The Integrity Council for the Voluntary Carbon Market (ICVCM) announced on Tuesday that eight renewable energy methodologies, which cover about a third of the carbon credits available on the voluntary market, cannot use its “Core Carbon Principles” (CCP) seal of approval.

The ICVCM, an independent watchdog, aims to address widespread concerns over the quality of carbon credits after many projects have been accused of overstating their climate and societal benefits. It is assessing groups of offsetting projects to determine whether they comply with the CCP criteria, which are designed to identify and encourage high-integrity carbon credits that meet requirements on governance, emissions reduction and sustainable development.

The body said existing standards are not strict enough on judging whether renewable energy projects need the funding generated by selling carbon offsets in order to go ahead – a concept known as “additionality”. But it emphasised that renewables like solar, wind and hydropower are key to tackling climate change and carbon credits “still have a role to play” in financing them.

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Since the eight methodologies were designed as long as 20 years ago, the cost of renewables has collapsed, and their profitability in many parts of the world has rocketed, meaning they are more likely to make money without needing extra revenue from selling carbon offsets.

The ICVCM said that “for several years, carbon market experts have noted concerns about the additionality of many renewable energy activities and the difficulties in transparently demonstrating the additionality of these activities approved under existing methodologies”.

Major carbon-credit registries like Verra and Gold Standard stopped accepting new grid-connected projects in 2019, with the exception of those located in least-developed countries (LDCs).

But pre-existing renewable energy activities continue to generate a sizeable chunk of all the offsets available on the registries.

According to a recent analysis by Carbon Market Watch, over 280 million renewable energy credits are available in the voluntary carbon market. If companies and individuals used all those credits, that would compensate on paper for emissions equivalent to the amount of carbon dioxide Thailand released into the atmosphere last year.

Inigo Wyburd, a policy expert at Carbon Market Watch, called the ICVCM’s decision “a positive step”. “It sends a clear message to tackle the issue of the many low-quality credits still in circulation and undermining the market,” he told Climate Home.

Despite long being written off as largely worthless by climate experts, renewable energy credits are still popular among corporate buyers.

Fossil fuel majors like Shell and Total, automakers and cruise operators were among the biggest purchasers of renewable energy credits over the last 12 months, an analysis of Verra’s database shows.

In one transaction last year, German carmaker Audi used nearly 100,000 carbon credits generated in 2021 from an Indian solar project to claim that its handover of electric vehicles in Europe and the United States was “CO2 neutral” despite the emissions involved in producing them.

Japanese parcel delivery service Yamato Transport Company and public entities like Australia’s Brisbane City Council and Western Sydney University also relied on renewable offsets to claim carbon neutrality in 2023.

A spokesperson for Audi told Climate Home: “We ourselves are not only dependent on the standards established in the market but depend on them being viewed critically too”, adding that the company is “convinced that constructive criticism leads to higher-quality projects and general transparency”.

The spokesperson said the automaker also increasingly relies on “on-site inspections, thorough due diligence and audit processes” and wants “to act independently of external providers in the medium term”. It founded a joint venture with ClimatePartner in 2022 to develop its own carbon offset projects.

Because of earlier concerns about whether carbon offsets generated by renewable energy deliver the emissions reductions they claim, their price has been falling over the last two years.

According to data provider MSCI, the average price is just $2 per tonne of carbon dioxide equivalent reduced – less than half the price of offsets derived from projects aiming to protect forests, tackle methane emissions or promote energy efficiency. Renewable energy credits are likely to see further falls in price after the ICVCM’s rejection.

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But Amy Merrill, CEO of the ICVCM, left the door open to better renewables methodologies obtaining CCP approval. She called on carbon crediting programmes to develop methodologies “that better reflect the rapidly changing and variable circumstances around renewable energy deployment”.

“While renewable energy costs have fallen dramatically around the globe over the past decade,” she said, “they have not fallen evenly across all countries and high up-front expenses and other barriers mean that there are still many places where it is difficult to deploy renewable capacity.”

The cost of renewables is particularly high in remote rural parts of developing countries without access to the electricity grid, on islands with small populations and in areas where the authorities are hostile to renewable energy for ideological reasons, particularly in parts of the US. Methodologies enabling projects in these places would have the best case to get CCP approval, market experts told Climate Home.

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Verra has announced that it will revise some of its additionality requirements “to address the deficiencies noted by the ICVCM”.

The registry plans to submit its new rulebook to the watchdog and give existing projects the possibility of updating their quantification of credits accordingly. “This is part of our commitment to providing a path for all VCS [voluntary carbon standard] projects that wish pursue a path to CCP labelling,” Verra said in a statement.

A Gold Standard spokesperson said ICVCM’s rejection of the methodologies was “ambiguous and potentially harmful to high-quality renewable energy carbon credits on the market today” as different regions across the world still face various financial and technical barriers making carbon finance necessary.

They added that Gold Standard would consider the ICVCM assessment framework among other inputs in its next review of relevant methodologies.

The ICVCM’s negative assessment of existing renewable energy credits could also have repercussions for the new United Nations carbon mechanism currently under development.

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Renewable energy projects make up four-fifths of all projects seeking a transfer from the old Kyoto-era Clean Development Mechanism (CDM) into the new market system being set up under Article 6 of the Paris Agreement, Climate Home revealed last January.

The projects need formal authorisation to proceed from the countries where their activities are located.

Carbon Market Watch’s Wyburd said ICVCM’s rejection of the renewable energy methodologies “will hopefully send a few shock waves” to the countries having to make those decisions. “Given their profound shortcomings, these credits should not be given a new lease of life under the future UN mechanism,” he added.

At the same time, the ICVCM approved other methodologies to capture methane from landfills and to detect and repair methane leaks in the gas industry. That means 3.6% of unretired carbon credits have now been approved to use the CCP label.

Shell, Norwegian Cruise Lines, Western Sydney University and Aviva did not respond to a request for comment on the impact of the ICVCM’s renewables decision. Total declined to comment.

The article was updated on 9/8 to add a comment received from Audi after publication.

(Reporting by Joe Lo and Matteo Civillini, editing by Megan Rowling)

The post Renewable-energy carbon credits rejected by high-integrity scheme appeared first on Climate Home News.

The Biden administration has laid out for the first time a set of principles that attempt to define how “high-integrity” carbon credits can play “a meaningful role” in helping cut greenhouse gas emissions and channelling “a significant amount of private capital” to combat climate change.

A 12-page policy document released by the US government on Tuesday includes provisions to ensure that carbon credit projects deliver real emission reductions, avoid harming local communities and encourage companies to decarbonise their own operations before buying offsets.

But it also recommends that businesses should be allowed to use carbon credits to cancel out some of the emissions generated by their suppliers and customers, known as “Scope 3”. A similar move by the board of the Science Based Targets initiative (SBTi), a leading arbiter of corporate net zero plans, sparked a major backlash from staff last month.

The US government guidelines are neither binding nor enforceable. However, proponents hope they will reinforce a number of ongoing initiatives led by carbon credit developers, buyers and green groups to raise standards and boost the role of carbon markets in climate and nature protection.

Troubled market

Polluting companies, including major fossil fuel producers and airlines, spent an estimated $1.7 billion last year on voluntary carbon offsets meant to compensate their direct emissions by funding climate-friendly activities elsewhere, such as planting trees or rolling out renewable energy sources.  

But a series of revelations questioning the environmental and social benefits claimed by some developers and users of carbon credits have dented confidence in the market.

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Scientific studies and investigative reports – including by Climate Home – have found that a growing number of projects failed to deliver the emission reductions promised. NGOs have also denounced instances of human rights abuse and environmental damage caused by carbon-offsetting activities.

“Voluntary carbon markets are a huge distraction and a waste of time and resources,” said Mohamed Adow, the Nairobi-based founder of the Power Shift Africa think-tank. “It’s sad to see politicians in the Global North desperately trying to find any way they can to avoid actually just cutting their carbon emissions,” he added.

Every tool needed

In its announcement, the US government acknowledged the shortcomings in voluntary carbon markets (VCMs), saying that “in too many instances” credits do not live up to the high standards required.

“For good reasons a lot of folks outside this room are skeptical,” National Climate Advisor Ali Zaidi told attendees at the policy launch in Washington. “[They are] scared off by news stories of things that went wrong and gloss of greenwash.”

US National Climate Advisor Ali Zaidi speaks during a press briefing at the White House in Washington, U.S., January 26, 2024. REUTERS/Julia Nikhinson

But, he added, that should not be seen as “an excuse to slow down but as an occasion to speed up” and do things better.

The Biden administration wants to be a leader in guiding “the development of VCMs toward high-quality and high-efficacy decarbonization actions”, the White House said. Its principles closely align with those of industry-led governance bodies that are trying to revamp the carbon market.

The Integrity Council for the Voluntary Carbon Market (ICVCM) is currently assessing project methodologies as part of its efforts to establish the first independent global benchmark for “high-integrity” carbon offsets, known as the “Core Carbon Principles”.

“We are in a climate emergency and we need every tool in the box to meet the 1.5°C [global warming] target,” said ICVCM Council Chair Annette Nazareth. “High-integrity carbon credits can mobilise private finance at scale for projects to reduce and remove billions of tonnes of emissions that would not otherwise be viable.”

Substitute for government aid

As most of the world’s largest carbon offsetting projects are based in the Global South, many rich governments view the market favourably as a way of getting dollars to developing nations without tapping into public budgets.

That is the case in the US where climate funding has fallen victim to political polarisation. President Joe Biden promised to increase international climate finance to over $11.4 billion per year by 2024. But Congress approved only a fraction of that as part of this year’s government budget: $1 billion of a spending package totalling $1.59 trillion.

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The White House’s Zaidi said voluntary carbon markets can move “mountains of capital” if their integrity is improved. Better regulation could expand the market from its current size of around $1.7 billion to $1.1 trillion by 2050, according to predictions by BloombergNEF. 

Gilles Dufrasne, global policy lead at Carbon Market Watch, told Climate Home the US government will need to “walk the talk and ensure that its promises of transparency and integrity are followed up by actions”.

“There is currently no public data to measure how much finance is flowing to climate action through carbon credits and how much is staying in the pockets of Global North intermediaries and consultants,” he added.

International negotiations

The US government is also a strong proponent of private sector-led carbon credit initiatives in international climate circles.

In discussions at the COP28 climate summit last year on setting the rules for a new carbon market governed by the United Nations, Washington championed what observers described as a “light-touch, no-frills” approach that could hand a prominent role to private-sector players from the voluntary market.

The move was rejected by the European Union, causing a breakdown in the negotiations, which will resume at the mid-year UN climate talks in Bonn starting next week.

“By undermining the multilateral process … and placing more faith in private sector-governed voluntary carbon markets, the US appears to be shirking its responsibilities for financing climate action and offloading them onto the private sector,” said Trishant Dev, a carbon market expert at the Delhi-based Centre for Science and Environment.

(Reporting by Matteo Civillini and Joe Lo; editing by Megan Rowling)

The post US government backs the carbon credit industry’s push to fix itself appeared first on Climate Home News.

At a meeting in the German city of Bonn last week, government negotiators and experts from around the world approved an appeals and grievance procedure for the UN’s proposed Article 6.4 carbon crediting mechanism.

Maria AlJishi, chair of the body in charge of establishing the market, said in a statement that by introducing the procedure, “we’re establishing new avenues to empower vulnerable communities and individuals, ensuring their voices are heard and their rights are upheld.”

Isa Mulder, a researcher with campaign group Carbon Market Watch, told Climate Home the agreement on policies to challenge carbon credit projects before and after they are implemented was “quite a historic moment”. “This is pretty big,” she added.

The previous UN carbon market – called the Clean Development Mechanism (CDM) – did not have any such procedures. It, and other carbon markets, have been plagued by allegations they have harmed local people and their livelihoods, as well as often not delivering the emissions reductions claimed.

Negative local impacts

In one CDM project in Uganda, Carbon Market Watch said villagers were being denied access to a tree plantation’s land which they used to grow food, graze livestock and gather firewood. In another CDM project in India, the National Green Tribunal found a waste incineration plant was releasing cancer-causing toxic chemicals into Delhi.

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A hydro-electric plant in Guatemala, financed using the CDM, stopped local people reaching water to fish, wash coffee and bathe, while another plant in Chile diverted rivers, endangering the water supply to the country’s capital Santiago.

To prevent such abuses, governments have agreed that the CDM’s replacement – under Article 6.4 of the Paris pact – will have processes to make appeals and raise grievances. The appeals procedure is to challenge projects before they begin, and the grievance procedure will apply once they are in place.

Retribution risk

Only people directly affected by a carbon credit project can file a grievance – and only if they have suffered “adverse effects of a social, economic or environmental nature” caused by it.

After a grievance form has been filled in and published on the UN climate change website, an independent panel will have two weeks to put together recommendations to the Article 6.4 supervisory body, which makes the final decision on actions to be taken “as it deems appropriate”.

There will be no cost to filing a grievance, despite the supervisory body previously discussing fees of up to $5,000.

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Complaints must, however, be submitted in one of the UN’s six official languages – Arabic, Chinese, English, French, Russian and Spanish – a requirement which Mulder called “a big problem” that “will specifically hit people who are most in need of protection”.

She added that the new procedures will not do enough to protect complainants from retribution from carbon credit sellers. “Sometimes it can be very sensitive if you file a grievance, but then there’s local tensions – and there’s also the project proponent who is right there and of course doesn’t want you to file a grievance,” she said.

Although negotiators have now agreed the appeals and grievance procedure, they were unable to approve a full set of rules for the Article 6.4 carbon market at the COP27 or COP28 summits in the past two years. They will try again at COP29 in November, and hope to have the market up and running by early 2025.

(Reporting by Joe Lo; editing by Megan Rowling)

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A decade ago, the Science Based Targets initiative (SBTi) was launched with the goal of mobilising the private sector for climate action.

Today, it stands as the largest and most influential validator of corporate climate targets, having confirmed the 2030 goals of around 5,000 companies.

Yet new analysis reveals a leniency within the initiative. According to the 2024 Corporate Climate Responsibility Monitor (CCRM), the emissions reduction commitments of 51 major global corporates are falling short of what’s needed at the global level.

Surprisingly, most of these companies received SBTi validation for their targets to be aligned with the 1.5ºC warming limit backed by governments in the Paris climate agreement. 

What explains this discrepancy?  

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Currently, the SBTi’s 2030 target validations often overlook substantial shares of companies’ full value chain emissions by excluding upstream and downstream value chain emissions, known as “scope 3”. Scope 3 emissions account for the majority of corporate greenhouse gas footprints, sometimes exceeding 95%.  

The SBTi requires companies to set a near-term target for scope 3 emissions, but only when those emissions account for more than 40% of their greenhouse gas footprint. However, these targets do not have to cover all scope 3 emissions and only need to be aligned with global warming of 2ºC or well below 2ºC, not 1.5ºC.  

While the SBTi checks whether companies have set a scope 3 target, the initiative does not provide a temperature classification for these scope 3 targets – only for companies’ scope 1 and 2 targets, which apply to direct operations and their energy use.

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This important nuance is often missed by the public, as many companies nonetheless prominently advertise their scope 3 climate targets as science-based.  

Take Fast Retailing, owner of clothing chain Uniqlo, for example. The company pledges to reduce its operational emissions (scope 1 and 2) by 90% by 2030, which represent just 5% of its total emissions.

It also commits to reduce its emissions from procured goods and materials (scope 3) by 20% by the end of this decade. However, upstream emissions in the fashion sector need to be reduced by around 40% to be aligned with global warming of 1.5ºC.

Whereas the SBTi validated the target for operational emissions as “1.5ºC temperature aligned”, the initiative did not provide a temperature classification for the scope 3 target.

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Yet Fast Retailing also describes this target as “science-based”. This pattern is not unique to Fast Retailing but common across companies validated by the SBTi. 

As a voluntary organisation primarily funded by third parties, the SBTi relies on the voluntary participation of companies. Its methodologies need to accommodate the perspectives of various stakeholders.

This may explain why the SBTi’s methodologies for 2030 targets are not necessarily always aligned with the scientific consensus on limiting global warming to 1.5ºC.

However, addressing the lack of stringency in scope 3 targets is key to ensuring that the SBTi can effectively drive corporate climate ambition. 

Offsetting controversy 

Despite the large degree of leniency that already exists in scope 3 standards today, there is a significant risk that the rules will be loosened even further.

Just this week, the SBTi Board of Trustees issued a unilateral and possibly illegitimate decision to revise scope 3 standards to allow for carbon offsetting.

This decision is not based on scientific insights but comes after a lot of pressure on the SBTi from supporters of carbon markets. SBTi staff have already reacted strongly to voice their discontent with the decision and the process. 

Introducing offsetting in the SBTi scope 3 standards could effectively nullify already insufficient targets, reversing years of incremental progress that SBTi and its member companies have fought so hard to achieve. 

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Allowing companies to offset their emissions could also deprive their suppliers – who are often located in the Global South – of much needed financial and technical support for their own emissions reduction efforts. 

Climate target-setting has become standard practice in the corporate world – progress the SBTi helped foster over the past decade. But the recent decision by the SBTi Board of Trustees on offsetting could bring any further advances to a halt.

Reversing this decision and tightening the rules for scope 3 targets would be the next step to propel corporate climate ambition forward. 

This article argues that the SBTI’s rules are too lax. We have also published a comment piece arguing they are too stringent.

The post SBTi needs tighter rules on companies’ indirect emissions appeared first on Climate Home News.

Both governments announced several carbon offsetting deals at Cop28 in Dubai under the umbrella of the Paris Agreement’s bilateral carbon trading principles.

But the rules for how to implement them have yet to be agreed, as negotiations at Cop28 collapsed over discussions on how to ensure the integrity of carbon credits. Still, that hasn’t stopped deals such as Paraguay’s moving forward without clear guidelines.

Climate experts and organisations fear the lax rules approved by the Paraguayan government – as well as its proximity to industry players – risk the new UN mechanism repeating problems that have beset the voluntary carbon market, where companies have frequently ended up buying junk offsets.

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Despite such concerns, Paraguay has made carbon markets a top priority, even rushing to pass a new law in less than one month – between September and October 2023. The law created a national registry and a set of rules for every carbon project in the country.

It “will contribute enormously to the growth and development of the country”, said Minister of Environment Rolando de Barros Barreto, in an official statement the day the law was signed by President Peña.

De Barros Barreto was heavily involved in lobbying for the legislation to pass through Congress without modifications. “We are one of the few countries that have a tool like this,” he added in the statement.

A man fishes near chimneys giving off emissions in an industrial area of Singapore, January 5, 2016. (Photo/Reuters/Tim Wimborne

Carbon shopping

Pressed by a hike in Singapore’s domestic carbon tax – which will rise from about $3 per tonne to $18 in 2024 – its government went shopping for carbon offsets at Cop28 to offer big emitters back home. It held talks with Bhutan, Papua New Guinea and Paraguay as potential suppliers.

Paraguay – which, according to industry minister Javier Giménez García de Zúñiga, was seeking to position itself as the “lung market” of the world – landed an ideal customer.

Both countries agreed to create a bilateral commission to pick carbon-cutting projects in Paraguay. Companies based in Singapore could purchase credits from these projects in exchange for a discount on the new carbon tax rates. No official document on the deal has yet been disclosed.

“What was agreed is to create a road connecting the two countries to manage the transfer of carbon credits,” Giménez García de Zúñiga said in a statement published jointly by the two countries to mark the deal.

On the same day, President Peña also signed a memorandum of understanding with Cop28 host United Arab Emirates, which had embarked on its own controversial spending spree for carbon offsets, mainly in the form of agreements with African countries.

At COP28 in Dubai, Paraguay’s Minister Rolando de Barros Barreto and the UAE’s Mariam Almheiri sign a Memorandum of Understanding on carbon credits. (Photo: Paraguayan Presidency)

Rushed rules

In order to arrive at Cop28 as a reliable supplier of carbon offsets, the Paraguayan government rushed its law regulating carbon markets through both chambers of Congress in less than a month.

The initiative was marketed abroad by President Peña as “one of the most advanced laws in the world” and as a way to attract foreign investment. But it also has been heavily criticised by opposition lawmakers, academics, Indigenous peoples and environmental groups.

The new law passed without including safeguards to guarantee environmental and human rights based on an international standard that seeks “to mitigate the negative impacts of projects and, above all, to defend the rights of the people”, explained Mirta Pereira, a Paraguayan lawyer and advisor for the Federation for the Self-determination of Indigenous Peoples (FAPI).

Alberto Núñez, an activist from the Youth Network for Climate Action Paraguay, said in a public hearing prior to the bill’s approval that “without explicit human rights safeguards, this (law) will have a climate-friendly name but will be destructive”.

Opposition senators said it had been influenced by peddling to favour law firms that advise on carbon projects.

A proposal to create mechanisms for handling complaints, information requests and potential land conflicts was also rejected by Peña’s ruling bloc of lawmakers.

Protected forests

Another issue is that the new law allows for carbon projects to be set up within national parks and forest reserves, in an effort to finance the country’s protected areas, experts said.

But the forests in the concession areas would have already been protected without funding from the offsetting projects, which means their credits lack “additionality” in terms of emissions reductions, according to the standards recommended by the Integrity Council for the Voluntary Carbon Market (ICVCM), an independent body that seeks to raise the quality of carbon credits for trading.

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Inigo Wyburd, a researcher at non-profit organisation Carbon Market Watch, said “additionality is necessary” for Paraguay’s market to be credible. “It is important that it is reflected in the text of the law. Areas that are not at risk of being deforested should not be eligible to receive carbon credits,” he added.

Without such safeguards, carbon schemes – including the country’s bilateral offsetting deals – risk repeating the errors of the voluntary market, according to Carbon Market Watch policy analyst Jonathan Crook.

Forest projects whose offsets are traded in the voluntary market have been widely criticised for over-crediting emissions reductions, as well as struggling to monitor forest loss. In some cases, projects have also led to human rights violations, especially against Indigenous peoples.

Industry brokers in the room

In September, a few months before Singapore and Paraguay announced their deal, the two governments held a meeting in New York, attended by big carbon brokers likely to benefit from the agreement.

They included Singaporean commodities giant Trafigura Group, which is one of the world’s largest carbon traders and Paraguay’s biggest fossil fuel supplier.

Peña also met in New York with Per Olofsson, CEO of Paracel, a forestry company seeking to sell carbon credits from eucalyptus tree plantations in Paraguay, where Olofsson had joined meetings lobbying in favour of the new carbon markets bill.

