Ten reasons to abolish the carbon offsets industry
SOMO adds its voice to those demanding an end to carbon offsets and a greater focus on real climate action.
Carbon markets seem to be everywhere at COP28, the UN’s climate circus in Dubai.
“Today is now officially VCM [voluntary carbon markets] Day at COP28”, Rich Gilmore, CEO of Carbon Growth Partners, an Australian carbon offset investment firm, wrote on LinkedIn on 4 December 2023.
Gilmore highlights three comments at the COP Presidency High-Level Roundtable on Unlocking High-Integrity Carbon Markets:
“No developing country who wants to use voluntary carbon markets should be left behind.”
Simon Stiell, Executive Secretary of the UNFCCC“Developing countries should get paid for the climate benefits they provide . . . We have to get this market done.”
Ajay Banga, World Bank President“I have become a firm believer in the power of carbon markets to drive increased climate ambition and action, and the VCM is a vital tool to keep 1.5°C in reach. Let’s not waste any more time or let the perfect be the enemy of the good.”
John Kerry, US Special Climate Envoy
Predictably, Gilmore didn’t mention the Big Polluters that will buy the carbon offsets traded on these markets.
Neither did he mention the fact that, as the Financial Times reports, the price of carbon offsets has crashed in the past two years:
This graph appeared in an article with the headline, “The looming land grab in Africa for carbon credits”. Obviously, Gilmore made no mention of the massive land grabs currently taking place in Africa - and elsewhere - in the name of carbon offsetting.
Nor did Gilmore mention the fact that 35 years of carbon offsetting has completely failed to reduce greenhouse gas emissions from burning fossil fuels.
The tragic reality is that carbon offsets have achieved exactly what they were always intended to achieve. Carbon offsets exist in order to delay meaningful action on the climate crisis - leaving fossil fuels in the ground.
It’s worth noting that while Carbon Growth Partners’ offices are in Australia, the small print at the bottom of the company’s website explains that the company Carbon Growth Partners Ltd “is registered to carry on a securities investment business and regulated by the Cayman Islands Monetary Authority”. So it’s yet another carbon offsetting firm incorporated in a tax haven.
Before becoming CEO of Carbon Growth Partners, Gilmore worked for The Nature Conservancy for six years. He also spend six years as a derivatives trader.
Ten reasons to scrap offsets
This week, SOMO (the Centre for Research on Multinational Corporations) put out a statement opposing carbon offsets adding its voice to those opposing carbon offsets.
In November 2023, SOMO published a report about systemic sexual harassment and abuse carried out by senior management at Wildlife Works Carbon’s Kasigau REDD project in Kenya.
In its statement opposing carbon offsetting, SOMO writes,
The UN and wealthy government representatives must stop delaying just climate action. Instead, they must focus on phasing out fossil fuels and reducing the energy demands of their economies.
Carbon offsetting has no place in addressing the climate crisis. It has no place in genuine conservation. It has no reason to exist except to protect the interests of the wealthy. As such, it must end.
The statement includes the following 10 reasons to scrap offsets:
Ten reasons to abolish the carbon offsets industry
Offsets delay the real work of tackling the climate crisis – and we cannot afford to do this. Offsetting has enabled companies and major economies to justify “business as usual” while simultaneously claiming to transition towards “net zero” practices. After over 20 years of carbon offsetting, global emissions continue to rise. As long as the wealthiest actors, particularly those most responsible for the climate crisis – such as the fossil fuel industry – continue to be able to buy their way out of reducing their actual emissions, they will do so. Carbon offsetting, thus, is a dangerous distraction from the undeniable and urgent task at hand: drastically reducing emissions by phasing out fossil fuels.
Offsets assume that the carbon released from fossil fuels is equivalent to the carbon absorbed by trees – which is factually wrong.
Scientists distinguish between two different sources of carbon dioxide. Biotic carbon is present in living organisms and can be found above ground in the atmosphere, oceans, forests and soils. Fossil carbon, on the other hand, is the carbon locked underground for millions of years until humans extract it for oil, gas or coal. Once fossil carbon is burnt as fossil fuel, it will stay above ground for a long time. The world’s vegetation, oceans, and soils can only absorb so much of this excess and certainly cannot absorb enough of it fast enough. It is thus highly problematic when industries releasing fossil carbon into the atmosphere claim to be “compensating” these emissions with projects that temporarily store carbon in trees or soil. This underlying assumption of offsets is a dangerous misconception, leading to further concentration of greenhouse gases in the atmosphere and obfuscating the fact that burning fossil carbon is driving the climate crisis.Offsets’ carbon accounting has been discredited.
