The demand for offsets, however, is not likely to decline any time soon
Photo: iStock The credibility and integrity of large-scale carbon offset projects have been severely hit by a series of fraud and greenwashing allegations, impacting project developers, standards bodies and buyers who rely on these offsets. The urgency to assess, and more importantly, regulate the voluntary offset markets has increased, a call that market observers have repeatedly made.
Countries are starting to take charge of filling up the governance void in the voluntary offset markets.
Zimbabwe, the host of the Kariba REDD+ project that has supplied over 20 million carbon credits to hundreds of buyers, has decided to take 50 per cent of all revenues from carbon projects. The country intends to regulate project developers participating in the market.
Last year, Tanzania notified rules for registering carbon offset projects and earlier this year, Kenya was mulling over a proposal to share 25 per cent of revenue generated from offsets with the local communities. The governments of Papua New Guinea, Honduras and Indonesia have similarly intervened to control offset project development.
Greenwashing is rampant in the offset market and consumers are starting to realise the misuse and abuse of claims of 'sustainability', 'green' and ‘climate neutrality’. Hence, a series of lawsuits have been filed against greenwashing.
The Advertising Standards Authority (ASA) of the United Kingdom has planned to implement stricter regulations regarding advertisements that make claims such as ‘carbon neutral’ and ‘net zero’. The watchdog requires companies to provide clear and objective evidence to substantiate these claims.
Meanwhile, the luxury fashion brand Gucci, has dropped its claim of becoming ‘entirely carbon-neutral’, a batch it has carried since 2019 after buying rainforest-based offsets from Verra, a leading carbon standards body that was recently pulled up for fraud.
Offset buyers are becoming wary of what is being sold as offsets in carbon markets. This has led to the growing importance of ‘carbon credit rating’ companies like BeZero and Sylvera, which seek to rate the quality of carbon credits generated from offset projects.
It has been a tough year so far for carbon offset markets and those who rely on them to claim climate neutrality. The year began with a damning report published by The Guardian in collaboration with Die Ziet and SourceMaterial, which shed light on Verra's rainforest-based credit programme.
The investigation revealed that over 90 per cent of rainforest offset credits certified by Verra were worthless, failing to represent genuine emission reductions. Beneficiaries of these offsets included companies like Shell, Gucci, Disney and other big corporations.
In March, Survival International released a report that raised questions about the impact of an offset project on the rights and practices of indigenous communities in Northern Kenya. The report Blood Carbon: How a carbon offset scheme makes millions from Indigenous Land in Northern Kenya raised concerns about the project’s additionality and the developer's right to ownership of the credits.
Verra suspended the issuance of credits for the project after its methodology was questioned.
Corporate watchdog and non-profit organisation Corporate Accountability has put the spotlight on buyers of junk credits with its report on Chevron's offset portfolio. According to the report, the oil and gas giant Chevron’s purchased carbon credits, which are used to ‘cancel out’ its emissions, are presumably junk.
The report also noted that Chevron's projected emissions for 2022-2025 was more than what 10 European countries emitted cumulatively during 2017-2020.
In the United States, Delta Airlines faces a billion-dollar class-action lawsuit challenging its claim of climate neutrality. The plaintiffs of this case argue that the airline's assertion is founded on unreliable offsets obtained from the voluntary carbon market, asserting that the current functioning of the market fails to guarantee true neutrality.
Amid the turmoil that casts doubts upon Verra's integrity, the organisation’s chief executive of over 15 years, David Antonioli, has resigned from his position. While no specific reason has been provided for his departure, it is only fitting to scrutinise the development in light of the multiple exposes concerning Verra-certified projects.
The voluntary offset market has experienced a slowdown but many are still bullish about its future role in the package of tools to address climate change. Companies are embracing offsets as one of the tools to theoretically achieve carbon neutrality, Net-Zero Tracker, an online platform that tracks net-zero pledges of countries, states, cities and companies, showed. Apple, a $3 trillion company, has expressed its intention to reduce its footprint through high-quality carbon offsets.
CORSIA, the world's first sector-specific offsetting scheme for international aviation, is in its pilot phase and will become mandatory by 2027. Participating airlines can acquire certified offsets from entities like Verra or Gold Standard. Thus the demand for offsets is not likely to decline any time soon.
In recent years, stakeholders have come up with integrity frameworks to establish more credibility and efforts to operationalise Article 6 of the Paris Agreement. These will attempt to bring adjustments and wider recognition to offset markets.
MIGA, the World Bank's insurance arm, is planning to provide insurance protection for carbon offset projects in developing countries to mitigate investment risks arising from regulatory uncertainties, according to a report in UK-based news website Climate Home News.
All of this, however, needs to be complemented with a much better public understanding and stronger regulatory interventions in individual countries. In countries of the Global South, market functioning needs public reporting and statutory direction.
For buyers in advanced economies, countries must put a lid on deceptive eco-claims and fancy storytelling around climate action.
We are a voice to you; you have been a support to us. Together we build journalism that is independent, credible and fearless. You can further help us by making a donation. This will mean a lot for our ability to bring you news, perspectives and analysis from the ground so that we can make change together.
.png)
Comments are moderated and will be published only after the site moderator’s approval. Please use a genuine email ID and provide your name. Selected comments may also be used in the ‘Letters’ section of the Down To Earth print edition.