Photograph of Paraguayan President Santiago Peña at a meeting in New York on September 20, 2023. The photograph shows Per Oloffson, CEO of Paracel, and Benjamin Chia, Singapore’s main carbon markets negotiator (second and second to last on the right, respectively). Chia’s attendance was not announced. (Photo: Paraguay Presidency)

Both Paracel and Trafigura have faced questions over the integrity of their carbon credits and had projects suspended by carbon credit verification agency Verra.

Trafigura faced problems in June 2023, when Verra launched an investigation into its Southern Cardamom project in Cambodia, after human rights groups raised concerns about land conflicts with Indigenous people.

Trafigura, which had already committed the credits to corporate buyers, had to suspend them. The results of the investigation have not yet been revealed.

Meanwhile, Paracel was also questioned last year by Verra, which suspended one of its projects aiming to generate carbon credits from a wood-pulp mill and eucalyptus plantations in Paraguay.

The project took a $200-million loan from the Inter-American Development Bank, which according to Verra, shows that the project had no additionality, since it would have accessed finance anyway and continued without selling carbon credits.

Excerpt from Verra’s letter denying registration of Paracel’s project

According to Verra, Paracel had until December 19, 2023, to present improvements and thus avoid a final rejection of the project. But as of March 1 this year, neither the company nor Verra had published updates regarding its status.

Paracel is also facing a dispute with a local community called Sargento José Félix López, in Paraguay’s northwest, which denounced the siting of some eucalyptus plantations on public land.

Asked about Verra’s concerns, a Paracel spokeperson said the company was gathering documentation to submit to Verra, noting that additionality was fundamental for its biggest international buyers.

Paraguay’s new carbon market law is a positive step towards regulating the local market, the spokesperson added.

Asked if that same law would be useful for international agreements, Rodrigo Maluff, vice minister of investment, said the door is still open to modify the legislation and adapt it to the standards demanded by Singapore.

The legal director of the Ministry of Environment, Víctor González, said much of the work could be done through the regulatory process under the law that will begin this year.

Transparency concerns

Experts told Climate Home that agreements like the Singapore-Paraguay deal could be negatively affected by the failure of governments at Cop28 to reach a consensus on rules for the new bilateral carbon markets being discussed under the Paris Agreement’s Article 6.2.

One key element of discord at Cop28 was how robust the process to verify the quality of the credits should be.

Carbon credits talks collapse at Cop28 over integrity concerns

“More and more countries [like Paraguay] and companies are negotiating bilateral agreements, in the absence of comprehensive regulation,” said Crook from Carbon Market Watch.

“This risks undermining transparency and may make negotiations [at Cop29] even more difficult, given the absence of clear direction,” he added.

A longer version of this story was first published in Spanish by El Surtidor as part of the Opaque Carbon project led by the Latin American Centre for Investigative Journalism (CLIP) and bringing together 14 media outlets from Latin America.

The post Paraguay’s carbon deal with Singapore beset by lobbying, lax rules appeared first on Climate Home News.

At the Cop28 climate summit last December, governments agreed to set up a new global carbon credit market under Article 6.4 of the Paris Agreement – and a host of fossil fuel firms and their middlemen are now trying to cash in by making their projects eligible for trading.

Developers applied for thousands of projects to be transferred over from the old discredited Clean Development Mechanism (CDM) to the new market that will be established, before the deadline of January 1 this year.

Most of these projects are for renewable energy – which, while good for the climate, have stirred debate. Critics argue that they do not need additional funding from selling carbon credits because they are profitable without it.

However, more controversial are ten projects Climate Home News has identified, based largely in Asia, which backed the construction of power plants that run on natural gas, one of the fossil fuels governments agreed to transition away from at Cop28. 

If approved by their host nations, the projects would transfer more than 10 million old gas-linked credits – equivalent to the reduction of 10 million tonnes of carbon dioxide (CO2) emissions a year – to the new Paris carbon market.

“These projects are entirely inappropriate,” said Carbon Market Watch researcher Jonathan Crook. “Some were registered as far back as 2009. It’s unreasonable to assume they expected to rely on revenue from a new market mechanism in 2024 – not to mention that these projects may lock in fossil fuel emissions and infrastructure for years to come, among other issues.”

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The Integrity Council for the Voluntary Carbon Market was set up in 2021 in a bid to ensure that carbon credits deliver on the emissions reductions they have promised and have a positive impact for the climate. In its categorisation of different types of carbon credit, offsets issued for gas-fired power plants are given the worst ranking.

Similarly, BeZero, a ratings agency for carbon credit projects, looked at three of the CDM gas projects that have applied for transfer to the new market. It gave them a ‘C’ grade, meaning they “provide a very low likelihood” of reducing emissions by as much as they claim. 

It cited the “minimal impact” of carbon credit revenues on the project’s overall financial situation and the risk of methane leaks from gas infrastructure that would make the projects more polluting than asserted.

Chinese gas-fired plant

The biggest project is a gas-fired power plant built by China’s state-owned oil and gas company CNOOC and Japanese conglomerate Mitsubishi in 2010 in the province of Fujian, China, just across the sea from Taiwan.

To fire the plant’s four turbines, CNOOC and Mitsubishi imported gas from an Indonesian gas field called Tangguh, which they both had stakes in, through the CNOOC-owned Fujian gas import terminal.

In addition to the income they received from selling the gas, importing it through the terminal and then selling the electricity it produced, they also submitted an application to the CDM to develop and sell carbon credits linked to the plant.

By their own calculations, the plant would emit 2.3 million tonnes of CO2 a year when fully operational. But if they didn’t build it, they said the electricity would come from coal, emitting over 5.3 million tonnes of CO2 a year. So they claimed credits for reducing the amount of CO2 that would have entered the atmosphere by an annual 3 million tonnes.

Justifying this assumption, they said that oil was too expensive and zero-carbon alternatives were not viable as an alternative. Most of Fujian’s hydropower potential had already been tapped, while wind power was “just start-up” and “of seasonal nature”, they added. They did not even mention solar power  – now the cheapest electricity source.

However, coal’s main competitors in the province are not gas but nuclear and hydro, power sources that do not emit greenhouse gases. Wind power has also grown rapidly in the province since the gas-fired plant was built.

Lauri Myllyvirta, a senior fellow with the Asia Society Policy Institute, told Climate Home: “The premise that power generation growth would come from coal if a new fossil gas plant wasn’t built was never true and certainly is not true today.”

Mitsubishi withdrew from the carbon credit project in 2022. While CNOOC remains involved, the main project participant is now a company called Europe New Energy Investment Capital, run by a Chinese citizen called Dongquan Yang.

A spokesperson for CNOOC said the project “is out of the scope of CNOOC Limited’s business operations”. Asked how that was compatible with CNOOC Fujian Gas Power Co., Ltd being listed as an authorised participant, the spokesperson did not reply. 

Indian carbon-credit developer

Fossil fuel firms are not the only ones trying to monetise carbon offsets from existing gas power plants. Documents show that Indian company EnKing – which has since changed its name to EKI Energy Services Ltd and claims to be the world’s biggest developer of carbon credits – is involved in three of the Indian gas power projects identified.

Last August, Climate Home revealed that EnKing vastly overestimated the benefits of carbon offsets linked to cookstoves in rural India and helped sell those junk credits to oil and gas giant Shell.

Cooking the books: cookstove offsets produce millions of fake emission cuts

Working with fossil fuel companies, EnKing used a methodology (AM0025), under the old Clean Development Mechanism, to derive credits from the building of gas-fired power plants in India.

The successor to this methodology is still technically up and running – but Verra, one of the main international carbon credit verifiers, has declared it inactive due to lack of use.

According to Crook of Carbon Market Watch, it is “extremely unlikely” that this type of methodology will be applicable under Article 6.4, which will govern the new UN carbon market when it launches. EnKing did not reply to a request for comment.

‘Not good practice’

To oversee the new carbon market, governments have agreed to set up an Article 6.4 supervisory body, made up of government climate negotiators. But the rules agreed for it so far offer little power to reject old CDM credits from gas-fired power plants. 

The host countries of those projects – including China and India – could refuse to authorise them, but they could still be sold, branded as “mitigation contribution units” under Article 6.4.

These are a lower class of carbon credit agreed at Cop27 which do not require authorisation by the host country as it does not need to do a “corresponding adjustment” for them, which means wiping the credits’ emissions reductions from its accounts.

Carbon credits talks collapse at Cop28 over integrity concerns

Mitigation contribution units cannot be counted towards national emissions goals set under the UN climate process, but they can be bought by companies and used for other purposes. That means the firms trying to sell carbon credits from old gas power stations just need to find buyers to make a profit.

Crook said such deals “wouldn’t be good practice”. “Retiring these credits paradoxically rewards fossil fuel companies for locking in emissions,” he added.

The post Fossil fuel firms seek UN carbon market cash for old gas plants appeared first on Climate Home News.

Last month, Shell used rice farming carbon credits to offset a chunk of its annual emissions, claiming to reduce the “carbon intensity” of its fossil fuel products.

But experts have long argued that the sellers of these offsets are over-counting their emissions reductions and using accounting tricks to evade checks, as a Climate Home investigation showed last year.

These accusations led leading carbon standard Verra to suspend the projects early last year and launch an investigation. Shell took them off its website as a result.

But, although Verra’s review continues, on January 9 Shell quietly retired over a million credits produced by the suspended projects, meaning it counts the claimed emissions reductions towards its climate targets.

Rachel Rose Jackson, director of climate policy at Corporate Accountability, said Shell’s actions were “shameful, dubious and reckless against the backdrop of a deadly climate emergency”.

“To retire over one million offsets from projects actively under investigation reeks of bad faith and malintent”, she added.

Carbon Market Watch’s Jonathan Crook said Shell should have at least waited until Verra’s review had ended to see if there were problems with the offsets.

If the offsets do have problems then, he added, they “have no value from a climate perspective and using them towards net carbon intensity targets is totally inappropriate”.

Shell did not reply to detailed questions on these particular offsets. But a spokesperson said that the credits the company buys are “certified in accordance with independent standards and further screened through our due diligence process”.

Claiming to lower rice emissions

The idea behind the projects is that emitters like Shell pay for Chinese rice farmers to take measures to reduce their emissions that they wouldn’t otherwise be able to afford.

Rice is traditionally grown in flooded fields known as paddies. These have more bacteria than dry fields and the bacteria breaks down decaying plants, turning them into a potent greenhouse gas called methane.

To reduce the damage to the climate and save water, the project developers claimed they would pay farmers to periodically drain their fields. With less standing water, there are fewer bacteria and less methane.

A rice field irrigated with alternate wetting and drying methods

But opinions from experts and scientific literature suggest that lots of farmers already employ this technique across China, encouraged by the central government. So they do not need incentives from carbon credit to do so.

Carbon credit rating agency BeZero Carbon has given a Chinese rice cultivation project similar to Shell’s its lowest possible score. 

Its assessment says there is a “significant risk” that the emissions reduction measures are not additional to what would happen without the carbon credit money “due to the high level of government support for the project activities”.

A Climate Home investigation last year found that the project developers artificially divided up fields across several projects to pass them off as small-scale and avoid stricter checks.

Quality issues

These activities were initially given the green light by leading carbon standard Verra. But early last year, in response to concerns, it identified “quality issues”, launched a review and stopped the projects from producing any more credits.

But the suspension did not prevent offsets already in circulation from being sold or used to offset emissions.

When Climate Home approached Shell last year, the company said it was aware of Verra’s review and “would look carefully at the results when they are published”. 

The company took the offsets off a webpage dedicated to its portfolio of carbon credits offered to external clients, with a spokesperson saying this was “pending Verra’s review”.

Rich nations miss loss and damage fund deadline

Nearly a year later, the results of the review have still not been published and the projects remain on hold. But Shell retired 1.23 million carbon credits issued by those projects, offsetting emissions equivalent to three gas-fired power plants running for a year.

A Shell spokesperson said the company had “recently retired a number of carbon credits as part of our net carbon intensity target”.

Finding a way out

Shell’s involvement in these projects is not just as a buyer. The schemes were originally set up by a Chinese firm but four years later Shell signed a series of agreements to become its exclusive agent.

The role granted Shell the right to either claim the credits against its emissions or sell them to other companies, potentially profiting from their sale.

Italy launches ‘ambiguous’ Africa plan fuelling fears over fossil fuels role

Before Verra suspended the projects, only a quarter of the credits issued by the projects had been used, primarily by Chinese state-owned oil company PetroChina. 

Shell retired the vast majority of the remaining credits on January 9. Carbon Market Watch’s Crook says it would appear Shell “had sunk money into the projects and had these credits sitting on their books”.

“Perhaps they have not been able to find any buyers since the projects were put on hold”, he added. “Or perhaps they are doubting that the review will be positive and it will be difficult to sell or trade any of these credits in the future. So they went ahead and used them themselves”.

Shell involved in rule-making

While Verra probes the credits, it has taken the rare step of banning any further use of the rice farming methodology under which the projects were developed.

The register is now working on a new rulebook for future rice farming offsets. It says it will allow project developers “to credibly achieve emission reductions and generate high-quality credits”.

To advise them on this, Verra has appointed an Indian company which is part of Shell, raising concerns about conflict of interests.

Crook described this as a “recurring issue” in the carbon credit world. He said: “You have actors who wear all these different hats. They can sometimes develop methodologies, transact carbon credits and/or use them towards their own targets, potentially based on rules they helped develop. It raises real questions around conflicts of interest and integrity.”

A Shell petrol station. Photo credit: Tomcat MTL/Flickr

A Verra spokesperson told Climate Home it “takes potential and actual conflicts of interest very seriously” and that methodologies “undergo an extensive review process before they are finalised” and at each stage “all stakeholders, including the public, have an opportunity to evaluate and comment”. 

They said: “This process is designed to promptly identify any issues with the methodology, including the opportunity to identify any perceived conflicts of interest”.

Investigation ongoing

The spokesperson said Verra does not comment on specific projects under review to avoid influencing the outcome of the investigation.

“The steps in a review, as well as the timeline for completing the review, depend on the underlying facts and circumstances, the complexity of the issues, the cooperation of third parties and other factors”, they said.

“A review may take several weeks or months to complete,” they added, “while every review is different, Verra aims to conduct an appropriately scoped review as expeditiously as possible.”

A spokesperson for Shell said: “We retire credits to compensate emissions, including those associated with the energy our customers use in transport, homes, producing goods and providing services. This approach complements our activities to avoid and reduce emissions from our own operations”.

The post “Shameful”: Shell uses carbon credits under investigation to meet climate targets appeared first on Climate Home News.

Climate Home analysis shows that renewable energy investments make up four-fifths of all projects seeking a transfer from the old Clean Development Mechanism (CDM) to the new system under article 6.4 of the Paris Agreement.

Experts have long written off the vast majority of credits produced from renewable energy as junk because they often already provide the cheapest sources of power in most of the world and selling offsets to fund them does not have any additional impact on emissions.

Some of these projects have also been accused of human rights violations such as forced evictions for the construction of large dams.

Harry Fearnehough from New Climate Institute told Climate Home that “it could definitely undermine the credibility of the mechanism because, while there’s still uncertainty over what it will look like, as a starting point you have a huge supply of low-quality offsets that are potentially available at a very low cost”.

Established in 1997 by the Kyoto Protocol, the UN’s CDM allowed rich countries to meet some of their climate obligations by financing emission-cutting projects in poorer ones.

The programme has received widespread criticism for its patchy human rights record and for failing to deliver promised climate benefits. Supporters of a new mechanism currently being developed under article 6.4 of the Paris Agreement say it is an improved, higher-integrity successor to the CDM.

Winning a lifeline

Countries are still wrangling over many aspects of the future market, but one much-debated issue was settled at Cop26 in Glasgow.

Under pressure from Brazil, Russia, China and India, countries agreed that a vast number of projects originally created under the CDM were allowed to migrate to the new mechanism. This handed them the chance to significantly extend their lifespan and their potential credit sales.

Project developers had until the end of December 2023 to fill in a simple two-page form and submit their transition requests.

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Of the nearly 3,500 eligible projects, over a third (1,284) seized that opportunity.

In total, the projects that have requested transition by the deadline could supply 1.4 billion tonnes of carbon credits between 2021 – the start year for accounting purposes set by the regulation – and 2035, according to a preliminary analysis by NewClimate Institute shared with Climate Home. That is more than the annual CO2 emissions of Germany.

While a relatively small share of the projects opted in, they account for approximately three-quarters of the potential supply of carbon offsets.

That’s because some of the programmes seeking to move could produce an outsized volume of credits. The two biggest ones – a hydro plant and a nitrous oxide emission reduction scheme, both in Brazil – each have the potential to issue around 6 million tons of offsets a year. That’s similar to the annual emissions of Sierra Leone.

Fearnehough says that “very few, if any, of these credits are genuinely likely to be additional”, going beyond what countries would do anyway without the carbon finance.

“A key reason for this is that the CDM was really only scheduled to run up to the end of 2020,” he added. “No investor would have made a decision purely based on expecting revenues from credits in the 2020s because, quite simply, there was no political indication that the possibility to move over to a new mechanism would exist”.

Climate and social concerns

That is particularly true for the renewable energy projects vastly dominating the list. Experts say they are highly likely to fail the additionality test, meaning their credits do not bring any climate benefit. When used to compensate for real emissions elsewhere, they result in more greenhouse gases entering the atmosphere.

The reason is simple. Many renewable offsets came into existence just as solar and wind power were becoming the cheapest source of energy in most countries. After years in operation, they are likely to be profitable from the sale of the electricity alone, without the need for additional revenues from carbon offsetting.

A 2016 study commissioned by the European Commission concluded that the vast majority of these projects “are not providing real, measurable and additional emission reductions”.

The Jirau hydropower plant is located on the Madeira River, in Brazil. Photo: UHE em Jirau/Flickr

Hydropower projects carry even more concerns as their implementation is often marred by human rights problems. Vulnerable communities relying on rivers for their livelihoods are particularly at risk of forced displacement.

The largest project applying for the transition to the new mechanism – the Jirau mega-plant in Brazil’s Rondonia state – is a case in point.

Over the years the project has faced multiple accusations of stoking tensions, pushing indigenous people away from their territories and breaching the rights of the workers that built it. Engie, the project’s developer, previously rejected any accusations.

Other categories of activities featuring prominently on the transition list have raised major concerns in the past.

Credits from projects which claim to cut or stop the emission of industrial gases such as nitrous oxide (N20) and trifluoromethane (HFC-23) were banned by the EU in 2013 for use in its emission trading system.

That’s because, according to studies, they created “a perverse incentive” to increase the production of gases depleting the ozone layer.

Countries’ authorisation dilemma

While the CDM projects have now made their move and requested transition, they are not automatically through to the new system.

Standing in their way is the need to receive a formal authorisation to proceed from the countries where their activities are located. Governments have until 2025 to make a decision and, experts predict, it won’t be a straightforward one.

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“It’s not a guarantee that all host countries will want to approve all of these projects”, according to Jonathan Crook from Carbon Market Watch, who said there would be contrasting forces at play.

“If they authorise them, they have to do corresponding adjustments, which they might not be so keen on since those emission reductions will be deducted from their [NDC climate plans]. But, at the same time, most projects are located in very large countries and it may not make a big difference to their plans”.

The answer to this dilemma will rest primarily in the hands of China, India and Brazil. Between them, the countries host around three-quarters of all projects that are looking to migrate under article 6.4.

Spotlight on three countries

Observers of climate talks said their governments all pushed for rules that would grant a lifeline to as many CDM projects as possible when those negotiations took place at Cop25 in Madrid and Cop26 in Glasgow. But, since then, they have been conspicuously quiet on the topic.

Climate Home approached the respective carbon market authorities in the three countries but did not receive a response at the time of publication.

Trishant Dev is a carbon market expert at the Delhi-based Centre for Science and Environment. He expects there will be “a lot of pressure on the Indian government to let projects through from the carbon industry, which is thriving in the country”.

But, at the same time, he thinks the government will take time to properly understand all the pros and cons of allowing such authorisations. “It’s a chaotic process. Countries want to make sense of what the final outcome of the article 6 discussions will be and how that will interact with domestic carbon markets they are constructing”, he said.

Who will buy the credits?

Article 6 talks collapsed at Cop28 last December after attempts led by the EU to introduce tighter controls and further integrity safeguards had been rebuffed by the US. Negotiators will try again this year to hammer out a deal on many technical issues that need to be resolved before trading of offsets can begin.

Meanwhile, questions also remain on who will be interested in using those credits, once the market is up and running. Countries, corporations and individuals could all be potential buyers.

Comment: High stakes for climate finance in 2024

New Climate Institute’s Fearnehough said there doesn’t seem to be much appetite from countries based on what they are saying in public. “But it’s hard to predict what will happen when suddenly the offsets are available and you have an easy option to meet your NDC targets”, he added.

The credits may gain more interest from polluting companies. Banks, airlines and industrial heavyweights keep buying large volumes of questionable renewable energy offsets despite the known concerns, a Bloomberg investigation found. Dressing them up with the UN stamp of approval may add to the appeal.

Carbon Market Watch’s Crook believes much will depend on the transparency of the system – something still largely unknown. “If there is a very transparent register disclosing who purchased how many credits and for what purpose, that would disincentivize companies from transacting low-quality credits out of reputational fears,” he said. “But if it isn’t transparent, buyers may not be as careful with due diligence or may be even encouraged to buy bad credits since there won’t be scrutiny”.

A previous version of this article stated that projects requesting transition could provide 700 million tonnes of credits until 2035, while the correct figure is 1.4 billion tonnes. That was due to a computational error in the model used by NewClimate Institute for their analysis of which we were informed after publication.

The post Junk offset sellers push to enter new UN carbon market appeared first on Climate Home News.

The Societe Conservation Forestiere (SCF) was set up in December 2022 and is co-owned by two adult children of the DRC’s defence minister Jean-Pierre Bemba, who was accused of war crimes and found guilty of bribing witnesses. This is according to previously unreported company documents seen by Climate Home.

The documents show its stated goal is to sell carbon credits and it has applied to the provincial government for a “forest conservation concession” in the DRC province of Sud-Ubangi but it has not made progress on the ground and little else is known about it.

Anti-corruption activists raised concerns that Bemba could use his political power over the environment minister Eve Bazaiba, as her party leader, to benefit the company. Human rights activists criticised the war crimes committed by Bemba’s forces across Central Africa.

“A la carte menu”: Saudi minister claims Cop28 fossil fuel agreement is only optional

Carbon Market Watch researcher Jonathan Crook said the revelations raised “red flags” over whether the company is free from conflicts of interest and has the experience to conduct forest conservation projects that get informed consent from local peoples.

