Mongabay recently unveiled a comprehensive five-part series delving into the intricacies of the carbon trade and its role in addressing climate change. The carbon credit exchange, primarily employed to offset emissions, came under unprecedented scrutiny in 2023, with a significant portion of criticism directed towards credits from REDD+ projects (reducing emissions from deforestation and forest degradation). Detractors have consistently asserted that relying on these credits often permits affluent individuals, companies, and nations to perpetuate pollution.
Simultaneously, critics argue that this strategy places an undue burden on less-industrialized, tropical forest countries. These nations are compelled to bear the responsibility for conservation and restoration efforts, intended to result in emissions reductions. This criticism highlights the complex ethical and environmental considerations surrounding carbon offsetting, emphasizing the need for a more equitable and effective approach in combating climate change.
In 2023, unsettling research surfaced, casting doubt on the veracity of claimed emissions reductions and the purported decreases in deforestation that support them. Scrutiny of the voluntary carbon trade exposed substantial financial transactions occurring with insufficient transparency regarding their direct impacts. The revelation raised serious concerns about the effectiveness of carbon offsetting initiatives and whether the significant sums exchanged have translated into tangible progress in reducing the atmospheric carbon responsible for the escalating temperatures since the Industrial Revolution.
Worries extended to the methods employed in carbon accounting, prompting questions about the trade’s actual contribution to addressing the root causes of climate change. The lack of clarity and accountability in these critical areas underscored the need for more rigorous oversight and comprehensive evaluation of the carbon trade’s outcomes, emphasizing the urgency of aligning environmental efforts with measurable and impactful results.
The greater scrutiny has unearthed other issues, such as abuse of community members by REDD+ project staff. More broadly, Indigenous and community leaders, some of whom actively support the voluntary carbon trade as a way to get money into the hands of people on the ground, have called for a larger voice in the design of REDD+ projects and initiatives to secure local land rights before work begins.
Amid these challenges, supporters say they realize that they need to be more vocal in asserting what they see as the benefits the voluntary market can provide. They acknowledge the challenges, from calculating spared emissions to protecting and engaging communities, but they often return to the notion that investments in forest conservation are a vital tool in avoiding the worst effects of climate change. They argue that the voluntary carbon trade provides an avenue for channeling private investment into these projects, particularly as governments have been slow to act despite rising temperatures and the loss of biodiversity worldwide.
Below are seven key points from our reporting.
1. Experts agree that Indigenous and local communities must be consulted and included in decision-making around forest carbon projects.
Safeguards focusing on the rights to self-determination, land, and free, prior and informed consent are critical to protect Indigenous groups and local communities. While some Indigenous-led groups have voiced their support for REDD+ and carbon trading as a way to access climate-related financing for conservation and development, many are wary that the rush to scale up projects — and the potential for profits — could disenfranchise forest-dependent peoples. In recent years, several countries have moved to take control of carbon-related projects within their borders. Rights advocates say that land grabs could result, citing the eviction of members of the Ogiek Indigenous community in Kenya as a concerning example. These advocates call for formal recognition of land rights prior to initiating projects.
2. Most observers agree that companies should cut their own operational emissions. Only after doing that should they then look to purchase carbon credits to compensate for their excess emissions.
Supporters and skeptics of voluntary carbon markets alike highlight the need for companies that invest in carbon credits to first work on reducing their greenhouse gas emissions as a result of their operations. Then, carbon credits can be an additional investment to deal with the remaining hard-to-cut emissions that are too expensive or otherwise just not possible to eliminate at this point. Several standards-setting bodies, including Architecture for REDD+ Transactions (ART) and the Science-Based Targets Initiative, now require that companies demonstrate that they’ve tackled emissions. Indigenous and community leaders say they want companies to act in good faith and not just leave all climate action to less-industrialized countries.
3. Supporters of carbon markets say companies that invest in carbon credits are typically more likely to have worked to reduce their operational emissions.