Multiple studies have demonstrated that carbon accounting, which is crucial for generating carbon credits, is flawed, unreliable and can even be considered fraudulent and a “carbon con”. When the businesses running offset projects overestimate the volume of emissions that would have been released in the absence of the project or overstate the emissions that are expected to be removed or avoided with the project, the project generates “phantom credits”: they do not represent actual emission reductions or removals. Yet, significant over-crediting is commonplace in the carbon market. This fundamentally undermines the Paris Agreement and any real climate action.Offset projects frequently lead to land grabbing and human rights abuses, primarily in the global South. The increasing global demand for offsets is leading to severe and growing problems in the areas where carbon offset projects are developed. The abuses documented include conflicts, forced relocation, weakening or undermining of local land tenure systems, violations of human rights and threats to the livelihoods of those who live on and depend on those lands. This should not be a surprise as large areas of land – and the lives of the people who live there – are being handed over to the control of a profit-seeking industry. In November 2023, SOMO and the Kenya Human Rights Commission exposed the systemic sexual abuse of women at the celebrated REDD+ Kasigau carbon offset project in Kenya, run by the US company Wildlife Works. Although rumours of these abuses had existed for a decade, they were never brought to light despite social and environmental auditors’ multiple assessments of the Kasigau project. Instead, the project was repeatedly approved under the Verra certification scheme.
The offset industry’s self-set standards and certification processes encourage and enable abuse. The carbon offsetting business relies on social and environmental auditors and certifiers. These companies are paid – by the offsetting business – to assess the project’s impact on carbon and people. The business model of the auditors and certifiers depends on their clients selling (more) carbon credits. This creates an obvious conflict of interest, and there is substantial and growing evidence that the auditors are failing to identify serious abuses. For example, the carbon credits from the REDD+ Kasigau Project in Kenya were sold with a “premium” certification based on claims that the project supported women’s empowerment and local development. None of the audit firms that assessed Kasigau reported any allegations of sexual abuse or, indeed, any serious problems at all. Moreover, certifications that raise the price of carbon credits by “adding value” with claims of improving people’s lives and livelihoods are, in fact, turning fundamental rights into commodities.
The offset logic reproduces a colonial construct.
Carbon offset projects reproduce colonial models of control and use of land, forests and livelihoods as well as of exploitation of particular groups of people and of nature itself. By design, the industry’s main objective is to maintain business-as-usual, which already creates negative consequences, mainly on forest-dependent populations, small farmer communities and Indigenous Peoples. Most of the owners and customers of the offset industry come from the global North. They can sustain their destructive businesses and lifestyles by taking over more resources and lands from the global South. The offset industry prioritises the profits of big businesses and wealthy elites over the world’s climate stability. It is an industry that fundamentally relies on and amplifies inequality. Offset projects often portray forest-dependent communities’ livelihoods as criminal or bluntly blame them for being the drivers of deforestation. These communities did not create the climate crisis, but the offsetting industry makes them pay for it. Carbon offsetting is fundamentally at odds with any concept of a just transition.Despite their failure to reduce emissions, public money is being squandered for carbon offsets.
Millions of dollars in public money are being channeled into supporting and enabling the carbon market, to produce enabling legal frameworks for the industry. Most development banks manage funds, especially for establishing or expanding carbon legislation, programs and projects worldwide, introducing the carbon asset into national legislation.The offset industry perpetuates an extractivist model that plunders nature. The economic logic of constant and increasing extraction of nature’s resources and people’s labour for the accumulation of profits provoked the climate crisis in the first place. Offsets are based on the same logic. The offset industry perpetuates the dominant economic model that views nature and certain populations as mere resources to exploit and commodify.
Offsetting commodifies the protection of nature, putting real conservation at risk.
Supporters of offsets often claim that carbon markets are the most feasible way to channel much-needed funds into conserving forests and other biodiverse ecosystems. SOMO strongly believes in protecting forests and biodiverse ecosystems. However, this should be done with full respect to the fundamental rights of the populations living within and guarding these areas. Although studies indicate that land under indigenous control does much better than under a state or private management scheme, Indigenous Peoples are often disenfranchised by forest conservation projects, especially those linked to offsetting schemes. Protecting nature and forests must not be turned into a profit-making endeavour. Displacing indigenous populations and turning their forests into business does not protect either of them – it makes them more vulnerable as people usually end up forcibly displaced, and the forests become dependent on volatile economic interests.Offsets repeat a flawed, inequality-driving foreign direct investment model.
Most promoters of carbon markets argue that offsetting businesses will channel much-needed foreign direct investment (FDI) into developing countries. This argument ignores the evidence that FDI based on the exploitation of natural resources has seldom had an overwhelmingly positive benefit in low- and middle-income countries. On the contrary, there is abundant evidence that foreign investors’ exploitation of natural resources has often been accompanied by illicit financial flows, frequently connected to tax avoidance and entrenched economic inequality. For example, carbon agreements are being presented to developing countries, particularly those in financial distress, as a way to pay off their sovereign debts (debt held overwhelmingly by wealthy countries and private actors in the global North). The exploitative economic framework that entrapped many global South countries in debt in the first place is now being leveraged to gain control of their land to run offsetting projects to benefit the shareholders or owners of the foreign companies. Debt relief, reparations and decolonization of the global economic system are prerequisites for investment to be non-exploitative.