He added: “It is very concerning to hear of potentially significant conflicts of interest and serious allegations of human and land right abuses reported about individuals linked to this company”.

Bemba was charged with war crimes and crimes against humanity but, after a 10-year trial at the International Criminal Court, he was eventually acquitted on appeal. He was found guilty of bribing witnesses in the case.

Ban on business

The documents show SCF’s shares are owned equally by Bemba’s 30-year old son Jean-Emmanuel Teixera and 29-year old daughter Magalie Tema Teixera. They are listed under their mother’s last name and as Portugese citizens.

The SCF’s constiution

Article 97 of the DRC’s constitution bans government ministers from carrying out “any professional activity”.

Jimmy Kande is an anti-corruption activist from the DRC. He told Climate Home that the country’s politicians often put projects in the names of their children.

Kande told Climate Home that this company may find it easy to get the support of the environment minister because she “depends on Jean-Pierre Bemba”.

Neither child has any track record of forest conservation and both remain close to their father. Magalie goes by Magalie Bemba on social media and re-posts her father’s messages praising his militia turned political party – the Movement for the Liberation of the Congo (MLC).

Jean-Emmanuel’s recent wedding was attended by his father, the president of the DRC Felix Tshisekedi and Laurent Gbagbo, the former president of the Ivory Coast who Jean-Pierre Bemba met whilst they were both on trial for alleged war crimes in The Hague.

A power player

Jean-Pierre Bemba was born into extreme wealth and power. His father was a minister under the DRC’s long-time dictator Mobutu Sese Seko.

When the DRC descended into wars which would end Mobutu’s rule, Bemba set up the MLC as a rebel militia and took control of almost a third of the country.

South African ministry uses opaque modelling to argue for weakening climate ambition

Human rights groups have accused them of raping and massacring and indigenous pygmy people during these wars.

In 2003, the warring factions signed a peace agreement which made Bemba one of five vice-presidents in the transitional government.

Three years later, Bemba was the main challenger to Joseph Kabila in presidential elections. The electoral commission declared Kabila the winner.

War crimes

The next year, on a trip to Belgium, Bemba was arrested on the orders of the International Criminal Court.

Their arrest warrant says he was suspected of perpetrating crimes against humanity and war crimes, particularly allowing his MLC troops to rape, murder and pillage during a conflict in the Central African Republic (CAR). In 2002, MLC fighters interceded to suppress a coup attempt against CAR president Ange-Félix Patassé.

Witnesseses told the court that civilians were murdered when they tried to stop their property being stolen. The thefts were “not justified by military necessity”, the ICC ruled.

In 2016, three different ICC judges found Bemba guilty of war crimes and crimes against humanity, namely the murder, rape and pillage committed by MLC fighters.

The three judges which declared Bemba guilty in 2016 (Photos: International Criminal Court)

While human rights groups celebrated the decision, then-MLC legislator Bazaiba called it “selective justice”. Bemba immeditately appealed. Two years later, a panel of five brand new judges narrowly reversed the decision, arguing the previous judges failed to properly prove that Bemba had the power to stop the war crimes.

The ruling was enough to free Bemba from prison in time for him to return to the DRC and try to run for president in the 2018 elections.

But the electoral authorities banned him from running because, while the ICC failed to convict him for war crimes and crimes against humanity, it did find him guilty of bribing witnesses in the trial.

The elections were won by Felix Tshisekedi, who sought to bring rivals from the MLC into his coalition.

He appointed the MLC’s secretary general Eve Baziaba as environment minister in April 2021 and Bemba as defence minister in March 2023.

The MLC’s support helped Tshisekedi win a second term in office last month and he is likely to keep both Bemba and Bazaiba as ministers.

Carbon offsets supporter

Since her appointment as environment minister, Bazaiba has been a vocal supporter of carbon offsets at Cop climate talks.

At Cop28, UN records show she was accompanied by her own daughter Nono Manganza and by Jean-Pierre Bemba’s eldest daughter Cynthia Bemba-Gombo.

At the conference, she stood alongside indigenous people from around the world and argued: “The world asks us – Amazonia, Congo Basin, Mekong basin – to preserve our forests. But to do this means adaptation of our lives, our agriculture, of everything”.

“And this adaptation needs funds,” she added, “so, we say OK, and we entered the carbon markets.

But back home, Greenpeace Africa have accused her of encouraging land-grabbing after she signed a mission order telling a team to “arracher” (which translates as “wrest”) consent from local communities for a carbon offset programme.

At the time, Greenpeace campaigner Irene Wabiwa accused her of “demonstrat[ing] contempt for Congolese law, civil society and the rights of local communities”.

Human Rights Watch researcher Thomas Fessy said “it’s easy to suspect that Bemba’s family – particularly at a time when a close political ally is at the helm of the environment ministry – has seen a business opportunity in a field that relatively new to Congo”.

The DRC is home to a twentieth of the world’s forest and polluting companies are expected be buying $10-40 billion a year of carbon offsets by 2030.

Magalie Bemba, Eve Bazaiba and the government of the DRC did not respond to requests for comment.

The post Witness bribing minister’s family own Congolese carbon credit company appeared first on Climate Home News.

Switzerland has bought from Thailand the first batch of carbon offsets under the mechanism, created through the rollout of electric buses in the Thai capital Bangkok as part of a bilateral partnership.

It is the first-ever completed transaction under article 6.2 of the Paris Agreement and the parties involved hailed it as a “beacon moment for climate action” and “a very important milestone”.

But an umbrella group for Swiss charities said the switch to electric buses “would have most certainly happened” without the offsets, raising questions over their integrity.

The Swiss government plans to use the credits towards achieving its emissions reduction goals under the Paris Agreement. If the quality concerns are correct, that means Switzerland would be given a licence to pollute without funding real climate action.

The controversy raises questions over the regulation of the offsets traded under the system. Currently, there is no centralised oversight of the credits and an EU attempt to introduce tighter controls at Cop28 failed.

Swiss-Thai cooperation

Switzerland is one of the most active proponents of bilateral credit trading under article 6. The December transaction is part of a wider agreement signed between Switzerland and Thailand in early 2023.

While the credits will ultimately be used in government plans, private operators are tasked with carrying out the project.

The project is coordinated by South Pole, a Swiss company that is one of the world’s leading sellers of carbon credits and has been mired in controversy over the last year.

South African ministry uses opaque modelling to argue for weakening climate ambition

Energy Absolute, a Thai renewable energy company, is generating credits by converting thousands of petrol-fueled private buses in Bangkok to electric vehicles. Switzerland’s Klik Foundation, which represents fossil fuel importers in the country, is funding the programme through the purchase of credits.

Swiss law requires fuel importers to compensate for part of their carbon dioxide emissions. The Klik Foundation buys credits on the companies’ behalf and finally transfers them to the federal government, which will count them towards its emission reduction targets.

The Thai electric bus scheme is among dozens the Swiss group is looking to implement across the world.

Additionality doubts

The Thai project developers claim that, without the funding guaranteed by the sale of offsets, the switch to electric buses would have not been economically viable.

So the offsets will cut emissions beyond what would have happened anyway, they argue. This is known as ‘additionality’.

Alliance Sud disputes this, casting doubts over the integrity of the credits. In a research dossier, it claimed “additionality is at best non-transparent, and at worst, non-existent”.

Analysis: Ten climate questions for 2024

Alliance Sud said the economic justification for the project failed to take into account the long-term benefits of direct investment from the Energy Absolute group, which specialises in renewable energy and electric vehicle manufacturing.

An e-bus operated by Thai Smile Bus, the beneficiary of the offsetting scheme. Photo: Patiparn.Nice2002bkk

It found that the same transport operator targeted by the project had already been running electric buses in Bangkok well before the start of the offsetting scheme – as early as 2021, over a year before the start of the project.

In a statement, the Klik Foundation did not address the buses seen in 2021 but says “the first 120 buses” seen in 2022 were just a pilot programme.

“This project shows it is basically impossible to have a guarantee that these certificates can be a real substitute of domestic emission reductions which Switzerland should instead focus on,” Delia Berner, an international climate policy analyst at Alliance Sud, told Climate Home. “Switzerland is leading in a negative way”.

‘Pure speculation’

Mischa Classen, an independent carbon market consultant and former director of the Klik Foundation, disagrees with Alliance Sud’s analysis.

“From my knowledge, Thailand has no policy intervention that would support private bus operators to switch to electric, which is the main additionality argument in this project. There’s no economic reason for a private company to use [electric] buses that are more expensive than others”, he added.

A spokesperson for the Klik Foundation told Climate Home the Alliance Sud’s claims on additionality are “pure speculation”. “Energy Absolute needs the financial support through the purchase of credits to make the project feasible”, they said.

A spokesperson for the Swiss Federal Office of the Environment (FOEN) said that only offsets that generate additional emissions cuts would be approved, following checks with the environmental authority of the host country. “In the view of the FOEN, as well as the Thai authority, this is the case with the e-bus project in Bangkok”, it added.

Swiss government plans

Switzerland has been among the most active countries in signing preliminary agreements for the bilateral exchange of offsets. The government expects to achieve a third of its total emission reduction by 2030 through projects abroad.

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It is pushing ahead with the rollout of these deals despite a lack of certainty over the rules governing the mechanism.

Talks over article 6.2 of the Paris Agreement collapsed at Cop28 following a bitter dispute over integrity, with the European Union pushing for stricter rules and the USA wanting more flexibility. 

While negotiators will try again to strike a deal at Cop29 in November, countries can still go ahead with their agreements under an initial rulebook agreed in Glasgow.

Classen says Switzerland’s first transaction is adding to positive momentum for countries that are already seriously interested in Article 6.

“It is the final result of a long, hard process and it is not a decision you can just switch on or off. You need well-designed bilateral agreements setting minimum standards and a lot of political labour to establish carbon market regulations. The case of Thailand shows that it’s possible”, he added. 

The post First ever Paris Agreement offsets face integrity questions appeared first on Climate Home News.

But not all its people. Because of the USA’s huge emissions, financial power and  electoral system, our hopes lie largely on those in a few swing states – like Pennsylvania, Wisconsin, Georgia and Arizona.

In 2020, we spoke to grassroots campaigners trying to boost climate voter turnout in Georgia. They were crucial in swinging the Senate then, which allowed a huge climate bill to be passed in 2022. The planet needs the likes of them again.

1.Who will win the US election?

Of all the world’s elections, the USA’s is the one that matters the most for the climate. The policies of the world’s second biggest polluter swing wildly depending on who is in the Oval Office.

The vote on November 5 is likely to pit Joe Biden against Donald Trump. Polls and bookmakers currently suggest Trump is more likely to win.

That would put a major dampener on climate hopes ahead of Cop29, on November 11.

We know where both men stand. As president, Trump withdrew the US from the Paris agreement. Biden re-joined it on his first day in office and pushed through $369bn of green spending.

On the same day as the Presidential election, Americans will also vote for all the seats in the House of Representatives and a third of those in the Senate.

Republican control of the House of Representatives is a big barrier to US climate finance. Given Democratic turnout is usually higher when there’s a Presidential election, there’s a chance Democrats could win control and at least deliver on their $3 billion promise to the Green Climate Fund.

Donald Trump being sworn in as US president in 2016 (Pic: White House photo)

2.What will the new global finance target be?

Compared to fossil fuels, finance was low profile in 2023 – to the anger of developing countries.

But 2024 should be its year, as countries have to negotiate a new finance goal for 2025 onwards by the time they leave Cop29 in Baku in November.

Expect debate over who should pay and who should receive, as well as how much should be given and to what.

Separately, France and Kenya have launched a taskforce on how to get money for climate which isn’t just from governments.

Options include taxes on international shipping, aviation, financial transactions and fossil fuels.

The US, Germany and others will continue their push to squeeze more money out of the World Bank and International Monetary Fund for climate.

3.Will emissions finally start going down?

Almost every year so far, the world’s humans have pumped out more greenhouse gas than any year before, sparking depressing headlines about “record emissions”.

But 2023 could well be the last year of this.  A report by Climate Analytics finds a 70% chance that emissions will peak in 2023 and start falling in 2024.

The International Energy Agency thinks something similar – but the US government’s forecasters are more pessimistic.

Whether emissions peak or not, the amount of greenhouse gas in the atmosphere will keep going up. A bath tub doesn’t empty because you put less water in it each year – you have to pull the plug out.

Climate Analytics says emissions are likely to peak this year but how fast they decline depends on policies (Photos: Climate Analytics)

4.When will the loss and damage fund start spending?

Before rich nations agreed to a loss and damage fund at the end of 2022, they argued that it would take years and years to set up – too long to be useful.

After governments agreed on most of the details in 2023, 2024 may be the year they are proved wrong.

Regional groups are appointing their board members to the fund now.

Then the board needs to meet, agree policies, receive the money it’s been promised and start dishing it out.

What’s for sure is that there will be loss this year and there will be damage – droughts, heatwaves, storms and more. So the victims can’t wait.

5.Will countries firm up adaptation targets?

After two years of talks, at Cop28 this year governments agreed to draw up targets on adapting to climate change in areas like healthcare, food security and protecting nature.

They will now spend two years discussing whether there should be numbers attached to those targets and what those numbers should be.

Developing countries want the numbers – like a target to reduce adverse climate impacts on agricultural production by 50% by 2030.

But developed nations argue numbers can’t show how well you’ve adapted to climate change.

They will hash out this debate at Bonn in June and at Cop29 in Baku in November.

Seaweed farmers in Tanzania are having to move into deeper waters as seaweed-killing bacteria thrives in warming seas (Photo: Natalija Gormalova / Climate Visuals Countdown)

6.Will governments get rid of fossil fuel subsidies?

Since 2009, governments have kept promising to get rid of subsidies for fossil fuels – but not really doing so.

At Cop28, a dozen nations including France and Canada joined a coalition to try and finally turn this promise into action.

They committed to drawing up an inventory of their fossil fuel subsidies by Cop29 in November.

Inventories can lead to action. When a Dutch inventory revealed they were spending $40bn a year subsidising fossil fuels, protesters braved water cannons to block off the country’s parliament, rocketing the issue up the agenda. Will the same happen elsewhere?

7.Will coal-to-clean deals keep disappointing?

Just energy transition partnerships (Jetp) faced a brutal reality check in 2023, as investment blueprints were finally unveiled.

Rich countries are offering most of their money as loans not grants. Ambitious plans to switch off coal plants early in South Africa, Indonesia and Vietnam are now much more uncertain as a result.

As the money starts flowing in 2024, the implementation of the first few projects should give a flavour of how effective and just the transition will be.

The energy transition deal aims to wean Indonesia off coal, which now takes up nearly half of the country’s electricity mix. Photo: Kemal Jufri / Greenpeace

8.Will new treaty target plastic production?

Government negotiators are currently debating a draft of a new plastics treaty, which they hope to finalise by the end of 2024 – after meetings in Ottawa in April and Busan at the end of November.

One option being fiercely debated is whether to set limits on the amount of plastic each country can produce.

While the majority of European and African countries want limits, the US and Saudi Arabia are resistant.

Plastics are made from oil and gas. With electricity systems and vehicles transitioning to renewable electricity, oil and gas companies see plastics as a lifeline which this treaty could take away.

9.How will companies prepare for the EU’s carbon border tax?

Many developing countries have long seen the European Union’s carbon border tax and elements of the USA’s Inflation Reduction Act as unfair protectionist trade measures, dressed up in concern for the environment.

These complaints were high-profile at Cop28 – with China and others trying to get them put on the official agenda. The United Nation’s trade chief – Costa Rica’s Rebecca Grynspan – recently echoed these concerns and they’re likely to keep rising up the agenda in 2024.

The EU’s carbon border tax incentivises companies making certain polluting products outside of the EU to clean up their manufacturing – or at least to say they’re cleaning up. As the 2026 start date for the tax nears, we expect more stories about companies greenwashing to lessen their tax burden and about the impact of the tax on ordinary people in developing countries, aluminium workers in Mozambique for instance.

Bratsk aluminium smelting facility in Russia will be affected by the EU’s border tax (Photo credit: UC Rusal/WikiCommons)

10.Will carbon markets gain integrity?

Carbon markets – and the voluntary one, in particular – are facing a credibility crisis. Scandal after scandal has put the spotlight on the wildly exaggerated claims and environmental and social issues of many projects. Demand has slowed down as a result.

The Integrity Council for the Voluntary Carbon Market – a new regulator-like body – is trying to steer buyers away from dodgy offsets and onto quality ones. It is expected to apply its quality label on the first batch of credits at the start of the new year.

After talks collapsed at Cop28 earlier this month, Article 6 negotiations will resume in Bonn in June. The US and EU are at loggerheads. Another bitter battle seems likely.

The post Ten climate questions for 2024 appeared first on Climate Home News.

Talks over Article 6.2 of the Paris Agreement – allowing for bilateral deals – collapsed in Dubai following a bitter fight over integrity between the European Union and the United States.

But willing countries can still move ahead with agreements in a vacuum that is increasingly being filled by independent certifiers from the voluntary market. Some observers are raising questions on whether they are fit for purpose.

Transatlantic fight

When the EU led a push at Cop28 for tighter controls over the bilateral exchange of carbon credits, one of its main goals was to restrict the role of operators from the voluntary carbon market.

In the year leading up to the summit, criticism of the market, which sells offsets mainly to corporate emitters, intensified. The climate credentials and the social and environmental integrity of several of its projects were being questioned. The nascent mechanism should draw a blank slate – the EU argued – and rely on a new standard directly supervised by the UN.

US Climate envoy John Kerry is a major proponent of carbon markets. Photo: COP28 / Christophe Viseux

The US went into the talks with a polar opposite vision. It wanted a light-touch approach built on the existing voluntary standards, accepting their requirements and using their infrastructure, according to a leaked EU memo prepared before Cop28 and first reported by The Lever.

The two forces clashed during deeply divisive marathon negotiations in Dubai, failing to find common ground. “Views have become more polarised,” said Pedro Martins Barata, an expert at EDF and a former carbon markets negotiator. “There’s more dissent on an almost philosophical level on what carbon markets should be like.”

After no deal

As the summit drew to a close, the Cop presidency put a ‘take it or leave it’ text on the table. It contained provisions the EU and other groups found unacceptable and was roundly rejected. Negotiators will try again to land a deal at Cop29 next year.

In the meantime, countries can still go ahead with bilateral deals under an initial rulebook agreed two years ago in Glasgow. “Nothing that happened in Dubai prevents countries from moving forward and some will certainly do so,” said Martins Barata.

Switzerland is developing projects with Ghana, Thailand and Vanuatu that will help achieve its climate goals. Singapore inked a similar deal with Papua New Guinea during the summit.

How Russia won a ‘dangerous loophole’ for fossil gas at Cop28

The political stalemate has opened up a big opportunity for players from the voluntary market. They are expected to take a leading role in filling the regulatory gap, experts told Climate Home.

“If a voluntary standard or its projects are given preference by certain countries, it will be a significant stamp of approval and could generate lots of investment,” said Jonathan Crook from Carbon Market Watch.

Voluntary market eyes opportunity

Some are wasting no time. Singapore, a pioneer in bilateral offsets, is partnering up with Verra and Gold Standard, the leading carbon credit registers. Their goal is to create a “playbook” with rules and procedures for countries to use existing carbon credit programs to achieve their climate plans under Article 6.

Hugh Salway, a senior director at Gold Standard, sees an important role for existing operators to speed up the implementation of deals. “A government can create its standard which would take time to develop and would be complicated to maintain,” he told Climate Home. “Or it can use our standard which is already set up with rules, methodologies, and auditors.”

‘Car without wheels’: Adaptation playbook lacks finance target

Another register, the Qatar-based Global Carbon Council (GCC), is also working with a series of credits-producing countries, including Oman and Ghana. They are looking to sell article 6.2 offsets in a first-of-its-kind auction at the beginning of 2024.

“We have been doing this for years, we have the necessary capacity to make it work,” said Kishor Rajhansa, chief operating officer of GCC. Limiting the role of the private sector “would kill off the potential of article 6.2,” he added in an interview at Cop28.

Integrity concerns raised

But some observers are concerned by an outsized influence of existing standards given their chequered record.

Some flagship projects certified by Verra have come under fire for making exaggerated climate claims and for causing alleged environmental and human rights violations. The GCC has been accused of breathing new life into offsets that hardly make any difference to global emissions and would not be accepted anywhere else.

Using voluntary market systems “may simplify things, but it raises many questions about how suitable it is, both for countries and the climate, given all the issues that have been flagged,” said Carbon Market Watch’s Crook.

This article was updated on 20/12/24 to add that the leaked EU memo was first reported on by The Lever.

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The Paris Agreement establishes ways for countries to “voluntarily cooperate” to meet their climate targets by allowing emission reductions and removals to be traded.

In Dubai, negotiators will finalise the architecture of a new mechanism allowing countries to sell offsets to other governments, companies and individuals under Article 6.4.

It comes at a pivotal time. The voluntary carbon market has faced more intense scrutiny than ever this year with report after report casting doubt over its integrity. But for many, carbon credits remain a valuable tool to channel much-needed finance to developing countries.

The stakes are high for the new system to get it right and correct problems with existing systems. We outline four critical questions for the outcome from Dubai.

Which activities are eligible?

Deciding which activities can produce credits is an important and fraught question.

If the criteria are too restrictive, countries may struggle to obtain any meaningful financial support from the mechanism. Too broad and projects with questionable climate credentials, or other significant environmental and social concerns, will undermine their credibility.

Over the last year, the UN’s Article 6.4 supervisory body has been evaluating the eligibility of carbon removals: activities that take carbon dioxide out of the atmosphere and store it. These can be nature-based, such as planting trees, or engineering-based, like machines to suck CO2.

A Direct Air Capture (DAC) plant operated by Climeworks in Iceland. Photo: Climeworks

Tensions emerged last May when an internal briefing note drafted by the UNFCCC secretariat advised against including technological solutions describing them as “unproven” and potentially risky.

While the supervisory body distanced itself from the document, it angered the industry which responded by flooding the consultation process with submissions putting their case forward.

It worked. The final recommendations, agreed upon after several extended meetings, do not directly encourage or discriminate against any type of activity.

Ministers still need to approve the package in Dubai. While a broad agreement is expected, certain groups may still have issues with it.

Papua New Guinea, representing the Coalition for Rainforest Nations, could be a blocker. It has long argued that credits issued for forest conservation under the Redd+ framework should automatically qualify for the new mechanism.

