near impossibility of guaranteeing the future).”

• Greenhouse gases: In order that all seven greenhouse gases can become tradable commodities, they have been equated to carbon dioxide (CO₂e). But each gas is different. Methane, for example, stays in the atmosphere for about decade on average. CO₂ can last for centuries. However, when one ton of methane is emitted it traps at least 100 times as much heat as one ton of CO₂. Over 20 years, methane traps about 80 times as much heat as CO₂. Over 100 years, one ton of methane traps about 28 times as much heat as one ton of CO₂. “Making these gases equivalently tradable is shifting even greater burdens onto future generations” SOMO writes.

Conflicts of interest

Carbon markets are riddled with conflicts of interest. Everyone involved has a vested interest in exaggerating the number of carbon credits generated. SOMO’s graphic shows the financial dependency between the standard setting bodies, the auditors that monitor compliance of the projects with these standards, and the project developers:

Verra, the Washington DC-based carbon certification company, is the world’s largest standard setting company. Under Verra’s system, project developers can only sell carbon credits if the project is validated and verified as compliant with Verra’s standards.

Verra receives a US$0.23 commission on every carbon credit that it certifies. The vast majority of Verra’s revenue comes from these commissions. The more carbon credits, the more money Verra makes.

Meanwhile auditors have to be registered by Verra, and pay a fee to Verra for this. They are hired by project developer. Auditors have an interest in keeping project developers happy, otherwise the project developers might hire another less exacting auditing firm.

New methodologies cannot address these fundamental problems in the carbon market. The false equivalences remain after numerous new methodologies as do the conflicts of interest. SOMO concludes that,

What focusing on new methodologies does do is buy the industry more time. It’s a great (and profitable) technique: keep working on the methodologies and standards to distract attention from the fundamental problems.

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This is the seventh in an occasional series of REDD myths on REDD-Monitor.