The U.K.-based carbon analytics firm Sylvera released a survey showing that these companies were nearly twice as likely to be active in decarbonizing their operations, lending support to observers who say that carbon credits aren’t just a license to pollute. Other research, however, has shown that many companies neglect the full range of emissions resulting from their supply chains. In particular, “Scope 3” emissions, which refer to carbon releases that result indirectly from a company’s work, aren’t often reported. That gap must be addressed if climate goals like keeping the global temperature rise below 1.5° Celsius (2.7° Fahrenheit) above pre-industrial levels are to remain within reach, scientists say.
4. Scandals around carbon markets have diminished confidence that credits are a viable climate change mitigation tool.
Reporting from The Guardian newspaper, German news weekly Die Zeit and nonprofit journalism outfit SourceMaterial called into question whether most of the carbon credits stemming from a global selection of REDD+ projects represented any real benefits for forests and the climate. Proponents of the voluntary carbon trade took issue with the analysis, and other scientists charge that the study on which the reporting was based contained “serious errors” in its analysis. Still, a series of high-profile scandals have led to further drops in confidence around these markets. Allegations of community displacement, trophy hunting and abuse have tainted the entire sector, and some fear it may be pushing potential buyers away from further investments in credits.
5. As some companies have slowed investments in carbon credits, other entities have announced major carbon-related investments, particularly in Africa.
A group of donors, conservation groups and corporations that are part of the African Carbon Markets Initiative has touted the potential for $50 billion annually to flow to the continent. This group says the money could help communities on the continent better adapt to the effects of climate change, such as drought, surging storms and sea-level rise.
Again, though, Indigenous groups and human rights campaigners say that land rights need to be secure to protect communities. Other groups note that replacing agriculture with tree plantations aimed at harvesting carbon for profit could be devastating for food security.
6. A market watchdog now advocates moving away from “offsetting” as a path to carbon neutrality.
In June, the Voluntary Carbon Markets Integrity Initiative (VCMI) released guidance for carbon credit buyers, saying that purchases should be framed as “contributions” to global climate change mitigation and calling for a move away from claims of carbon neutrality based on offsets. The recommendations are meant in part to address the criticism that the purchase of a credit entitles a company to continue polluting. In 2023, several major companies, including Nestlé, announced a pause in their plans to go carbon neutral by buying offsets. Meanwhile, Delta Airlines faced a lawsuit in California over whether its neutrality claims actually stood up to scrutiny.
7. Governance bodies are looking to increase standards to encourage a “rush to quality” in the voluntary carbon market.
The VCMI and the Integrity Council for Voluntary Carbon Markets (ICVCM) are working together and with carbon certifiers such as Verra to shore up carbon accounting methods and safeguards to improve the quality of carbon credits offered for sale on the voluntary market. The fear is that concerns about the efficacy of REDD+ and other carbon projects may reduce demand for carbon credits, thereby diminishing the flow of funds to forest conservation. Proponents of carbon markets as a climate solution say that more rigorous standards will boost the confidence of buyers in the market.
Banner image: A truck for a packaging factory in Cameroon. Image by Ollivier Girard/CIFOR via Flickr (CC BY-NC-ND 2.0).
John Cannon is a staff features writer with Mongabay. Find him on Bluesky.
Citations:
Mitchard, E. T., Carstairs, H., Cosenza, R., Saatchi, S. S., Funk, J., Quintano, P. N., … Nowak, E. (2023). Serious errors impair an assessment of forest carbon projects: A rebuttal of West et al.(2023). arXiv Preprint. doi:10.2139/ssrn.4661873
West, T. A. P., Wunder, S., Sills, E. O., Börner, J., Rifai, S. W., Neidermeier, A. N., Frey, G. P., & Kontoleon, A. (2023). Action needed to make carbon offsets from forest conservation work for climate change mitigation. Science, 381(6660), 873–877. doi:10.1126/science.ade3535