Most countries and experts disagree. “The intention of the Redd+ framework was never to generate credits”, says Pedro Martins Barata, a carbon markets expert at EDF and a former negotiator. “That mechanism is much less stringent. They should go through the same process of methodology submission and independent evaluation as all the other activities.”

Are the reductions additional and permanent?

As credits are used by governments or companies to compensate for their polluting activities, each unit must represent a real emission reduction. This has been a fundamental and long-standing issue with many carbon offsetting projects.

Among other things, rules need to make sure the activities would have not happened anyways without the carbon finance (additionality) and that any CO2 removed does not re-enter the atmosphere in a short amount of time (permanence).

The Supervisory Body has tackled those policy issues in the recommendations sent to Cop28 for approval.

On additionality, the document says that projects will have to take into account all relevant legislation and produce a detailed analysis of investment barriers to demonstrate that emission-cutting activities would have not occurred without the mechanism.

Experts told Climate Home these provisions should be stringent enough.

A community ranger standing in a mangrove forest restored as part of a nature protection project in Kenya. Photo: Anthony Ochieng / Climate Visuals Countdown

On permanence, concerns have been raised.

“The text leaves open the question of for how many years a credit is guaranteed to correspond to an actual removal without giving specific thresholds,” says Martins Barata, adding this should be established in further work.

Another contentious point is the possibility of relieving project developers of the duty to carry out permanence monitoring after they stop issuing credits. The risk is that, for example, protected trees could burn in a fire unleashing the stored carbon into the atmosphere.

The recommendations indicate this exemption can apply when a “negligible” risk of the emission removals being reversed is demonstrated.

Jonathan Crook of Carbon Market Watch argued the text could be tightened. “How do you define negligible risk? What sources will be accepted as evidence? These are all open questions that may cause potential issues,” he added.

What happens if a country wants to take back credits?

Article 6 has a provision to ensure that emission reduction activities are not counted twice, by both the seller and buyer, towards their respective climate plans. When a country transfers a credit to a government or a company it needs to deduct that from its greenhouse gas inventory.

As a result, countries need to strike a balance between attracting revenues and being able to meet their own climate plans.

But a contested rule could give struggling governments a way out. In Dubai, negotiators will be discussing whether countries may be allowed to withdraw any credits that have been previously authorised. This could also apply in cases where the projects are causing environmental and human rights violations.

Carbon Market Watch’s Crook said this provision poses a substantial threat. “If a country can revoke credits that have already been traded, and potentially used, then you have a serious risk of double counting,” he told Climate Home. “If revocations are allowed, at the very least they shouldn’t apply to credits already sold.”

Will the new market rescue the reputation of carbon credits?

A lot is riding on the Article 6.4 mechanism because of the impact it can have on the wider carbon offsetting world.

Crook said it needs to set a “high bar”, sending a strong message to the voluntary market that there needs to be improvements.

The new mechanism is set to include some positive elements that currently don’t exist in carbon markets used by corporations.

Already agreed rules have established that 2% of any credits traded in the new market will be automatically cancelled. This means that offsetting will not just be a zero-sum game, shifting emissions cuts from one place to another.

But when it comes to individual projects, experts said it was too early to say if they will have high integrity.

“You can have the best rules but it all comes down to implementation,” said Martins Barata. “They’re off to a good start. But come back to me when they start approving projects”.

If the recommendations are approved in Dubai, the new mechanism may start issuing credits towards the end of 2024.

Paradoxically, the first batch of credits to be traded may pose some of the biggest integrity risks. A process to transition credits created under the Clean Development Mechanism (CDM), the now-defunct UN carbon market established through the Kyoto Protocol, into the new mechanism is well underway.

CDM credits have been widely criticised for failing to contribute to real emissions reductions and causing human rights violations.

The post Four questions for Cop28 to settle about a global carbon market appeared first on Climate Home News.

Blue Carbon plans to take over forested areas the size of the United Kingdom and sell carbon credits from their conservation under a mechanism established by the UN. The UAE firm, chaired by a member of Dubai’s royal family, has been on a deal-making spree with African governments to make that happen.

The 58-year-old Italian is no forestry expert, but – he says – he was tapped by the company right after its launch a year ago because of his decades-long technology experience. In Dubai, Landi is known as the owner of a cybersecurity firm devising fully encrypted phones.

In his native country, Landi is a wanted man. He was convicted in two separate trials for a bankruptcy fraud that sank one of Italy’s largest telecommunications companies and left over 2,200 people without a job nearly 15 years ago.

Landi’s advisory role in Blue Carbon is likely to fuel concerns over the integrity of a company bidding to become a large player in a sector already plagued by environmental and social risks.

Blue Carbon did not respond to emailed questions. After Climate Home contacted the company, Landi emailed the reporter in a personal capacity and agreed to a video call. He rejected the legitimacy of the court judgments against him, alleging that Italian judges ruling over his case were corrupt.

Bankruptcy fraud

Samuele Landi was the founder and chief executive of Eutelia, an Italian company providing landline and internet services to millions of users across the country in the early 2000s.

The firm, which had ballooned in size through acquisitions, seemed set on a meteoric rise. But in 2008 cracks started to appear. Drowning in debt, Eutelia asked the government to place most of its workers in a state-funded job retention scheme while trying to restructure its activities.

But at the same time, according to court records, Samuele Landi and other senior executives illicitly moved funds worth dozens of millions of euros outside of Eutelia and into shell companies mainly based outside of Italy.

Shades of green hydrogen: EU demand set to transform Namibia

Eutelia went bankrupt. By the time Italian police moved in to arrest Landi in mid-2010, he had relocated to Dubai. At the time Italy had no extradition treaty with the UAE. Landi told Climate Home News he did not move to Dubai out of fear of being arrested but because he was looking for more freedom.

Landi never returned to Italy. Two separate trials against him and other executives went ahead in his absence. In one Samuele Landi was handed an 8-year prison sentence on bankruptcy fraud charges in 2020. In a second one, stemming from the bankruptcy of a company linked to Eutelia, the court of appeal in Rome sentenced him to 6 years and six months in prison at the end of October.

Landi said he had referred the first case to the European Court of Human Rights, claiming it was an unfair trial. He said he is going to appeal against the second sentence to the Italian Supreme Court. “There is no evidence. I did not steal one single euro”, he told Climate Home.

Liberian diplomat

While his legal troubles rumbled on in Italy, Landi started a new life in Dubai. He set up a cybersecurity company and became a diplomat, after being appointed as consul general in the UAE for the African state of Liberia.

Landi told Climate Home he “developed the diplomatic relations between the Liberian and the UAE governments”, which resulted in the construction of roads, hospitals and sports centers in the African nation over the last few years.

It is through this role that he first came in contact with people from Blue Carbon. Landi said he accompanied a delegation from Liberia to a meeting with Sheikh Ahmed Dalmook Al Maktoum, a member of the Dubai royal family and chairman of Blue Carbon. “When they formed the company a year ago they asked me to be their advisor”, Landi said. “I help them with information technology. Sometimes they call me to make evaluations on IT solutions.”

A screenshot from the Blue Carbon website

Liberia is one of the African countries that have signed a raft of memorandums of understanding with Blue Carbon in the run-up to Cop28, alongside the governments of Kenya, Angola, Zimbabwe, Zambia and Tanzania. Landi said he was not directly involved in the negotiations between Blue Carbon and Liberia.

Blue Carbon’s African scramble

The deals, which are not yet definitive, could see the UAE firm gain control over more than 30 million hectares of forests across the countries. In Zimbabwe alone, it is set to secure rights over a fifth of its total landmass.

Blue Carbon plans to set up forestry protection schemes, produce carbon offsets on a never-seen-before scale and sell them to polluting governments and companies.

The firm is looking to operate under a new mechanism established by Article 6 of the Paris Agreement, which is set to transform carbon markets. Blue Carbon wants to trade a specific type of credit, internationally transferred mitigation outcomes (ITMOs), that can be used by governments to achieve emission reduction goals set out in their nationally determined contributions.

 

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Blue Carbon’s foray into Africa has prompted numerous concerns.

Alexandra Benjamin, forest governance campaigner at Fern, calls Blue Carbon’s plans “a new scramble for Africa”.  “These deals, mostly struck under a veil of secrecy, aren’t just bad news for the climate, but for the lives and livelihoods of rural African communities, whose rights are threatened by them”, she added.

Civil society and indigenous groups fear communities will be forced to make way for the projects, losing control over land that constitutes their primary livelihoods. A number of forest protection offsetting projects – unrelated to Blue Carbon – have been suspended recently following allegations of abuse and forced evictions.

Exposed: carbon offsets linked to high forest loss still on sale

The second concern is that little money would actually end up in the hands of African governments and local communities, contrary to what the mechanism is set up to achieve.

Finally, there are worries that the unprecedented volume of credits created could end up greenwashing oil and gas operations without providing any meaningful emission reductions. Forestry offsetting programs have been hotly debated after a series of articles and scientific studies cast doubts over their climate integrity.

COP28 plans

Blue Carbon has said the deals will bring “vital environmental impacts” and “a transformative wave of economic opportunities” for the African countries signing on. Sheik Dalmook Al Maktoum told the Zimbabwean government the programme could bring $1.5 billion of climate finance into the country.

“Beyond the immediate goal of carbon emissions reduction, the heart of these carbon projects pulsates with the intent to bring about tangible improvements at the grassroots level,” the company added when announcing the agreement in Harare.

The company has indicated that more details about its carbon credit plans will be revealed at Cop28 in Dubai. It told CNN that it would present its deals at the climate summit as a “blueprint” for carbon trading.

Landi said he has no intention to take part in Cop28. Nearly a year ago he moved to a barge moored in the international waters off the Arabian coast with the goal to set up a so-called decentralized autonomous organisation.

“The idea is to create a place where people can stay without being subjected to the matrix,” he told Climate Home. “No one can say which kind of insects or fake meat you have to eat, which kind of injections you have to get. A libertarian state is very important.”

The post Meet the Italian fugitive advising Emirati start-up Blue Carbon appeared first on Climate Home News.

In the launch video, a calm female voice makes a plea over jangly guitar. “Join us to accelerate net zero with more transparency, liquidity and efficiency,” she says, as a headless businessman fondles a hologram of a globe.

Two months on, this call has been largely ignored. Climate Home’s analysis of trading data suggests most days see no trading at all. 

Carbon credit traders and experts blamed a lack of incentives to buy, administrative mistakes and muddled government priorities. 

A divisive solution

A carbon exchange allows the trade of carbon credits. One company takes carbon dioxide out of the atmosphere and another pays to take credit for it.

Carbon credit supporters argue they are a way of financing climate action which wouldn’t otherwise take place while critics say their real-world benefits are overstated and they offer polluters an excuse to keep emitting.

The European Union and China’s exchanges are among the biggest in the world. President Widodo predicted in September that Indonesia’s could soon rival them.

Shades of green hydrogen: EU demand set to transform Namibia

But the exchange has got off to a very slow start. Of the 19 trading days that Climate Home was able to obtain data for, there was no trading on 17 days.

This data was gleaned from IDX statements and from some of its daily reports, which regularly vanish from its website. IDX did not respond to repeated requests for the full data.

The price of carbon has remained the same since the launch, suggesting it is an inactive market.

Low demand

Demand for the credits is low. This is reflected by the price of carbon – just RP 69,600 ($4.50) per tonne of carbon dioxide.

Demand could be boosted if Indonesia implements a scheme to cap company's emissions and tax them on any excess.

The idea is to allow them to avoid tax by buying another company's unused emissions allowance or by buying carbon credits.

The government initially suggested a tax would be set up in 2022 but now says it will be set up next year or the year after, saying carbon markets must be set up first.

France, Kenya set to launch Cop28 coalition for global taxes to fund climate action

The voluntary market has been launched and the compliance market will begin next year, when the cap and tax is piloted on coal-fired power plants.

The government has given out mixed messages on the extent to which companies will be able to buy voluntary credits to cover their cap and tax obligations. The energy ministry wants a limited role, while the environment ministry wants a more expansive one.

Suppliers kept out

All that has dampened domestic demand and the regulations to allow foreign companies to buy credits have yet to be put in place.

Dessi Yuliana is the director of CarbonX, a company which buys and sells credits. She told Climate Home that this is because of pending international trading regulations and divided priorities in the government.

While some groups in government are keen to attract foreign investment the main administration priority is ensuring that carbon credits issued are counted towards national carbon reduction commitments, Yuliana said.

So far, the exchange lacks sellers as well as buyers. The government has authorised just three companies to sell credits.

UK aid cuts leave Malawi vulnerable to droughts and cyclones

Fifiek Mulyana from PWC Legal Indonesia said this was because, with more regulations on carbon trading to be issued soon, many companies are still in a “wait and see situation”.

One Indonesian carbon credit seller, who did not want to be named, complained that regulations are often vague and inflexibly enforced.

A lack of expertise and experience needed to swiftly assess projects credibility is a particular problem, they added, with only four verification and validation bodies signed up.

With carbon credit projects plagued by accusations of overcounting and human rights abuses, the role of verifiers will be crucial.

“A lot of investors basically use carbon credits as a form of green virtue signaling," says Bill Sullivan, a mining and energy lawyer with Christian Teo & Associates.

“Accordingly,” he added, “any scandals in this sector could undermine the whole point of carbon credits as far as they are concerned and, so, make buying carbon credits must less attractive for them."

The post Slow start for Indonesia’s much-hyped carbon market appeared first on Climate Home News.

Encouraging one party to continue pumping greenhouse gases into the atmosphere, while paying another to do the opposite has been a giant diversion: side-tracking us from decarbonising our economies and lives.

One scandal after another has engulfed carbon offset schemes. Their credibility has eroded as evidence has mounted that offset projects fail to deliver the climate gains that they promise.

An investigation earlier this year found that 90% of the rainforest protection schemes approved by the world’s largest carbon offsets standards agency, Verra, were “worthless” from a climate perspective. This point was reinforced by a new study from UC Berkeley, which found that the companies had greatly overstated the emissions their projects saved.

Inherently flawed

Another study investigating the largest forest offsetting schemes by companies, governments and the World Bank reached the same conclusion: all had inflated their impact.

The real problem with carbon offsetting schemes, however, lies less with their execution than with their inherent flaws.

This is especially true of land-based offsetting – where polluters claim the effects of their fossil fuel emissions have been neutralised because they’ve paid for trees to be planted, improved farming methods, or temporarily locked carbon into the land by another means.

Exposed: carbon offsets linked to high forest loss still on sale

These schemes are predicated on the promise of sucking vast amounts of carbon out of the atmosphere in the future: a future laden with variables and uncertainties. By contrast, every ton of emissions released now will certainly contribute to the floods, heat waves, wildfires and other climate-fuelled chaos unfolding across the planet.

From global leader to global wrecking ball?

Yet just as the evidence is hardening around land-based offsets’ fundamental flaws, the European Union (EU) could be on the cusp of agreeing a law that would bolster the market. This would signal a serious reversal of the EU’s status as a global climate leader.

EU countries hammer out joint stance for Cop28 climate summit

The EU chose to exclude forest offsets from its Emissions Trading System (ETS), because of concerns about the problems plaguing the voluntary carbon offset market – that projects could be manipulated to overstate their climate impact.

Now, with potentially disastrous consequences, conservative EU lawmakers are paving the way to reverse this.

Their proposed EU Carbon Removal Certification Framework (CRCF), aimed at establishing new standards for calculating carbon dioxide removals from forests, farms, or yet-to-be developed projects for industrial carbon capture, will also include forest offsets.

Cooking the books: cookstove offsets produce millions of fake emission cuts

The CRCF would encourage private, self-regulating agencies like Verra to create tradable carbon credits based on agreed standards, allowing the use of carbon removals to offset ongoing emissions by the entities that buy the credits, rather than ensuring companies are obligated to both reduce their emissions and pay for activities that remove carbon.

This dangerous proposal, which is currently before the European Parliament, would reward offsetters with an EU stamp of approval. It would also create the false impression that the use of tradable carbon credits, developed under new EU rules and misleadingly described as “carbon removals”, will result in lower total emissions.

The opposite is more likely to occur.

A stark choice

Like other speculative markets, from crypto currencies to derivatives, the carbon offset market is plagued by cycles of boom and bust. It is currently in a swoon. As the risks of being held liable for false claims have risen, many companies have stopped buying. The price for land-based carbon credits has fallen tenfold since the start of 2022.

Those championing land-based carbon offsetting as a climate solution are trying to resuscitate the carbon offset market. A major reason, as a new report co-authored by Kathleen McAfee asserts, is that carbon trading has become a self-perpetuating industry rife with conflicts of interest and a bias for producing success stories.

In their quest to revive their industry, the carbon marketeers seem to have found powerful allies among a sizeable number of Members of the European Parliament (MEPs).

This week, the European Parliament’s Environment Committee will vote on the CRCF. If MEPs are serious about tackling the climate emergency, then they must call for the EU to ban the sale of carbon credits which would enable climate action to be delayed.

As the world has just endured the hottest July, August and September on record, it is clear that the EU faces a stark choice. It can either give a false climate solution a new lease of life – or face up to the reality that offsets simply don’t work.

Dr Kate Dooley is a Research Fellow in the School of Geography, Earth and Atmospheric Sciences at the University of Melbourne. Dr Kathleen McAfee is Professor Emerita in International Relations at San Francisco State University.

The post The EU is about to revive a failed climate solution appeared first on Climate Home News.

Its supporters claim it has been doing exceptionally well. The Cambodian government hailed it as the “most successful” community-based forest conservation scheme on the carbon market and a climate solution.

Satellite images tell a different story. Tumring is experiencing dramatic deforestation, losing over 22% of trees in the project area since the scheme began. The Cambodian government does not account for this loss in official monitoring reports.

Nor is this an isolated case. In a joint investigation, Climate Home and Unearthed, Greenpeace UK’s investigative journalism unit, found similar discrepancies in two Brazilian projects, based on data from two different satellite monitoring platforms. Companies like Uber, ArcelorMittal and Marathon are still using credits from these three projects to offset their emissions – and there is nothing to stop them.

It raises serious questions for Verra, the largest standard setter in the voluntary carbon market, which oversees the projects.

Project owners disputed the findings, while Verra said it “is committed to refining and improving its methodologies based on the best available science and data”.

Mind the gap

By protecting trees the Tumring project generates carbon credits – or offsets – which are then used by polluters to compensate for their own emissions elsewhere. Texan oil firm Marathon is a major buyer, while the Cambodian and Korean governments, project partners, are planning to use a portion of the credits as part of their national net zero plans.

But the emissions avoided through the project are likely to be overstated given the deforestation rate appears to be higher than claimed. Project owners recorded just 3,450 hectares (ha) of forest loss in monitoring reports between 2015 and 2019, the most recent data submitted. Our analysis using the online tool Global Forest Watch showed forest loss was four times higher in that period, at 14,000 ha.

Climate Home and Unearthed looked at offsetting projects after a source raised concerns about apparent discrepancies between what project owners were declaring in their monitoring reports, and what could be seen through satellite images.

The team compared project filings with data developed by the University of Maryland and made available on the Global Forest Watch online platform. A second source of satellite data, Forobs, developed by the European Commission’s Joint Research Centre, was used to check the findings. This showed a similar trend.

Redd+ weaknesses

Verra is a major proponent of the UN-backed scheme Redd+, which stands for “reducing emissions from deforestation and forest degradation in developing countries”. It is designed to protect areas at risk of being deforested. Companies can buy carbon credits from these projects to discount their own emissions.

Critics have long raised concerns about weak quality control of this kind of project. An investigation published by The Guardian and Die Zeit earlier this year alleged more than 90% of Verra’s Redd+ projects were not driving emission reductions, largely because developers exaggerated the threat forests were facing. Verra disputed the findings.

Climate Home and Unearthed found that, in addition to inflated baselines, underreporting of forest loss throughout a project’s lifetime and light-touch regulation can lead to far too many credits being generated.

“The findings point out deep flaws in the forest carbon offset mechanism”, said Souparna Lahiri, a climate adviser for the Global Forest Coalition. The fact deforestation is increasing, instead of going down, “is deeply concerning” and “strengthens our conviction that the mechanism of offsetting cannot be fixed”, he added.

Self-reported deforestation

Each carbon credit represents a ton of CO2 kept from being released into the atmosphere by protecting trees. If a larger portion of forest is cleared than project developers claim, the volume of emissions they avoid will be overstated. When used by companies or governments to compensate for their emissions elsewhere, these credits would have a negative climate impact.

Verra says its role is to make sure that, when a company does invest in a carbon project, it has integrity and meaning, verified by the best standards and science. Monitoring reports are a crucial part of how progress is measured, since they disclose setbacks such as rising deforestation.

Monitoring reports are audited by third parties, then submitted publicly on a project’s page, alongside a host of other documents. In practice, they can be difficult for the public to understand and evaluate. There’s no standardised way to monitor projects.

The way the Cambodian government and its partners monitor deforestation in the Tumring area is opaque. They use national land cover data produced by Cambodia’s environment ministry that is not available publicly. It has a low tree cover threshold, meaning an area needs as little as 10% of trees to be counted as forested. To put it another way, you could chop down 90% of tree cover in a previously untouched section and still claim the forest was intact.

Cambodia has one of the highest deforestation rates in the world, according to Global Forest Watch. Photo: Un Yarat / US Embassy Phnom Penh

The Cambodian government has previously tried to discredit independent analysis showing that deforestation is higher in the country than state records.

Wildlife Works, which worked as a technical consultant for project validation and verification, said it “had no connection to the project” since completing the job and directed questions to the Cambodian government.

The Cambodian government did not respond to a request for comment. The Korean government told Climate Home and Unearthed that only credits from 2021 onwards would be used to offset national emissions.

Industry transparency

The Integrity Council for the Voluntary Carbon Market, an independent governance body for the industry, has called for greater transparency, urging offsetting projects to make all their information accessible to a “non-specialised audience” so a project’s climate impact can be better assessed.

Gilles Dufrasne, from the NGO Carbon Market Watch, said: “Current practice on the market simply isn’t up to standard and this lack of transparency needs to be plugged. More credible, and transparent, use of forest monitoring data is part of this.”

Sylvera, a carbon offsets analytics provider, noted in its 2022 State of Carbon report that the majority of the company’s D-rated projects, of which Tumring is one, “grossly under-reported the deforestation in the project area and have exceeded the baseline emissions”.

Samuel Gill, Sylvera co-founder and president, told Unearthed and Climate Home: “The technology to largely resolve issues like underreporting or overcrediting already exist and are being deployed.” He added: “These improvements take time to filter through the system and in the next few years we should see considerable uplift in project quality as a result.”

In theory, Verra already has various mechanisms to prevent worthless credits linked to deforestation from flooding the market and to punish project developers responsible for any irregularities.

Project owners are required to set aside in a “buffer pool”: a portion of credits that cannot be traded on the market. These act like an insurance policy: if trees meant to be protected end up being felled or burned in a fire, credits in the pool should be cancelled to ensure the integrity of the credits previously sold for offsetting purposes.

Additionally, complaints may trigger a project review and, if a developer is found to have issued too many credits, it can be sanctioned or made to pay a compensation.

But carbon market experts have doubts over the effectiveness of the system, saying the size and use case of buffer pools may be too limited. Only one project has ever had credits from the buffer pool cancelled, according to the Verra register.

Recurring problem

Over 17,000 kilometres away from Tumring, the Rio Preto-Jacundá Redd+ project is meant to achieve the same goal and protect an area of the Brazilian Amazon state of Rondonia.

The project has sold more than one million credits, with big name buyers including German utility Entega, Bank of Santander’s Brazilian arm, and Brazilian financial services giant Banco Bradesco.

From when it began in 2012 to 2020, the latest year available in monitoring reports, the project recorded 5,884 ha of loss, with a sharp increase from 2016. Global Forest Watch data shows it lost 8,200 ha of forest – 33% higher than the numbers declared by the project owner, Biofílica Ambipar.

The scheme’s “without project” scenario, to show what would happen under business as usual, predicted 9,922 ha of loss in the same period.

‘On watch’

Sylvera, an offsetting rating agency that independently checks and verifies projects using a combination of satellite imagery and machine learning, has placed the Rio Preto project “on watch”, after noting significant and increasing deforestation within the project area.

Biofílica Ambipar, which runs the Rio Preto scheme, said it “works continuously to monitor, identify and report any illegal activity to the Brazilian public environmental authorities”.

The company says it relies on the Prodes system to monitor forest loss in the area. Created by the National Institute for Space Research in 1988, Prodes is also used by the Brazilian government for its official annual deforestation reports.

“According to the Prodes system, the deforestation rates in the region are lower than those informed by Global Forest Watch, which is not as accurate in classifying deforestation,” Biofílica Ambipar said.

Prodes is used to detect large-scale changes in primary forest, but it can miss smaller changes. The system uses satellite images that only detect clearcut logging of more than 6.25 hectares – an area equivalent to nearly nine football pitches – missing smaller-scale forest loss. The University of Maryland data, made available through Global Forest Watch, captures losses as small as 0.1 hectares, while also picking up forest degradation.

Still selling credits

Another Biofílica project was abruptly cancelled last year after part of it was legally deforested by the landowner. But carbon credits generated by the scheme are still on the market.

The Maísa project covered over 25,000 hectares of forest in the state of Pará controlled by a family-owned agroindustrial company, which runs eucalyptus, Brazil nuts and açaí plantations.

When the project began in 2012, the firm agreed with Biofílica to protect the trees and invest in better forest management practices in exchange for a share of the profits from the sale of carbon credits.

Since then, polluters including steel giant ArcelorMittal have bought hundreds of thousands of its credits.

But starting from last year the landowner began clearing increasingly larger areas of the forest in what Biofílica says was a breach of their agreement.

The project developer decided to stop the project, but it is still listed on the Verra register and its credits continue to be used for offsetting purposes. Over 38,000 credits have been retired since the project was stopped by Biofilica – more than 4,000 of them purchased by Uber to compensate for the emissions spewed by its fleet of cars in Central and South America.

Uber said that it “only invests in projects certified, traceable, and auditable by Verra, the United Nations, Gold Standard, and Climate Action Reserve [other verifying bodies for offsetting schemes] after a thorough investigation”.

Lure of agribusiness

Biofílica told Unearthed and Climate Home that the company had made it a policy to stop selling credits from the Maísa project as soon as it became aware of the legal logging. It added that “the project is currently in the process of being terminated and audited in line with Verra procedures.”

Asked what would happen to old credits in the project that are still available on the market through third-party sellers, Biofílica’s spokesperson said: “It is important to highlight that the credits that are still being sold by traders and brokers refer to credits verified in previous years, when there was still no legal deforestation scenario in the area; that is, they were audited and verified credits.”

However, when trees are cut down, the carbon stored in them is released back into the atmosphere, no matter if they were originally protected, negating any potential climate benefit. Experts say good projects need to ensure the carbon they sequester or avoid will remain out of the atmosphere for at least 100 years.

When asked what happens to credits in projects that are cancelled, a Verra spokesperson said projects are required to deposit a percentage of their credits into buffer pools which can be drawn on if a portion of the forest is lost.

Maísa’s buffer pool contains 131,600 credits which have currently been placed on hold, meaning Verra still needs to decide their fate. That is only 20% of the total credits put on the market for offsetting purposes, most of which have already been used.

Biofílica spokesperson suggested that what happened with the Maísa project was a sign that Redd+ projects can struggle to compete with the economic opportunities offered by agricultural production in the Amazon.

They said: “Maísa shows the reality of the Amazon region and illustrates the difficulties that all actors interested in conservation face in making carbon projects financially viable.”

The post Exposed: carbon offsets linked to high forest loss still on sale appeared first on Climate Home News.

While it no longer funds the extraction of fossil fuels, the EU backs gas pipelines in Eastern Europe using money generated from taxes on pollution.

When polluting European companies are taxed through the EU’s emissions trading scheme, some of the money goes to the Modernisation Fund.

The fund’s slogan is “accelerating the transition to climate neutrality” and it is aimed at ten Eastern European countries which are among the bloc’s poorest.

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But it is giving €86 million ($92m) to the Tuzla-Podisor pipeline which will transport gas from a new field in Romania’s Black Sea to three Romanian gas power plants and perhaps to Romania’s neighbours soon too.

‘Transition fuel’

Justifying the funding, an EU official told Climate Home that the gas will help Romania get off coal and “as such can contribute to emissions reductions”. 

They added that the investment only covers gas transmission capacity “that corresponds to the amount of gas that can be estimated to replace coal-fired electricity generation”.

But critics told Climate Home that the project would increase emissions and damage the EU’s reputation on climate.

Simon Dekeyrel is an analyst at the European Policy Center. He said the EU’s backing for the project is “a negative development, especially since this pipeline is linked to the development of  a new gas field [Neptun Deep] in the EU”.

He added that the idea of the emissions trading scheme is “putting a price on greenhouse gas emissions” and “if the money obtained is then spent on the development of a new gas field within the EU, that is obviously incompatible with that core idea”.

Leaky pipelines

Romanian Greenpeace campaigner Alin Tanase said that gas pipelines often leak methane, a particularly damaging greenhouse gas.

A recent investigation by the Clean Air Task Force found that of nine European countries studied, Romania had a particular problem with methane leaking from its gas infrastructure.

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Faten Aggad from the African Climate Foundation said the gas backing would further damage the EU’s climate credibility, already weakened from its decision last year to put gas in its list of green investments.

“While the EU is singing the phase-out song internationally, it is keeping options open to leverage them for self-interest,” she said. "There is no single meeting in Africa on energy transition that I attended where Europe’s hypocrisy isn’t pointed out."

The decision to back the pipeline was made in March by the fund’s investment committee, a group of 15 officials from the ten Eastern European beneficiary governments, three other EU member states, the European Commission and the European Investment Bank.

The minutes of the meeting when the investment was approved do not note any disagreement among the committee's members. The investment was approved by the European Commission.

Sliding in before the deadline

A spokesperson for the European Investment Bank (EIB) told Climate Home "the selection and submission of investment proposals rest entirely with and is the responsibility of" the Eastern European states that benefit from the fund.

The spokesperson added that the EIB has only a "limited and legislatively specified role in the Modernisation Fund". The bank does a technical check and financial due diligence.

The spokesperson said that Romania was so far the only country to ask for money for gas transmission projects.

It has also been granted €8m ($9m) for the Ghercești-Jitaru pipeline as well as €276m ($294m) towards two gas power plants in Turceni and Isalnita, on the basis they will replace coal.

The EIB itself, which is run by EU member states, loaned the Tuzla-Podisor pipeline developers €150 million ($160m) in 2018.

The following year, the bank announced it was phasing out support for fossil fuels to become a “climate bank” but, as it had already been announced, the support for this pipeline will go ahead. 

The pipeline could also win funding from the EU’s Connecting Europe Facility, as it will be unaffected by new regulations which mean that will stop backing gas pipelines next year.

The post EU uses pollution tax funds to back Romanian gas pipeline appeared first on Climate Home News.

Politicians, businesses, some NGOs and big philanthropy are trying to get an African Carbon Market Initiative off the ground, which would allow companies to buy carbon credits in exchange for continued emissions.

It’s become a major topic of controversy in the run up to the Africa Climate Summit this month. But Africa’s leaders should think twice before supporting this wolf in sheep’s clothing.

The idea is that some of the money paid by the corporations for these “carbon credits” – or more accurately, permits to pollute – would go towards projects in Africa that avoid or reduce emissions: renewable energy projects, or land and nature schemes that aim to capture carbon from the atmosphere.

But a number of key questions are being ignored – do they work for African people, the climate and development?

UAE pitches itself as Africa’s carbon credits leader

For western polluters, they are a silver bullet painkiller that allows them to keep pumping greenhouse gases into the atmosphere. But for Africa, they are a placebo drug that ends up making the pain of climate change far worse.

Africa is indeed right to demand climate funding from the global north, who caused the climate crisis which is devastating African people, economies, and nature in the first place.

But instead of signing up to a carbon market initiative that is full of booby traps, African leaders should use the opportunity to work together with others in the global south to interrogate where the real and essential money is for the critical role we play in protecting forests and nature, without which the Paris Agreement would fail?

Where is the money for the actions to reduce emissions and adapt to climate change that we need and deserve?

African leaders skirt over fossil fuels in climate summit declaration

A string of summits – the Amazon Summit last month, the Africa Climate Summit, the Three Basins Summit, and Cop28 – offer real opportunities for Southern leaders to drive forward financing options that aren’t merely set up to cover for the big polluters.

African leaders have three serious questions to ask about the African Carbon Market Initiative.

The first: will this cut pollution, or enable it? For global corporations, purchasing credits is the cheapest way to avoid real cuts and continue business as usual.

Take Delta Airlines: they claimed to be carbon neutral, in part down to the purchase of tens of millions of carbon credits per year. Meanwhile, they continue to operate 4,000 flights a day.

Calculations like this rely on the argument that a ton of carbon pumped out is equivalent to a ton of carbon avoided, or captured in forests or agricultural land. This is wrong.

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Fossil fuel emissions are permanent, but storing carbon in nature is fragile: forests burn down, loggers move in, and the carbon is released again. That means a hotter world: and for Africa, more droughts, floods and devastating storms. 

The second question Africa’s leaders must ask: when we follow the money, who wins? Two players benefit from carbon markets more than anyone else: fossil fuel companies, and the financial brokers who buy and sell credits with huge markups.

Fossil fuel giants see their product legitimised, because polluters can continue to burn it by buying pollution permits.

Carbon credit traders are in line for hefty profits too: one study found that some brokers sell credits for three times the price they pay to the project that actually created them.

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Because they profit from every trade, they’re incentivised to create, trade and speculate on as many carbon credits as possible – so a market claimed to be worth $100 could actually be due to a single $10 credit being traded ten times. African countries will be sorely disappointed when the actual flow of funds is well below the market value they’re promised.

The third question leaders need to answer: Will carbon markets promote development? What do African people gain from this? It won’t be the money they deserve: financial brokers pocket plenty of the cash before it reaches projects in Africa. And promises of economic development by the African Carbon Markets Initiative rely on exaggerated claims for job creation and income.

Indeed, since carbon markets were started more than two decades ago, initially with the Kyoto Protocol, there’s a large body of evidence showing offsetting schemes mean insecurity and land grabs.

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Planting new forests requires land, and so does flooding valleys for new hydropower projects.

In the Democratic Republic of the Congo, families were kicked off land they had owned and farmed for generations to make way for a carbon offsetting project for oil giant Total Energies.

Similar stories ripple through countries, like Colombia, who’ve had similar experiences. Which is why Indigenous communities from South America spoke out against carbon markets at Cop26.

Instead, Africa needs to take control of the discussion about how to finance our response to the climate crisis.

There is a lot at stake: adaptation costs in Africa as well as the costs for a clean energy transition and other measures to build zero-carbon societies will amount to hundreds of billions of dollars a year over the coming decades.

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We can’t afford to lock ourselves into the constraints of illusory and non-functioning carbon markets.

Africa is blessed with world-leading talent, the planet’s best sources of wind, sun, biodiversity and geothermal energy, and the ability to leapfrog other continents to the technologies of the future.

We should consider a new “polluter pays” funding mechanism, where polluting businesses would pay towards reducing emissions and adapting to climate change, where Africa defines its own needs.

The amount they pay would increase over time, to incentivise companies to stay within the limits of the Paris Agreement.

The money would boost African capacity for clean, resilient and affordable development led by local communities. It would remove the market brokers and middlemen and maximise money to projects.

We need a plan for debt cancellation, more domestic investment in renewables, an end to fossil fuel subsidies and investments, and a fair share of climate finance for Africa. Africa can’t afford another false solution to the climate crisis.  

Mohammed Adow is the founding director of Power Shift Africa, a Nairobi based climate change and energy think tank.

The post A wolf in sheep’s clothing: why Africa should shun carbon markets appeared first on Climate Home News.

The latest sign of that came on Monday when a coalition of major UAE energy and financial companies indicated its intention to buy $450 million of carbon credits generated in Africa by 2030.

It was one of the most highly-anticipated announcements at the first Africa Climate Summit taking place in Nairobi, Kenya, this week. Over 30 heads of state are joining nearly 25,000 delegates to drum up support for climate action on the continent.

But the summit organiser’s strong focus on instruments such as carbon credits to mobilise funds has attracted criticism from environmental groups.

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Thandile Chinyavanhu, Greenpeace Africa climate and energy campaigner, says “it is regrettable that the Africa Climate Summit is becoming a bazaar for carbon credit speculators and propagandists that serve to greenwash rather than reduce harmful emissions”.

“They are risky diversions from real climate and biodiversity action that requires ending fossil fuel expansion and industrial destruction of our ecosystems”, she added.

Carbon credits mega-deal

Powering Africa’s push for carbon credits is the African Carbon Markets Initiative (ACMI). Launched at Cop27, the group brings together nations including Kenya, Nigeria, Gabon and Western philantropies like the Rockefeller Foundation and Bezos Earth Fund.

Run by the American consultancy Mckinsey, the initiative aims to increase the number of carbon credits generated on the African continent from 16 million a year in 2020 to around 300 million by 2030.

Such large amounts of credits will be created only if there is enough interest from buyers, the initiative argues, so one of the initiative’s main task has been to secure early commitment from investors. Its biggest backer to date is based in the UAE.

During a panel event at the climate summit on Monday, ACMI announced a non-binding agreement to buy $450 of carbon credits from the UAE Carbon Alliance. Founded last June, this coalition includes the Mubadala sovereign wealth fund, renewable energy company Masdar and the UAE’s largest lender, First Abu Dhabi Bank.

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The UAE Carbon Alliance wants to establish the Emirates as “a leading hub for high integrity, high quality carbon markets”, facilitating the trading of offsets between companies.

The ACMI’s head Paul Muthaura says the deal gives a clear indication there is an appetite for African carbon credits. “There is often a sentiment that African credits are not equivalent to those from other regions,” the CEO told Climate Home News. “Having advanced market signals from strong reputable entities reaffirms that there are high quality credits being generated on the African continent.”

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Climate Asset Management – a joint venture of HSBC and a climate change investment firm called Pollination – also announced a $200 million commitment towards buying ACMI’s carbon credit projects.

Muthaura also added his organisation is in the process of negotiating a more extensive partnership with the UAE-based group for solutions not only in the voluntary carbon markets but also in the trading of offsets between countries.

Sheikh’s forest agreements

The Carbon Alliance is not the only Emirati organisation taking a keen interest in African carbon credits.

Blue Carbon, a company founded by Sheikh Ahmed Dalmook Al Maktoum, a member of the royal family of Dubai, has signed memorandums of understanding with governments in Liberia, Tanzania, Zambia and Zimbabwe to manage huge swathes of their forests and produce carbon credits from conservation activities.

Blue Carbon hopes to sell those credits to governments that want to offset their carbon emissions as a mechanism to meet their climate pledges.

Cooking the books: cookstove offsets produce millions of fake emission cuts

In its latest climate plan, the UAE wrote that, while it primarily intends to rely on domestic efforts to hit its targets, it “reserves the right” to tap into offsets trading mechanism under Article 6 of the Paris Agreement to partially fulfill these commitments.

The agreements have attracted criticism from environmental organizations. A group of international NGOs called on the Liberian government and Blue Carbon to stop negotiations as, they claim, the deal could breach community land ownership and violate people’s rights to have a say in the development of their land.

Critics also say carbon credits allow for continued pollution by wealthier countries and corporations, that should instead provide direct compensation to those who contributed less to climate change.

The post UAE pitches itself as Africa’s carbon credits leader appeared first on Climate Home News.

Machutar is one of the several dozens of villages across the Maharashtra state where the distribution of new stoves fuelled the production of carbon credits that are still being sold to big polluters today.

Nalband was told the new equipment would consume less of the firewood sourced from nearby trees as fuel. For villagers, this would mean fewer harvesting trips, supposedly bringing climate benefits in the process. 

But, as Abdul Nalband recalls now, “the stoves broke down soon due to rusting and nobody came to follow up or repair them”. Machutar villagers reverted to cooking with traditional stoves, while the few able to afford it gradually switched to liquefied petroleum gas (LPG). 

Machutar’s experience is far from unique. Hundreds of carbon offsetting projects distributed so-called improved cookstoves across India, and other developing countries, over the last decade. As 2.4 billion people across the world still cook with highly polluting fuels, giving them access to more efficient firewood stoves can aid the transition to clean cooking.

However, experts suggest the climate benefits from a significant proportion of these projects have been severely overestimated. They say that lax rules, overinflated estimates and poor monitoring have likely created a flood of poor quality offsets linked to the cooking devices.  

Climate Home News analysed improved cookstove projects linked to one of the most active players in the sector: Enking, an Indian firm that claims to be the world’s biggest carbon offsetter. It found that the projects are likely overstating emissions reductions by as much as eight times. Buyers of these offsets include top polluters like oil giant Shell. 

“Everyone is technically playing by the rules, the issue is that the rules are bad”, Annelise Gill-Wiehl, co-author of a recent study on improved cookstoves, told Climate Home News. “The methodologies allow the books to be cooked by developers”. 

Booming carbon offsets

Improved cookstove projects are often confused with clean cooking schemes. But whereas the latter help households transition away from a polluting fuel to a cleaner one, like gas or, even solar, improved cookstoves simply hand out more efficient devices still powered by the same fuel, in this case firewood. 

The premise is that giving poor households better-designed stoves makes them consume less firewood resulting in fewer carbon emissions. That greenhouse gas prevented from being released into the atmosphere is then converted into carbon offsets that corporations, governments and individuals can buy to compensate their own emissions.

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On paper, such programmes can bring benefits. Especially in countries like India, where more than 40% of rural residents still rely on firewood for cooking and face barriers to switching to cleaner fuels.

But, in order to have a real climate impact, the projects have to accurately calculate the drop in CO2 emissions as a result of handing out the stoves.

Sheetal Kelgane sitting in her kitchen beside a firewood stove in Maharashtra state, India. (Photo: Saurabh Katkurwar)

Most improved cookstove projects follow a popular set of rules first established by the Clean Development Mechanism (CDM), the UN’s official carbon offsetting scheme. Experts have pointed the finger at this methodology, arguing it has opened the floodgates to worthless offsets.  

A project distributing improved firewood stoves with those rules generates on average eight times more credits than it should, according to a recent pre-print study by the University of California, Berkeley. The paper is currently undergoing peer-reviewing. 

“I wouldn’t say that the projects are intentionally misleading their buyers,” says Rob Bailis from the Stockholm Environment Institute (SEI), “but that weaknesses in the methodologies and oversight bodies allow developers to make assumptions that are probably not accurate, leading to inflated emission reductions”.

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World’s largest carbon offsetter 

In a business park on the outskirts of Indore, a city in west-central India, lies the self-proclaimed world’s biggest developer of carbon credits. EKI Energy Services, or Enking as the company is commonly known, claims to control roughly 15% of the global voluntary carbon market. Enking has also played a major role in giving a new lease of life to thousands of junk credits from improved cookstove projects. 

Founded in 2008 by engineer Manish Dabkara, Enking started out buying and selling credits and helping other developers get their projects certified. It quietly built up a huge inventory and an ever-growing list of clients including the World Bank and major corporations such as Shell, Siemens and Volksgwagen. It also became the first carbon offset company listed on the stock exchange in 2021.  

We make a #great #team that sweats together, survives together, and wins together.

We #believe in the vision, harmony, and consistency. pic.twitter.com/tgp7ReCkrn

— Manish Dabkara (@manishdabkara1) May 7, 2022

Since then results for Enking have been much more mixed. The company has been mired in a spat with its auditor, which refused to sign off on its financial accounts after highlighting a “material overstatement of revenues”. Enking, which denies any wrongdoing, is now trying to oust the auditor. 

Climate Home News found Enking has also been betting big on improved cookstove projects, despite technical concerns from experts. The company has set up a manufacturing plant capable of producing up to 5 million cast iron stoves a year. The plan is to distribute them to rural households across India, and beyond, as part of carbon offsetting projects. This could lead to 5 million new credits every year. 

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Alongside developing its own activities, Climate Home News found that Enking has also been playing a major role in giving a new life to credits issued by old projects, originally started over ten years ago by a different Indian company under the UN’s Clean Development Mechanism. 

Based on flawed accounting, this type of project has long been subject to strong criticism. For this reason, Jess Roberts from carbon offsets rating agency Sylvera says they should not be used for offsetting claims, and, if bought, they should be seen as more philanthropic investments. 

But, since early 2021 Enking, acting as a consultant, has helped transfer two dozen of these projects onto the registry of Verra, the world’s largest carbon offsets certifier. Nearly 1.2 million credits have since been made available to polluters. Oil and gas giant Shell has been the biggest buyer so far, snapping up over 98,000 of them on a single day last February. 

Enking has not replied to questions sent by Climate Home News at the time of publication.

Verra told Climate Home News that it “takes any concerns about the integrity and quality of the carbon credits it issues seriously and is ready to address them if they turn out to be founded”.

It is not the first time Enking’s carbon credits activities have come under scrutiny. A report by Bloomberg highlighted how its portfolio is stuffed with offsets tied to renewable energy schemes. These products are generally acknowledged to be of poor quality because of the lack of additionality – meaning the projects would have been funded without the offsetting scheme. 

Overstated climate benefits 

Climate Home News found that both sets of projects – Enking’s own and the old ones from 2012 that they brought back to life – are highly likely to produce offsets that do not reflect real cuts in CO2 emissions, according to an analysis of their documentation by Berkeley’s Gill-Wiehl.  

The projects apply two slightly different versions of the much-contested CDM rules to calculate emissions reductions. They claim abnormally high levels of deforestation caused by firewood harvesting and unrealistic rates of usage when compared with comparable numbers found in scientific studies, the analysis shows.

When projects claim very high numbers buyers should ask hard questions, says SEI’s Rob Bailis. 

A traditional earthen stove (left) used in a rural household in India’s Maharashtra state alongside an improved cookstove (right). Photo: Saurabh Katkurwar

As with most other types of carbon credits, improved cookstoves start from a counterfactual scenario: what would have happened to CO2 emissions – in this case produced by collecting firewood – if the project had not existed? 

The methodologies compare the amount of wood consumed by each household before and after installing the efficient cookstoves. The cast iron cookstoves provided should be more efficient and consume less fuel. As a result, project developers claim villagers need to harvest less firewood from nearby forests, which should therefore be better preserved. 

But “it is extremely difficult to quantify the emissions reduced from avoided deforestation as a result of distributing the improved cookstove,” says Jess Roberts from carbon offsets rating agency Sylvera. Calculations heavily rely on modelling based on several different parameters, which are subject to uncertainty and at risk of manipulation, she added. 

Exaggerated forest loss 

One single key number, in particular, can hugely inflate emission reduction estimates and, as a result, produce vast amounts of worthless carbon credits. Experts call it the fraction of non-renewable biomass (fNRB). In layman’s terms, this is the percentage of wood assumed to be lost for good when trees are cut down for fuel, leading to the depletion of carbon stocks. 

For example, if forests regenerated at the same rate at which firewood was collected, there would be no net change to CO2 levels and no negative climate impact. But the longer forests take to grow back – which implies a high fNRB value –, the bigger the threat to forests’ carbon-storing potential researchers expect. 

Experts say most low-quality credits from improved cookstove projects stem from the misuse of this factor. Several studies have found large discrepancies between the fNRB values used in carbon offsetting projects and those observed by independent researchers. 

According to Berkeley University’s Annelise Gill-Wiehl, this also applies to the projects analysed by Climate Home News.  

The 2012 CDM project declared a fNRB value of 87.9%, assuming therefore that nearly all harvested wood would not grow back. That value stands in stark contrast with the corresponding number – 24.2% – calculated by Gill-Wiehl through a more sophisticated and scientifically accepted model.  

The same level of discrepancy is found in the project currently being developed by Enking. 

Accounts heard by Climate Home News in villages across India’s Maharashtra state indicate the impact of the rural population’s firewood collection on forest loss is limited.

“The forest is protected and maintained by the government. So villagers collect just dead and broken twigs and branches,” Shantabai Deve said. “We are well aware of possible problems if we keep chopping trees, so we plant new ones as well.”

Vittal Barge using his improved cookstove at his house in India’s Maharashtra state. (Photo: Saurabh Katkurwar)

Poor monitoring 

The exaggerated forest loss estimates are not the only parameter fuelling questionable offsets.

“For this type of project the assumed emission reductions don’t happen unless the recipient actually uses the stove,” says Gill-Wiehl. For each stove not used as intended, the project developer needs to reduce the number of credits issued. 

That involves tracking recipients’ behaviour: whether they cook with the new stove at all, how often that happens and whether the traditional, less efficient, stove also remains in operation. This phenomenon, known as stacking, is relatively common because traditional stoves may be better suited for preparing a specific type of meal or may have a religious significance – like in some parts of India. 

Checking these metrics brings more problems. “Lots of over-crediting comes from the lack of robust monitoring”, Gill-Wiehl says.

Often this delicate exercise is done exclusively through surveys, asking a small sample of the recipients a set of questions once a year. These can be “really simplistic”, according to the Berkeley researcher. “They would literally ask a household ‘have you used the stove in the last month?’ and if the answer is ‘yes’, they get to credit it as if they used it all the time”. 

These surveys produce results that, on the face of it, appear excellent. 

In a monitoring report for its new project, Enking said its surveys showed everyone they had given a stove to has been using it all the time without ever combining it with a traditional one. The CDM projects report similarly high rates across the board, allowing them to issue nearly the maximum number of credits allowed. 

These results are starkly different from those generally observed by independent researchers on the field. According to the Berkeley report, studies have seen average adoption rates of 53%, usage rates of 48% and stacking rates of 76%. In other words, only about half of the recipients cook with the stove at all, and, if they do, it happens less than half of the time, most likely in conjunction with a traditional one. 

SEI’s Rob Bailis says that “projects claiming very high rates of fNRB, adoption, and exclusive use, should raise some red flags”.

Researchers say project developers could implement different methods to track the stoves’ usage: anything from just drafting better surveys to cross-checking answers with photos and videos, or even fitting the devices with remotely-controlled sensors.  

But it is easy to see why very few go the extra mile, experts said. “The incentive structure is to generate as many credits as possible, not to produce really high-quality data,” says Gill-Weihl.

In Machutar and in other neighbouring villages most improved cookstove users interviewed by Climate Home News didn’t recall the exact project that gave them their devices. But they do remember that most of them broke down quickly and were no longer in frequent use.

For the villagers, the abstract thought of carbon offsets is eclipsed by their immediate needs. Meager incomes from rice and strawberry farming put frequent supplies of gas canisters beyond the reach of most. Firing up the traditional mud stoves remains the only solution.

“It is convenient and faster to cook on LPG. But I cannot afford to refill it twice every month”, says Rajendra Jadhav, an electrician in the region. “So I use an earthen stove for boiling water, drying clothes, and even cooking food frequently”.

Saurabh Katkurwar contributed to report this story.

The post Cooking the books: cookstove offsets produce millions of fake emission cuts appeared first on Climate Home News.

It sounds like a a win-win. A company gets a step closer to telling its investors and consumers it’s reached net zero, and critical forest protection gets an injection of cash.

These days, forests generate a lot of credits: they represent one in three carbon credits sold through Verra, the largest of the voluntary carbon market administrators. 

But this market is plagued with problems. It routinely inflates its climate impact, diverts money to middlemen who cream off profits, and exploits Indigenous communities. High-profile investigations have exposed widespread malpractice. 

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That scrutiny should not stop, because the most dangerous element of exploiting forests for carbon credits still exists: businesses buy credits as a shortcut to meet their net zero targets while continuing to pump out emissions.

Forest offsets, no matter how incredible trees’ role in tackling climate change is, are simply not equivalent to cutting emissions: storing carbon in trees isn’t always a long-term bet to keep carbon out of the atmosphere.

Deforestation, decay, or fire (as we have recently seen in Canada) can release it back into the atmosphere within hours. The only sure way to slow down climate change and meet net zero goals is to keep coal, oil and gas in the ground.   

To understand the risks of forest carbon credits being sold as offsets, take a look at Guyana: a story of zombie carbon credits, dubious accounting, and a cosy relationship between offset schemes and the oil industry. 

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Guyana’s story begins with a calculated overstatement of the risk of deforestation. A report written by McKinsey in 2009 claimed that the country’s forests could disappear at a rate of more than 4% per year, gone entirely within 25 years.

Independent assessments show that the true rate of deforestation was actually around 0.2%. But the inflated McKinsey estimate had already established an attention-grabbing baseline number that would set the project up to report an impressive – but false – impact.   

In a deal set up with the Norwegian government, Guyana received four payments totalling nearly $200 million for ‘avoided deforestation’. Recently, Guyana sold 33.5 million carbon credits for reducing forest loss during 2016 and 2020, this time under an ART-TREEs crediting scheme.   

But analysis of the methodology used shows that, as with previous payments to Guyana, the ‘emissions reductions’ may be largely fictitious. According to one analysis, some 84% of these credits were created by accounting manipulations allowed under the scheme.

Independent evidence also suggests deforestation actually rose during the crediting period. Data from the independent Global Forest Watch shows that forest loss in four of the five years was higher than in all the years the analysis looked at. 

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Meanwhile, the Amerindian Peoples Association, which defends the rights of Guyanese Indigenous Peoples, said that there hadn’t been proper consultation about the programme with people with ancestral rights to land. 

Astonishingly, this project – which allowed deforestation to rise, and more carbon to be released into the atmosphere – was used to greenwash oil drilling off Guyana’s coast. The Hess Corporation, which has a 30% stake in a deal exploiting oil from Guyana’s recently-opened Starbroek offshore oil block, announced its intention to buy $750 million of credits generated by Guyana forest projects to offset its emissions.

But in comparison to the 33 million tonnes of carbon supposedly captured by the scheme so far, the oilfield could, over its lifetime, release up to 5.5 billion tonnes of carbon. That’s 166 times as much. 

A race to the bottom of offset standards permitted the creation of millions of ‘zombie carbon credits’ used to justify oil drilling.  

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But can we blame forest nations for looking to exploit a promising source of finance? For decades emerging economies dense in essential biodiversity have faced promises of critical finance from the global north to protect and restore rainforests – the lungs of the earth and the only tried and tested method for removing carbon from the atmosphere.

A $711 billion a year funding gap currently exists for nature protection and restoration, with $200 billion of that needing to be new sources of finance outside of repurposing existing subsidies that could be channelled in better directions.  

In the run up to Cop28 we’re seeing countries and continents rich in carbon storing biodiversity come together – through the Amazon Summit, Africa Climate Summit and Three Basins Summit all before COP28 –  to renegotiate what those financing solutions should look like.  

Now is the time to turn away from the small piece of the funding pie failing carbon markets represent and focus energy on real solutions that really have forests, people and the climate at their heart.  

On its website, ART TREES says credits created under its HFLD methodology “constitute additional climate action” and “incentivises jurisdictions to protect intact forests since guarding the carbon sequesterd in these forests is essential to meeting the goals of the Paris Agreement”

Joe Eisen is the executive director of the Rainforest Foundation UK

This story was was edited on August 21, 2023, to correct the role of the Amerindian Peoples Association as a defender of indigenous rights in Guyana, but not a legal representative of them.

The post As Guyana shows, carbon offsets will not save the Amazon rainforest appeared first on Climate Home News.

The coal to clean credit initiative aims to plug funding gaps in the Just Energy Transition Partnerships (Jetp) agreed last year between wealthy nations and Indonesia, South Africa and Vietnam to wean them off coal power.

Currently in the late stage of development, the offsetting scheme is linked to the early closure of coal plants and their replacement with renewable energy. The greenhouse gas emissions avoided in the transition would be monetised through carbon credits.

Nations or companies will be able to buy them to compensate for their direct greenhouse gas emissions in the pursuit of their own climate targets.

Seismic change

Joseph Curtin, a managing director at the Rockefeller Foundation and one of the scheme’s creators, says these carbon credits could be “a game-changer” in fast-tracking the replacement of coal with clean power in emerging economies.

“Carbon credit finance will be instrumental in getting the industry moving. We see it as making up for some of the weaknesses [in Jetp deals],” he told Climate Home. “ This carbon finance will blend with and unlock private and concessional [with more generous terms than offered in the market] capital, which is theoretically available to support the just energy transition but is not flowing”.

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But experts warn there are a number of concerns about using carbon finance to phase out coal, especially given the massive number of credits potentially on the line. The project developers hope to retire dozens of coal plants with support from carbon credit finance, leading to gigatons of avoided emissions and, as a result, offsets.

“Phasing out coal plants is absolutely essential, but whether or not this should be eligible for carbon crediting is another question entirely,” Jonathan Crook from Carbon Market Watch told Climate Home. “If the credits were to be generated with an unrealistic baseline or aren’t additional in nature, then they actually would undermine ambition”.

Jetp ambitions

Last year a consortium of rich countries – made up of G7 nations plus the EU, Norway and Denmark – development banks and private financiers signed Jetp deals with Indonesia, Vietnam and South Africa.

The multi-billion dollar agreements are supposed to help recipient countries move away from coal which generates most of their electricity while supporting workers in the transition.

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The programmes, which are at various stages of implementation, have attracted some criticism over the type of financing.

Recipient countries have been calling for grants and cheap loans because they don’t want to be burdened with more debt. But G7 countries with tight purse strings have been pushing back on those terms.

“Let’s be honest, there is very little new truly concessional capital on the table and a lot of disappointment in Jetp countries,” says Curtin, who believes new solutions need to be developed to keep the green deals on course.

Carbon credit solution

The idea of using carbon credits to fund energy transition projects in coal-reliant countries was floated at the end of last year by John Kerry, the US special envoy on climate. Kerry said the private sector could be “enticed to the table because you then have a way of them getting something they need and want, which may be a credit towards their goal”.

Some of the Jetp partners, however, have been sceptical about this solution. The German minister Jochen Flasbarth told reporters at Cop27 they had “some concerns that the commitments we gave as governments should not be replaced by private offsetting”.

About 60% of Indonesia’s electricity is produced from coal. Photo: Ezagren

For months, a group of philanthropies involved in Jetp and carbon market specialists have been busy trying to turn this into reality. They have secured a partnership with the Indonesian government, begun talks with South Africa and Vietnam, and sounded out interest from investors.

Crucially, they have also been working on the thorny matter of setting the rules for this new type of offset. The methodology will determine which projects qualify, and how the emission reductions are calculated and translated into carbon credits. Climate Home News has not been able to see the terms which are still under discussion.

Number of concerns

Carbon Market Watch’s Crook says it’s difficult to comment on specifics without consulting the methodology but he underlines how delicate the task is.

“There a number of factors that would have a large impact on the volume of credits generated and the overall credibility of such an approach,” he said. “The stringency of additionality tests, the assumptions on the future viability of coal plants and the capacity at which they would run.”

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Additionality is one of the key tests of any offsetting project: in simple terms, this concept boils down to whether the project would have been possible without carbon credit financing.

Proving this could be tricky in a scenario where multiple funding streams – including public finance – are being directed at the same set of activities. In Indonesia, for example, five separate energy transition schemes are moving ahead at the same time.

Renewable energy link

Curtin says the initiative is targeting “relatively new coal plants” with power purchasing agreements of 20-30 years. He added the methodology includes a series of tests assessing regulatory, economic and financial conditions to prove additionality.

The rules will also determine how to establish a direct link between the closure of a coal plant and the rollout of renewable sources to make up for the electricity shortfall. The simplest solution under consideration involves the installation of renewables on the same site as the coal plant. But the programme developers say there will be a number of options available.

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Curtin says the role of gas in this scheme “has not been quite bottomed out yet”. “We don’t want new gas plants to be built to replace coal ones, but some gas may be needed to bring in the renewables,” he added. The prospect of expanding gas consumption, even just temporarily while renewables ramp up, would likely anger campaigners keeping an eye on the Jetps implementation.

Flooding the carbon market

Curtin acknowledges that devising the methodology has been “extremely difficult and technically challenging”. He says the initiative is striving for the “Goldilocks zone between extremely strong environmental integrity and yet having to be realistic to work on the ground”.

The initiative is eager to unveil the rules at Cop28 in November and clinch a first project agreement next year. South Pole, one of the world’s biggest project developers, will be in charge of the implementation on the ground.

If the scheme reaches their stated ambition, it could have far-reaching consequences not only for the Jetp, but for carbon markets more widely.

Buyers appeal

At scale, coal-to-clean offsets could in fact rise to dominate the carbon market. Each coal plant closure is expected to generate tens of millions of credits. Fewer than twenty of the world’s biggest forest protection offsets produce a similar volume of offsets.

The future buyers of the credits will also be closely watched. Curtin says the initiative has so far attracted the most interest from countries keen to purchase credits under article 6.2 of the Paris Agreement.

This is a mechanism allowing countries to exchange offsets through bilateral agreements and count them towards their climate goals, or nationally determined contributions (NDCs).

Governments like Switzerland, Singapore, Japan and South Korea have shown the most interest in using article 6.2.

Given the high stakes, Carbon Market Watch’s Crook said it is paramount to get the scheme right. “One mustn’t forget the broader context: these credits — which could be issued at a huge scale — will be used to offset real ongoing emissions,” he said. “If the finer details end up being wrong, then you have a serious problem”.

This article was updated on 22 June to make the scheme’s name more prominent

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The Multilateral Investment Guarantee Agency (Miga) expects to gain an expanding role in providing insurance cover to carbon credits projects in a bid to facilitate large-scale investment in countries considered as high-risk.

The agency’s foray into the carbon market comes as several developing nations are moving to regulate or restrict the trade of credits generated within their borders.

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The upheaval has spooked project developers and investors in the $2 billion voluntary market. Hailing predominantly from rich nations, they have been profiting from activities like planting or protecting trees in developing nations and selling on the resulting credits.

Carbon credits – or offsets – are used by companies, governments or people to compensate for the greenhouse gas emissions they generate themselves.

A Miga spokesperson told Climate Home News, as governments around the world are starting to regulate carbon markets, the agency will be able to protect investors against risks of governments breaching agreements.

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But some campaigners have expressed concern over Miga’s plans. Teresa Anderson from ActionAid told Climate Home News that offsetting projects “have a long track record of displacing communities while worsening the climate crisis by giving polluters an excuse to avoid real emissions cuts”.

“Miga might claim to be insuring green projects, but in reality, this is about ensuring greenwash”, she added.

Greening Miga

Founded in 1988, Miga’s mission is to help foreign investment into developing countries by issuing guarantees. Its backing allows investors to obtain better financing terms, like cheaper loans, from banks.

Over the years, the agency has come under fire for heavily subsidising fossil fuel energy projects.

But, as part of its updated strategy, it has pledged to increase its support for projects that address climate change.

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The ‘greening’ of Miga’s portfolio is part of a sweeping set of reforms which could give the World Bank a much bigger role in enabling climate finance.

Among a long list of measures, a plan drafted by the bank’s steering committee and currently under discussion sees an expansion of Miga’s guarantees “to cover risks related to carbon rights”.

Pioneering carbon insurance

Miga plans to equip offsets developers with its political risk insurance and to develop new types of covers specifically for carbon investors.

Offset projects have often been contentious. If a dispute between developers and the host country cannot be resolved, Miga may be liable to pay compensation.

The agency funds itself through the financial contributions given by member countries. Its biggest shareholder is the United States (with 18% of capital), followed by Japan, Germany, the UK and France.

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The agency will plug a gap in a market for which private insurers have so far shown a lack of appetite. Insurance policies for carbon projects are currently very limited.

Peter Zaman, a carbon markets lawyer at HFW, says project developers don’t have any specific insurance cover normally.

“They have been in denial about the risks and so the products that would protect them have not even been produced,” he said.

Carbon markets upheaval

The risks that Zaman refers to revolve around countries’ ongoing efforts to assert tighter control over carbon rights.

Similar to intellectual property, carbon rights refer to the ability to lay claim to an amount of carbon dioxide trapped or avoided through activities like tree planting and sell it under the guise of credits.

For more than a decade private developers and investors have been setting up projects across the world operating in the loosely regulated voluntary market.

Many of these initiatives have been sharply criticised not only for exaggerating their climate benefits. But also for giving local governments and indigenous populations a small fraction of the profits.

An Indonesian ranger patrols a forest protected through a carbon credit project. Photo: Dita Alangkara/CIFOR

After years-long inaction, now a growing number of governments, especially in developing countries, are waking up to the value of these projects and stepping in to regulate them.

Zimbabwe announced last month it would retain half of all revenue from carbon projects and consider voiding all existing programs in the country.

Zimbabwe hosts Kariba, one of the world’s largest – and most controversial – forest conversation project, which is controlled by Swiss company South Pole.

Elsewhere, Papua New Guinea has suspended new projects while the government decides on new rules for future and existing projects.

Indonesia has restricted exports of carbon credits generated within the country with a view to centrally control sales in the future.

‘Low-hanging fruits’

In regulating offsetting projects, experts say governments are not only motivated by their revenue-raising potential.

Countries are also eyeing the possibility to count the greenhouse gases avoided or trapped through these programs towards their national climate goals under the Paris Agreement.

This calculation will become ever more important when the United Nations set up a new global carbon trading mechanism. The rules will prevent the same credit from being used more than once.

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Peter Zaman says carbon credits are “low-hanging fruits” to achieve climate commitments. “It is entirely logical for countries to establish control over these cheap sources of emission reductions and decide how to best use them”, he added.

Miga believes its involvement in the carbon market will spur foreign investment in riskier countries as new regulations come into place.

The agency says it will protect investors against risks of governments breaching agreements that allow investors to export credits at pre-agreed terms, or risks of governments not respecting double-counting rules.

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In a briefing note, unnamed authors from the UN’s climate body (UNFCCC) said these removal activities are “technologically and economically unproven, especially at scale, and pose unknown environmental and social risks”. It concludes they are therefore not suitable for offsetting carbon emissions under the upcoming UN’s global scheme.

The UN assessment has angered the growing industry, which is seeing billions of dollars of investment from governments and corporations.

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More than 100 figures from the carbon removal industry signed a letter addressed to the UN body asking it not to rule out any specific activity, but to “let science, innovation, and the market compete to deliver the solutions”.

Crunch meeting

The document will inform discussions taking place next week in the German city of Bonn to set up a new global carbon trading system under Article 6 of the Paris Agreement.

A UN panel is tasked with drafting the rules and indicating which activities should be eligible. It is taking into consideration both land-based solutions, like tree planting, and technological ones, such as using machines to pull CO2 directly out of the air.

The process is being closely watched as the inclusion of certain technologies over others could have far-reaching consequences for the development of the sector.

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Campaigners have raised concerns over the technical challenges of deploying these solutions and the potential risks to human rights.

But Ben Rubin, from the Carbon Business Council, told Climate Home News that leaving any carbon removal pathway off the table risks creating challenges to have the scale of climate impact that is needed.

Carbon removals role

As the world fails to curb the rise of polluting emissions, most scientists see some form of carbon removal as necessary to limit the impact of climate change.

The IPCC said the use of carbon removal is “unavoidable” to offset hard-to-abate emissions and achieve net zero. But how to achieve that result is the subject of intense debate.

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At the moment land-based solutions, such as planting trees or preventing them from being cut down, account for 99.9% of all CO2 removed from the atmosphere.

But several governments, like the US, and companies are betting big on technological fixes.

The most prominent ones are Direct Air Capture (DAC) and Bioenergy with carbon capture and storage (BECCS). The first technology uses big machines to pull carbon dioxide directly out of the air and store it underground.

Verra boss steps down after criticism of its carbon credits

The second one relies on trapping emissions produced through the generation of biomass energy. Its proponents describe it as carbon-negative because it permanently locks away the CO2 trees used as biomass will have absorbed in their lifetime.

Multi-billion dollar bet

The industry believes it can scale up rapidly thanks to large-scale investment pouring into the sector.

The US government committed $3.7 billion towards the development of DAC. Major corporations are signing deals worth hundreds of millions of dollars to buy vast amounts of tech-based carbon removals as a way to offset their own emissions.

The industry also hopes to be supported by the creation of a new global carbon market. As part of Article 6 of the Paris Agreement, the new system will allow governments, companies and individuals to buy UN-certified credits, funneling money towards climate projects.

A supervisory committee is currently working out the complex details of how this mechanism will work, including the eligibility of certain projects.

In its briefing note, the UNFCCC said activities like DAC or BECCS are not fit for the purposes of Article 6.

Currently costly

Without going into details, it argues they are too costly, are not suitable for developing countries, and do not contribute to sustainable development.

The UN based its views on scientific papers and on submissions received by industry players and campaigners.

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The International Energy Agency estimates that removing a ton of carbon dioxide costs between $135 and $135 with DAC today – although this could drop to below $100 by 2030.

According to the IPCC scientists, this is far more expensive than reducing emissions with renewable energy or energy efficiency.

Human rights risks

A recent study cited in the brief argues that the large-scale deployment of carbon removal technologies may lead to “significant human rights infringements”.

The risk may be particularly acute with BECCS which, to operate at scale, would require a vast amount of land and water to be converted from food production to growing biomass.

This will “most likely infringe upon the right to food, the right to water, and the right to a healthy environment”, the authors said.

The study found DAC would “likely have a smaller human rights impact” than BECCS. It doesn’t incentivise anything to be grown. But, as it requires a lot of energy, large-scale use of DAC could take electricity away from other uses.

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The UN document does not spell out why these carbon removal technologies do not contribute to sustainable development and the industry disputed this.

“We would be pleased to connect you with carbon removal leaders advancing projects in Kenya, Kiribati, India, Brazil and other locations around the world where CDR is contributing directly to local regional economic development”, their letter said.

The Center for International Environmental Law called carbon removal “a dangerous distraction”. The NGO argued that relying on removal technology, “both delays the immediate reduction of emissions and presents independent risks to human rights and the environment, some of which remain poorly understood”.

The post UN advises against offsets for carbon removal technologies appeared first on Climate Home News.

The CEO of Verra, David Antonioli, has announced he will leave his post after 15 years during which the company issued over one billion carbon credits, in theory stopping a billion tons of carbon dioxide from worsening the climate crisis.

But under his tenure, Verra has also been repeatedly accused of approving “worthless” offsets which could harm climate commitments.

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Antonioli, who has strenuously rebutted any accusation, has not given a reason for his departure but said he would be taking holidays and sabbaticals.

Verra’s recently-appointed president Judith Simon will replace him as interim CEO next month.

Carbon credits – or offsets – are when companies, governments and people pay for someone else to cut greenhouse gas emissions on their behalf, so they can take credit for this climate action.

Certifiers like Verra are supposed to check whether projects actually reduce the number of emissions that they claim.

Antonioli has overseen a period of tremendous growth for the company. In the last two years alone Verra’s annual revenues have more than tripled, reaching $40.5 million a year. In 2021 it made 92% of its money by taking a cut from the sale of carbon credits.

String of accusations

But at the same time, mounting concerns have been raised over a string of projects approved by Verra.

Climate Home News revealed last March how dozens of Chinese rice cultivation projects on the Verra registry were riddled with accounting loopholes and questionable integrity claims.

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Polluters, including Shell, had bought hundreds of thousands of carbon credits generated by the projects before Verra put them on hold pending a review.

Previously, an investigation by the Guardian accused Verra of listing largely worthless rainforest credits. According to independent studies, most projects overstated the threats to forests which calculations are based on, inflating their climate benefits.

Rules review

Verra strongly disputed the investigation’s findings and said it was already working to transition all forest projects to one updated methodology.

The new rules are currently being reviewed by an external auditor before getting the final approval towards the end of the year.

But experts told Climate Home that the new rules will not fix the conflicts of interest which undermine these programmes and that the way Verra is carrying out its review of the rules is flawed.

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Announcing the CEO’s departure, the chair of Verra’s board said “Antonioli had an immeasurable impact on Verra and on the global climate action community”.

“We are grateful for what he has contributed and are glad that we will be able to draw on his expertise as Verra enters its next phase”, he added.

The post Verra boss steps down after criticism of its carbon credits appeared first on Climate Home News.

Verra says the new methodology will ensure that the programmes are actually protecting as many trees as those buying and selling the carbon credits they produce claim.

But experts told Climate Home that the new rules will not fix the conflicts of interest which undermine these programmes and that the way Verra is carrying out its review of the rules is flawed.

Forest offsets

Carbon credits are when companies, governments and people pay for someone else to cut greenhouse gas emissions on their behalf, so they can take credit for this climate action.

Organisations like Verra are supposed to check whether projects actually reduce the amount of emissions that they claim.

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Projects which aim to reduce emissions by saving forests, allowing them to keep sucking in planet-destroying carbon dioxide, make up much of Verra’s credits portfolio.

Project developers estimate what would have happened if the conservation project had not existed. The ‘avoided’ emissions are then turned into credits to be sold to polluters. Verra approves the projects and advertises them for sale on its website, receiving a fee for each transaction.

Under fire

But in January, a Guardian investigation alleged in January that more than 90% of its rainforest offset credits are likely to be ‘phantom credits’ and do not represent genuine carbon reductions.

It found that most projects overstated the threats to forests which calculations are based on and did not show real evidence that they had saved the forest.

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Verra disputed the investigation’s findings and said it was already working to transition all forest projects to one updated methodology.

More than three years in the works, Verra finally unveiled its draft rules in mid-April. They are expected to be finalised by the end of the year, before coming into force in 2025.

Controversial pick

After drawing up the rules, Verra sent them to an independent auditor called Aster Global Environmental Solutions to review.

Aster is a family firm from rural Ohio which makes its money auditing carbon offset projects and consulting for the industry.

As an auditor, its job is to asses whether projects follow Verra’s rules and are likely to achieve the emissions reductions they claim. After they’ve marked the project developer’s homework, Verra gives the final seal of approval.

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Simon Counsell, who has been assessing offsets for 15 years, says auditors are hugely influential. “In many respects, the quality of the carbon credits depends on the rigour of their work,” he said.

But Aster has come under fire for a series of projects recently. It’s accused of approving a grassland conservation project which harms indigenous cattle herders in Kenya and forest protection projects which over-count emissions reductions in Zimbabwe and Peru.

Indigenous herders disrupted

Aster approved the Northern Kenya Grassland Carbon project, which claims to increase the amount of carbon stored in the soil of savanna grasslands by managing the grazing patterns of livestock.

The carbon credits from the project were sold to the likes of Netflix, Facebook owner Meta and the Natwest bank.

Indigenous cattle herders in Kenya’s countryside. Photo: Ninara/Flickr

But the Survival International campaign group claim the project is breaking down long-standing Indigenous herding systems without their informed consent and cannot accurately account for how much carbon it is removing from the atmosphere.

The group also took issue with the work of Aster Global as a validator and verifier. “Far from having undergone ‘rigorous’ assessment, numerous fundamental problems with the project were not properly addressed during its validation and the subsequent verification,” it said.

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Counsell carried out Survival International’s analysis of the project. He said Aster was “clearly troubled” by what they saw as it raised a large number of concerns with the developers during the assessment.

“The troubling part is that they never received convincing responses and yet still approved the validation”, Counsell added. “This raises questions about their rigour.”

Aster has not responded to a request for comments.

Mixed messages

In March, Verra suspended the Northern Kenya project while it carries out a review to “investigate claims” that the project does not comply with the rules.

If it identifies any irregularities – Verra says – it will require Aster to explain the cause for any quality control issues.

Verra will review the response and “reserves the right to take action” against the body, a spokesperson told Climate Home.

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But Verra, who appointed Aster to review their methodology shortly after they suspended the Kenyan project, said it would be premature to blame Aster for the project’s review.

Counsell commented: “You’d think [Verra] would at least wait until they conclude their analysis of what went wrong with the Kenyan project before putting [Aster] in charge of this really important work”.

Verra says Aster is a very experienced auditor and its proposal for the methodology review “demonstrated the best quality”.

Over-counting

Aster has also approved projects which stand accused of over-counting. When offset seller South Pole claimed to have saved an area of forest in Zimbabwe the size of Puerto Rico, Aster verified that claim for the Verra registry.

Elephants on the edge of Lake Kariba in Zimbabwe. This area comprises a forest protection project that has been accused of exaggerating its climate benefits. Photo: Vince O’Sullivan

But separate reports by Bloomberg and carbon rating firms found that the Kariba project had wildly overstated the risk of mass deforestation its calculations were based on.

South Pole denied this but voluntarily suspended the sale of some of the offsets. Verra said the baseline validated by Aster Global for the Kariba project was “in conformance with VCS Standard and reflected the data available at that time”.

Aster also verified forest protection credits in the Peruvian Andes which were later questioned by an Associated Press investigation. An Aster review found nothing wrong with the project.

Baselines are key

The baseline is a key component of carbon credits as it describes what would happen if the project did not exist and therefore how much difference the project makes.

It is one of the most contested elements of Verra’s forest offsets.

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Carbon rating firm Calyx Global estimated almost two-thirds of forest offset projects have a high risk of an overestimated baseline, leading to tens of millions of worthless credits and more pollution.

Elias Ayrey, chief scientist at carbon ratings firm Renoster, puts this down to many project developers’ “manipulating” data and maps showing where deforestation has occurred and is likely to occur in the future.

Verra’s remedy

Under its new rules, Verra proposes to fix this by guessing how much of the forests could be destroyed in every region and setting a cap on the total amount of emission reductions that developers can claim.

Then they split that cap up among individual projects in that region based on risk maps.

Ayrey believes the new methodology brings some welcome changes, but ultimately “is not going to significantly improve the market”.

The problem – he says – remains that the maps can continue to be made by “biased” parties, including project developers. The only difference is that, in future, they would need a sign-off from a state official.

Several analysts believe the only way to ensure the integrity of the system is to have baselines set by truly independent third parties.

“As long as these maps are not made by peer-reviewed scientists at academic institutions, like Nasa, we are going to keep having this problem”, says Ayrey.

The post Verra’s revamped forest offset programme comes under fire appeared first on Climate Home News.

The company has teamed up with carbon offset provider South Pole to buy nearly 200,000 tonnes of carbon dioxide removal credits from technological schemes, about a quarter of all such purchases to date.

They hope to sell these credits for millions of dollars. Companies like UBS bank, Mitsui shipping line and the Bosting Consulting Group have already promised to buy them.

Despite Taiwan and spy balloon tensions, China invites US for climate talks

But New Climate Institute researcher Takeshi Kuramochi, who has studied carbon capture, told Climate Home that Mitsubishi’s involvement was “disturbing”.

“If Mitsubishi is to strengthen its ‘commitment to the sustainable future’, they would better contribute to [emissions reductions] by first accelerating its transition of fossil fuel-heavy energy business to renewables,” he said.

Major polluter

According to Global Energy Monitor, Mitsubishi currently operates nine coal power stations in Japan and Taiwan, and is building two in Vietnam and two in Indonesia.

But although the company says it has stopped taking on new coal projects, at least without carbon capture technology, it has not put any restrictions on oil and gas expansion.

Reporting on climate adaptation is a mess – here’s how to fix it

Carbon emissions from using Mitsubishi’s products are 381 million tonnes – more than Nigeria and its population of over 200 million people. The conglomerate does not include these emissions in its climate targets, which focus solely on the 23 million tonnes from its companies’ operations.

Big deal

Mitsubishi’s new joint venture with South Pole will be called NextGen. The joint company said the carbon removal projects it is investing in will remove “significant” volumes of carbon dioxide from the atmosphere and help scale up the market.

It plans to buy one million credits by 2025. With an average target price of $200 per tonne, it is hoping they will be worth $200 million.

US solar boom on hold as industry awaits subsidy rules

Carbon removal technology is still in its infancy around the world and none of the three projects NextGen has bet on are up and running yet.

The projects plan to either suck carbon from the atmosphere and bury it, or to burn dead plants without oxygen, in a process known as pyrolysis, to turn it into carbon-rich charcoal which can be buried. The latter method stops the plants from releasing the carbon into the atmosphere as they rot.

Better than forests?

Carbon offsets that rely on protecting forests are coming under increasing scrutiny, with critics often arguing that the forests weren’t in as much danger of being cut down as the offset sellers made out.

Although he recognised that carbon removal technology faces its own challenges, NextGen’s chair Philip Moss told Climate Home it “can ensure a higher degree of carbon permanence in many cases than nature-based removals and avoidance projects”.

Revealed: How Shell cashed in on dubious carbon offsets from Chinese rice paddies

“Technological carbon removal projects can also avoid some of the scrutiny around measurement,” Moss said, “as the quantity of carbon removed can be metered and measured as opposed to having to work on modelled assumptions.”

NextGen’s projects will be certified and verified under standards endorsed by the International Carbon Reduction and Offset Alliance (ICROA).

Contentious topic

However, government and scientists’ discussion of carbon removal technology at the recent IPCC meeting was highly politicised, with Japan and others emphasising it and others playing it down.

Yesterday, US special presidential envoy for climate John Kerry described relying on technology to remove carbon dioxide from the atmosphere as “dangerous” and a cause for “alarm”.

UN’s Green Climate Fund too scared of risk, finds official review

Although they recognised carbon removal technology would be needed, IPCC scientists also stressed that cutting back on emissions being produced in the first place “would limit peak warming levels and reduce the requirement for net negative CO2 emissions”.

This would, they said, reduce “feasibility and sustainability concerns, and social and environmental risks associated with [carbon  dioxide removal] deployment at large scales”.

Only the hard stuff

Kuramochi said carbon removal technology should be reserved for neutralising left-over emissions from the hardest to clean up sectors.

While electricity and light transport can be cleaned up relatively cheaply and easily, other sectors like flying and heavy industry are finding it harder to go green.

US pledges $1 billion to Green Climate Fund amid call to keep 1.5C in reach

Kuramochi said emissions in the easier industries to clean up have to be “completely eliminated”.

“Depending on who buys the [carbon dioxide removal] credits,” he said, “such projects may even result in slowing down the companies’ effort to reduce their own value chain emissions.”

Mitsubishi could not be contacted for a response.

The post Mitsubishi bets on carbon removal while keeping coal plants appeared first on Climate Home News.

Then yesterday, we reported how the carbon credit industry had successfully resisted calls from vulnerable nations for a share of carbon market revenues to go towards helping countries adapt to climate change.

On Climate Home and elsewhere, it feels like nearly every day brings a new carbon credit exposé. But are those in power paying attention? 

Our freedom of information request revealed that the last Australian government paid US$133,000 for advice on carbon credits. 

The consultants they gave the contract to had a close relationship with the carbon credit and fossil fuel industries and (surprise surprise) the report they produced was uncritical of carbon credits.

While the new Australian Labor government says it is cracking down on consultants, they seem to have kept their predecessors’ love of carbon credits.

Offsetting emissions from new coal and gas production was a key plank of the new Labor government’s flagship climate policy, agreed after compromises with the Greens this week.

This week’s stories

• At Luxor talks, splits remain but hopes high for loss and damage fund this year
• Carbon credit industry resists vulnerable nations’ call to fund adaptation
• Consultants close to industry shaped Austalia’s controversial carbon credit policy
• Cyclone Freddy prompts pleas for urgency on loss and damage finance
• European court hears landmark lawsuits that could shape climate policy
• International Court of Justice to advise states on climate duties: ‘A turning point for climate justice’
• Revealed: How Shell cashed in on dubious carbon offsets from Chinese rice paddies
• Carbon credit rule-makers must engage Indigenous People
• Cop28 host UAE tried to weaken global shipping’s climate ambition
• Climate in court: The Paris Agreement’s role in safeguarding human rights 
• Greens stop blocking Australia’s new fossil fuel projects
• Mexico launches global push for geoengineering restrictions
• I’m a COP veteran. Here are 3 suggestions for the new Loss and Damage fund

On a brighter note, it’s been a fantastic week for climate lawyers. In New York on Wednesday, the UN General Assembly officially asked one of the world’s top courts to advise states on their responsibilities to fight climate change and the legal implications of failing to do so.

That was a diplomatic success for the tiny Pacific nation of Vanuatu and the students there who dreamed up the initiative. Although no one knows what the court will rule, Vanuatu’s prime minister called it “a win for climate justice of epic proportions”.

Also on Wednesday, Isabella Kaminski reported from a court in Strasbourg where France and Switzerland stood accused of breaching their citizens’ human rights through inadequate action on climate change.

If the European Court of Human Rights rules in campaigners’ favour, the case could improve climate policies across Europe and the world – as governments tend to dislike getting sued.

The post Carbon discredits – Climate Weekly appeared first on Climate Home News.

The alliance of small island developing states (Aosis) wanted new guidelines on carbon credits to recommend that a mandatory 5% levy on carbon credit revenues. The money would go to the Adaptation Fund to finance projects like seawalls to protect against rising sea levels.

This idea was supported by the expert panel of the Integrity Council on the Voluntary Carbon Market (ICVCM), the organisation drawing up the guidelines for the industry.

But, with sellers like the NGO Conservation International and buyers like the Spanish bank BBVA opposed, the ICVCM’s board decided to make the 5% levy optional.

Adao Soares Barbosa, a climate negotiator for the south-east Asian island nation of Timor-Leste, told Climate Home that “mandatory measures would be good”, because if it is optional then “it might not be fulfilled”.

But both he and Guinea’s climate negotiator Alpha Kaloga said they were pleased that a 5% levy was there, even if it is optional. “I believe that this principle will become the rule in the near future,” said Kaloga.

Revealed: How Shell cashed in on dubious carbon offsets from Chinese rice paddies

In 2022, the UN estimated that funds for climate change adaptation in developing countries were five to ten times lower than needed. By 2030, the finance needed for adaptation would reach between $160 and $340 billion.

But in 2020, rich countries provided just $29 billion and only aim to provide $40 billion by 2025.

At the last UN climate negotiations in Egypt, countries agreed to “urgently and significantly” scale up finance from developed countries for adaptation measures in developing nations.

Experts overruled

Pedro Martins Barata leads the Environmental Defence Fund’s work on carbon credits and co-chairs the ICVCM’s expert panel. He said most of the panel had supported making it mandatory but the board decided not to heed their advice.

“It was a political decision by the board”, said another expert panel member Lambert Schneider from the Institute for Applied Ecology. Barata said not all of the board’s members supported their decision.

The governing board of the ICVCM

Barata said that, although the funds raised would be limited, a mandatory levy would be important symbolically. He added it would also help carbon markets become popular in communities like Pacific islands or the world’s poorest countries, where emissions are low that there aren’t going to be many carbon-cutting credit projects.

The counter-argument, he said, is that a mandatory levy adds extra costs to carbon offsets and will therefore mean less carbon-cutting projects and more emissions.

Among those making this argument in the consultation over the new guidelines was the American non-profit Conservation International, whose board includes celebrities like actor Harrison Ford and business figures like Walmart’s Rob Walton.

An unnamed employee of Conservation International argued that a levy would be an “undue additional financial burden”.

Cyclone Freddy prompts pleas for urgency on loss and damage finance

‘Reverse carbon tax’

Emergent, an intermediary that develops forest carbon credit projects, said that a levy would “constitute a reverse carbon tax on jurisdictions/projects in those developing countries that the fund is meant to benefit”.

An anonymous staff member of the Spanish bank BBVA argued that, because carbon credit projects are usually based in developing countries and bought in developed ones, they are “already an inherent funding mechanism from developed economies to developing countries”.

Carbon Market Watch’s Gilles Dufrasne, a member of the expert panel, told Climate Home he disagreed. “Adaptation finance is not just development finance,” he said, “it’s money needed to adapt to the catastrophic impacts of climate change.

“Claiming that this supports the host country is a bit like saying you’re supporting farmers when you buy food. Sure, that’s true in a way, but that’s not really why you’re buying the food,” he added. “It’s quite disingenuous to try to pass this off as an act of kindness towards the seller.”

European court hears landmark lawsuits that could shape climate policy

The ICVCM will continue consultations on whether to make a 5% levy mandatory in its next set of guidelines, scheduled to launch in 2025. ” It’s a gap that will have to be plugged in future updates,” said Dufrasne.

The funds generated by a levy are likely to be small in comparison to developing countries’ needs.

A spokesperson for the Adaptation Fund told Climate Home they have a pipeline of projects not yet funded approaching $0.4bn. They said they “will wholehearteldy welcome the 5% share of proceeds when they become available” as they largely rely now on voluntary donations from governments and companies.

Predicting how much a share of proceeds could raise is difficult. But, with the voluntary carbon market at its current size, it is likely to be significantly less than $0.1 billion.

“Its money, its not nothing but its not going to be by itself changing the needle in terms of the needs to address adaptation” said Barata.

The post Carbon credit industry resists vulnerable nations’ call to fund adaptation appeared first on Climate Home News.

Bidding for a A$200,000 (US$133,000) contract to advise Australia’s climate change authority (CCA) on carbon credits, EY boasted of its unpaid work with carbon credit registries Verra and Gold Standard, the documents show.

The CCA required bidders to highlight any conflict of interest arising from their work. EY did not declare any competing interests, despite its previous engagement with the carbon credit registries.

In the end, the CCA awarded them the consultancy contract last year. They were tasked with preparing a report to help the country assess its carbon market schemes.

In the final 60-page report, EY concluded that Verra and Gold Standard were “the leading international offset schemes for governance”, and gave them both the highest evaluation score.

EY gave Gold Standard and Verra its highest scores (Photo credit: EY/Screenshot)

That recommendation could drive Australian companies to buy carbon offsets verified by these two organisations. Both will get fees if this happens.

But Verra’s credits in particular have recently come under fire. In January 2023, the Guardian reported that more than 90% of Verra’s rainforest based carbon offsets do not represent genuine carbon reductions. Verra disputes this.

Both the previous and the current Australian governments have promoted carbon offsets as a way to reduce the country’s emissions, but critics say it’s a way of avoiding politically difficult measures like reducing its coal and gas production or consumption of fossil fuels.

A United Nations-commissioned report last year said carbon offsets should only be used as a last resort, after a firm’s own emissions have been reduced.

A $200,000 report

Carbon offsets are projects that reduce the amount of greenhouse gas going into the atmosphere in one place. They are meant to offset increased emissions somewhere else.

Governments and companies often buy emissions reductions associated with those projects to compensate for their pollution.

For this to work, a third party – which includes organisations like Verra and Gold Standard – is supposed to verify the projects do what they say they do.

But offsets can lead to greenwashing. That’s why last year, the then Australian energy minister Angus Taylor asked the government’s independent climate advisers – the climate change authority (CCA) – to research how to best assess projects.

Revealed: How Shell cashed in on dubious carbon offsets from Chinese rice paddies

The review would help select offsets under the government’s domestic “climate active programme“, a national carbon market, and its Indo-Pacific carbon offsets scheme, which aims to offset Australian emissions in countries like Fiji and Papua New Guinea.

The CCA had the equivalent of only twelve full-time staff members at the time so, to prepare the report, they hired the EY consultancy company (formerly known as Ernst and Young) in April, awarding them a $200,000 contract.

The report was supposed to do a “stocktake” on international offset schemes, come up with a “framework” for comparing the quality of offsets” and compare and rate shortlisted offset schemes.

The report’s key finding was that Gold Standard and Verra had the best offsets, but it could have been influenced by a conflict of interest with them, documents show.

Competing interests

Using a freedom of information request, Climate Home News obtained documents which show that EY had worked with Verra and Gold Standard before producing the carbon offsets report. It was not paid for this work.

EY’s bidding for the consultancy, obtained under FOI, runs to 54 pages – a similar length to the final report.

It claims that EY’s consultants, who charge up to A$1,650 ($1,104) an hour, would carry out “intensive desktop-based research, workshops and collaboration”.

It boasts that EY itself is “now carbon negative” because it buys offsets for more emissions than it produces and therefore has “first-hand experience”.

In a section outlining its “credentials”, EY said it worked with carbon credit verifier Gold Standard, advising on credits legal definition and preparing a survey for the organisation’s consultation group.

EY said their work with Gold Standard “will be continued” in a joint report on this issue.

EY’s bidding document boasted of its work with Gold Standard

Later in this section, EY said it had looked for carbon credits for an unnamed “major global natural gas producer” and formed relations with Verra, “one of the leading standards for voluntary carbon credits”.

The contract, which was also shared in the obtained documents, states that EY had to tell the CCA that “no conflict of interest exists or is likely to arise”.

A clause in the contract between the Australian government and EY

The CCA commissioned EY and, after bumping up the fee from A$198,000 to $206,000. Two months later, they published the 60-page report.

The report gave Gold Standard its top score followed by Verra. It concluded that “Verra and Gold Standard were the leading international offset schemes for governance”.

The documents list Steve Hatfield Dodds as one of the EY consultants who would advise on the report. The new Labor Australian government recently appointed him to an independent review of Australia’s carbon credits scheme.

The director of the Australia Institute’s climate programme, Polly Hemming, said the report was superficial. It “didn’t assess the efficacy of the projects or methodology in reducing emissions,” she said.

Instead “it assessed Verra’s stated commitment to integrity – not whether it actually has integrity.”

Bill Hare, climate scientist and CEO of the non-profit Climate Analytics said Australia’s push for carbon offsetting instead of actual emissions cuts is “a massive challenge”. “So far we have little confidence in (the country’s) ability to tackle the issue,” he added.

Outsourced climate policy

EY’s bidding document reveals the extent of their influence across Australia’s climate policy-making, advising governments, fossil fuel companies and climate campaigners.

Aside from the unnamed “global natural gas producer”, the CCA documents indicate that EY advised an unnamed “Australian energy company with global operations” on carbon markets.

EY has also worked for a British coal mining company called Simec. The Australia Institute accused them of over-stating the economic value of the company’s mines. This experience was not mentioned in EY’s bid for the CCA contract.

Hemming said the government “appears incapable of running any kind of truly independent review process. The default is not to turn to scientists or experts free from potential conflicts but to industry.”

While advising fossil fuel companies, EY was also drawing up regional governments’ climate policies. The consultancy also advised the Queensland region’s environment department “in a number of areas since 2018”, its bid to the CCA says.

Carbon credit rule-makers must engage Indigenous People

This includes helping set up a “carbon farming” project called the Land Restoration Fund which one farmer representative called a “disaster” where “the consultant has made the money and the producer is left behind again.

EY advised the regional governments of South Australia and New South Wales on how to reach net zero by 2050 and the Victoria government on how to reduce emissions.

But even climate campaign groups have forked out for consultants’ advice. The World Wildlife Fund and Farmers for Climate Action commissioned EY to write separate reports on how to reduce emissions from Australian agriculture – neither recommended reducing cow numbers.

And it’s not just EY. Rival consultancy Deloitte advised the government of the Northern Territory on the oil and gas industry.

Their report advised the province to speed up gas production, build gas pipelines and invest in carbon offsets and carbon capture to “meet the growing demand for low-carbon energy”.

Consultant crack-down

In May 2022, the right-wing government of Scott Morrison was replaced by Anthony Albanese’s Labor government. In October, they said they would look to cut the amount of money they spend on consultants, estimated at more than $2bn (US$1.3bn) a year.

As part of this policy, they have given the CCA more funding so that it can increase its staff from the dozen employees it had under Scott Morrison’s government to around 65 staff members.

The CCA’s Archer said the funding “will support the authority to enhance its internal capacity” but “there may still be some circumstances where we decide it is necessary to complement our own expertise by engaging external input”.

Greens stop blocking Australia’s new fossil fuel projects

Controversy over carbon offsets continues. The Australian Parliament passed on Thursday a new flagship climate policy known as the safeguard mechanism.

It will require the country’s biggest polluters to reduce emissions either through absolute cuts or by buying offsets.

Hare warned it could allow coal and gas industries to receive an unlimited supply of carbon credits to supposedly offset its emissions from production.

“The way things are headed in Australia it looks like it will be the first country with a government-sponsored greenwashing system at scale,” Hare said, “and a lot of this will be facilitated by reports from different consulting firms”.

In defence

The head of the CCA Brad Archer told Climate Home that consulting firms often balance work with governments and corporate clients. “While that raises the risk of conflicts, it also provides them with the knowledge to undertake the analysis required,” he added.

Archer said the CCA had “sought assurances that EY had no current conflict of interest and placed a positive duty on them to indicate if they did during the contract. They did not indicate a conflict on commencing or during the contract.”

He said the authority “maintains the highest standards of probity in engaging with consultants and complied with all relevant legislative, policy and procedural requirements when entering into the contract with EY”.

Cop28 host UAE tried to weaken global shipping’s climate ambition

A spokesperson for Gold Standard said that EY Law “were one of many organisations on our consultation group” and that EY was not paid for being in the group or for the paper that followed.

A spokesperson for EY said it is “proud” of the work it does supporting the Australian government and it is chosen for its “specialist knowledge and the skills of our staff”.

Asked if its relationship with Verra and Gold Standard was a conflict of interest, the spokesperson did not respond. But they said that managing potential conflicts of interest is “of utmost importance to EY”.

The post Consultants close to industry shaped Australia’s controversial carbon credit policy appeared first on Climate Home News.

Sixty million Indigenous Peoples almost wholly depend on forests for our livelihoods. In the Amazon basin, Indigenous People manage more than 30% of forested territories. Likewise, in Mesoamerica, Indigenous People and local communities steward half of the region’s forests.

Satellite imagery shows that deforestation rates in our territories are roughly half of rates found in surrounding lands.

Despite centuries of history and clear evidence that Indigenous Peoples and local communities are the most knowledgeable and experienced stewards of our rainforests, we are not consulted in key decisions about how to conserve them.

Governments battle over carbon removal and renewables in IPCC report

When it comes to using carbon credits as a tool to halt deforestation and stop climate change, it is critical that we are included in decision-making and consultation processes. This is especially true with regards to the Integrity Council for the Voluntary Carbon Market (IC-VCM), which will soon release new criteria for high-quality carbon credits called the Core Carbon Principles (CCP). However, their process to define carbon credit “integrity” was developed without input from Indigenous Peoples and local communities.

The Integrity Council is nearing the end of their process to develop this guidance, and has not adequately consulted us on important issues that directly impact our communities, our livelihoods, and our ability to conserve our rainforests. Consultation with Indigenous Peoples and local communities has been limited to one disappointing webinar plagued by technical problems, and one lunch at Cop27 in Egypt—which, despite featuring a promising and robust discussion, has seen no follow-up.

One urgent issue for our communities that we have not been able to weigh in on is the treatment of high-integrity jurisdictional REDD+ crediting in the Integrity Council’s guidance. Jurisdictional REDD+ credits are designed to incentivise the conservation of large regions of forests that span Indigenous territories, states, and whole countries. For our communities, these credits can unlock the finance needed to support our work to safeguard forests.

Mexico launches global push for geoengineering restrictions

With jurisdictional approaches to forest conservation, Indigenous Peoples and Local Communities can generate high-integrity credits based on improvements in emissions and removals across wide regions or territories of forests, preventing deforestation from simply shifting to nearby plots of land.

Because of our efforts, Indigenous territories are often home to High Forest, Low Deforestation (HFLD) regions—meaning that we have high forest cover, yet low rates of deforestation. However, HFLD territories face increasing threats of deforestation. It is Indigenous Peoples who can best defend these territories in circumstances of high vulnerability. However, our only pathway to leverage carbon markets is through HFLD approaches.

It is critical that the Integrity Council does not exclude jurisdictional REDD+ credits, HFLD territories, or Indigenous wisdom from carbon markets. The Integrity Council can get this right by creating guidance for high-quality carbon credits that includes jurisdictional REDD+ programs, including those in HFLD territories, and that reflects Indigenous and local communities’ perspectives and priorities.

I’m a COP veteran. Here are 3 suggestions for the new Loss and Damage fund

The Council should look closely at the Tropical Forest Credit Integrity (TFCI) guide, published by Indigenous Peoples organizations and environmental groups last month. Working together, these groups created guidance to distinguish high-integrity credits that have the greatest forest conservation impact and respect the rights and livelihoods of Indigenous Peoples. The guide shows that jurisdictional REDD+ crediting can be done with high integrity, with Indigenous Peoples and Local Communities at the decision-making table, and with great impact for forests and climate.

Without the inclusion of Indigenous Peoples and Local Communities in the development process, the Council’s Core Carbon Principles will not be effective in the long term. We need to be represented in governing bodies and spaces like the IC-VCM board with a real, legitime representation to contribute to the design and oversight of both the market and individual projects, and have effective channels to address grievances.

The Integrity Council has an opportunity to embody ‘integrity’ by including Indigenous Peoples and Local Communities as partners and honoring our power in the voluntary carbon market. Working together, we can enable finance to flow to one of the most impactful climate solutions—our forests—and Indigenous Peoples and local communities who can best safeguard them.

Levi Sucre is the general coordinator of the Mesoamerican Alliance of Peoples and Forests and Fermin Chimatani is the presidente of the Asociación Nacional de Ejecutores de Contrato de Administración de Reservas Comunales del Perú 

The ICVM responded that it is “deeply commited to working in partnership with indigenous people and local communities to ensure the voluntary carbon market protects and promote their rights and livelihoods”.

It said it has three seats on its board for indigenous people and local communities, one member of its “distinguished advisory group” is from the Shuar people and two members of its expert panel have “significant expertise of working with indigenous people and local communities”.

The ICVM said it is recruiting two experts on indigenous people and local communities and has “engaged extensively” with them during its standards development process and offered them an extended deadline to submit responses “in consideration of technical issues on one of the webinars”.

The post Carbon credit rule-makers must engage Indigenous People appeared first on Climate Home News.

The initiatives are meant to slash methane emissions by changing irrigation methods in rice paddies. But projects in which Shell is involved have implemented a series of accounting tricks that would help them avoid stricter controls.

The oil and gas giant says the projects, certified by the leading carbon standard Verra, reduce greenhouse gas emissions, increase rice productivity, and provide job opportunities – particularly for women.

But their integrity is now under question.

Verra is now carrying out a quality review of its rice farming offsets after identifying a series of concerns with how rules were applied. It also banned any future use of the methodology under which the activities were developed.

Verra has put the projects linked to Shell on hold, pending its review. But the activities have already generated hundreds of thousands of carbon credits, which have been used by fossil fuel giants to compensate for part of their greenhouse gas emissions.

An investigation by Climate Home News has found alarm bells could have rung sooner.

It found rice paddies which are part of Shell’s carbon offsetting projects have allegedly been chopped into smaller plots to avoid stricter rules, according to an analysis of satellite images and emission reductions data.

Additionally, the techniques used are not entirely new, which further undermines their integrity. For nearly two decades, China had already rolled out the methane-reducing irrigation techniques championed by the project.

Governments battle over carbon removal and renewables in IPCC report

Shell acts as a ‘carbon credits broker’ in at least nine of the Chinese rice farming projects currently under review by Verra. The role grants the oil and gas giant the right to either claim the credits against its own emissions or transfer them to other companies, potentially profiting from their sale.

Fossil fuel companies including state-owned PetroChina have purchased more than 450,000 carbon credits issued by the rice farming projects in which Shell is involved. According to Quantum, a carbon market data provider, credits in Chinese rice farming projects have been traded for around $6, meaning that Shell may have pocketed up to $2.7m from their sale. 

Gilles Dufrasne, an expert from Carbon Market Watch, says the findings “raise concerns about the quality of the credits”.

“If project proponents are willing to ‘game the system’ in that way, these credits are not worth what they’re supposed to be worth. They should not be used for offsetting emissions”, he added.

Verra said it takes any concerns about the integrity of projects registered in the VCS Program very seriously and is committed to investigating them thoroughly.

A Shell spokesperson told Climate Home News the company is conducting its own internal review.

“We are aware of the review Verra is conducting of some of its rice cultivation projects and will look carefully at the results when they are published. Our diverse portfolio of carbon credits includes rice cultivation,” it added.

Carbon credits form an integral part of Shell’s net zero strategy. The company aims to offset emissions of around 120 million tonnes a year by 2030 with nature-based solutions of “the highest independently verified quality”.

But Shell has also become a major player in producing offsets, as well as buying them. In 2022 it invested $92 million in carbon credits projects.

This line of Shell’s business has repeatedly come under fire. The company’s purchase of forest carbon credits has been a particular focus of controversy. At the same time, however, Shell has been acquiring a primary role in a nascent, and less scrutinised, niche of the carbon credits market: rice farming.

UN tells governments to ‘fast forward’ net zero targets

Lowering rice emissions

The farming of rice is a big contributor to climate change. The flooded fields, known as paddies, that rice traditionally grows in, encourage bacteria.

This breaks down decaying plants, turning them into a potent greenhouse gas called methane.

To reduce the damage to the climate and save water, over the last few decades some farmers have started to periodically drain their fields. With less standing water, there are fewer bacteria and less methane.

A rice farmer in a field irrigated with alternate wetting and drying methods. Photo credit: IRRI Photos/Flickr

In the early 2000s, the UN’s official carbon offsetting scheme was set up. Known as the Clean Development Mechanism, it established a set of rules for how to get paid to reduce emissions.

One of these sets of rules was meant to reward rice farmers for reducing their methane emissions, encouraging them to drain their fields.

The scheme was aimed at small communities who wouldn’t otherwise have been able to afford the switch to the more climate-friendly irrigation method.

To encourage small farmers to get involved, the rules allow small-scale projects to face fewer checks and paperwork.

Any project which cuts less than 60 kilo tonnes of carbon dioxide equivalent every year is defined as small-scale.

But announcing a review of the methodology, Verra said it was concerned about how certain projects had been categorised as small-scale, therefore benefitting from looser requirements.

Chopped up rice fields

Climate Home News has analysed all of the 37 rice farming projects that have been registered by Verra using this methodology.

On average they declared annual emission reductions of 58.2 kilo tonnes of CO2. For one of the Shell projects the number is 59.99.

In other words, they manage to qualify as small-scale by a very narrow margin. If they had surpassed the 60 kilo tonnes threshold, they would have not been eligible as carbon credits.

Shell is a partner in at least nine paddy fields offsetting projects in China. They are all located in one of the country’s most important areas for rice production, the Eastern Anhui province.

On paper, the projects are presented as unrelated small-scale initiatives. But, at closer inspection, the similarities are striking. They were all approved on the same day, 29 May 2017, by the same proponent: Hefei Luyu, an agricultural technology company based in the capital of the Anhui province. The documents outlining the project's characteristics are broadly identical to one another and were written by the same Shanghai-based consultancy.

Each of those projects bundles together ten of thousands of disparate farms sitting on either side of the Yangtze river.

Our analysis can point to the close proximity of rice paddies grouped by Hefei Luyu under distinct projects. Climate Home News has identified the geographical location of the farms on satellite images. They show rice paddies intersecting into different projects without clear distinction. As little as 280 metres separate farms belonging to separate projects.

If all of those rice projects were merged into one, they would stretch for over 200 kilometers. They would also sum emissions reductions of over 500 kilo tonnes of CO2 per year, rendering them ineligible to be registered as carbon offsets.

Some of the rice fields included in different offsetting projects are only a few hundred meters away from one another

Verra began registering the projects in 2021 after having the proponent’s claims verified by external certification bodies based in China. Now, nearly two years later, Verra says its review has identified quality issues with the work of the validators.

Verra told Climate Home News it cannot comment on specific projects while they are under review.

Kazunori Minamikawa, a senior researcher at the Japan International Research Center for Agricultural Sciences who has conducted several studies on irrigation methods in rice paddies, believes the projects’ proponent may have artificially divided up fields across several projects to obtain the ‘small-scale’ status.

“They just follow the current rule,” he told Climate Home News. “But I think the developers of AMS-III.AU [the rice cultivation methodology] did not imagine such loophole at that time. To solve the concerns in the short run, Verra should create additional strict rules.”

Hefei Luyu did not respond to a request for comment.

Credits without integrity

The categorisation of a project as small-scale is not a trivial matter. In fact, this grants proponents a series of advantages.

Small-scale projects have more leeway in demonstrating that their type of activity is not already a common practice in the project's region. This key principle is known as additionality.

Under this requirement, a proponent needs to demonstrate that its emission reduction project would not have happened without the money obtained through the sale of carbon credits.

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Carbon Market Watch’s Gilles Dufrasne says the concept of additionality underpins the credibility of a carbon offsetting activity.

“The whole logic is that these projects should generate extra emission reductions and that's why they can be used to compensate other emissions somewhere else,” he told Climate Home News. “So it's plus one here, minus one there, it sort of matches up. But if that is not true, it actually leads to an increase in overall emissions. The entire system falls apart”.

The rice farming projects aim to cut methane emissions by helping farmers change irrigation method, switching from continuously flooded paddies to intermittently flooded ones. Thanks to the carbon credits, the projects outline says, farms have been equipped with the cement ditches necessary for the new water regime.

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Documents submitted by the proponents claim people in the areas “have poor living standards and economic backwardness”. Therefore, they would have been unable to implement a new methane-cutting irrigation system without the carbon offsetting initiatives. The documents add the additionality findings are based on surveys conducted by a local academy of social sciences.

Climate Home News has not been able to check the claims.

But opinions from experts and scientific literature suggest that the use of intermittent flooding in Chinese rice paddies is not entirely a new concept.

Chris Butenhoff, a physicist from Portland State University, studied efforts to reduce methane emissions in Chinese rice paddies in the early 2000s. He says it is certainly the case that changes in rice water management in China likely date back to at least the 1980s.

“The transition to intermittent flooding and drying of the rice paddy was driven in part by increased demand for water resources due to population growth, industrialization and expansion of hydropower resources,” he added.

Butenhoff says the data on this is poor so it is hard to have a precise historical record of how the practice spread geographically.

Rice farmers in the Anhui province of China take part in a trial implementing water-saving techniques. Photo credit: IRRI Photos/Flickr

Scientific studies suggest that in 2018 - when the offsetting projects began - around 41% of rice paddies in China were already being irrigated using an alternative wetting and drying method.

This rollout has coincided with the Chinese government making water-saving techniques a key tenet of its agricultural policy. The 2015 National Agricultural Sustainable Development Plan urged to “accelerate the construction of an efficient and water-saving agricultural system”. It set out a plan to increase the proportion of agricultural areas using water-saving irrigation to 75%.

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Kevin Chen, China Leader for CGIAR Mitigate + Initiative, says in recent years, China has invested significantly in building high-yield paddies through the construction of good irrigation systems. “At present, the water management method of paddy fields in most areas of China has changed from traditional flooding irrigation to mid-stage drying and wetting irrigation”, he added.

Chen says the impact has been known for a long time. "The adoption of intermittent flooding by paddy rice farmers might have reduced global emissions of methane from rice fields by about 12% during the decade 2000 to 2009".

Verra raised concerns about China’s rice farming offsetting projects not exceeding what is required by government regulations — the so-called surplus regulatory requirements.

Shell’s offsets

The rice farming projects first came into existence years before Shell entered the picture. Hefei Luyu decided to develop all its carbon credit projects at a meeting of their stockholders held on 29 May 2017.

Only three years later Hefei Luyu and a carbon trading consultancy based in Shanghai - its then partner in the projects - began submitting requests to Verra to have the offsetting projects validated and listed on the exchange.

Shell bursts onto the scene after Verra gave the green light. Starting from December 2021, Shell (Energy) China, a subsidiary of the oil giant, signed a series of agreements with Hefei Luyu, becoming a partner in at least nine rice farming projects.

In particular, according to the documents, Shell took on the role of an exclusive agent for the projects. Those were transferred into the Verra account of Shell (Energy) China, granting the company the right to request the issuance and transfer of carbon credits generated by the projects.

“Shell appears to be acting as a broker for the carbon credits”, Carbon Market Watch’s Gilles Dufrasne says.

“This is becoming increasingly common. Once they have access to the credits they can do what they want. They can use the credits towards their own targets or they can profit by selling them to other companies.”

In recent years, Shell has become an increasingly active player in the carbon credits industry through partnerships and direct acquisition of project developers.

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On a dedicated webpage illustrating its carbon credits portfolio, Shell says it “employs a rigorous internal screening process” to ensure it invests in activities with clear climate and environmental benefits. Shell’s environmental products division markets these carbon credits to customers needing them for compliance requirements or voluntary carbon compensation.

The portfolio lists dozens of offsets, including the nine rice farming projects in the Anhui province. Shell says they “cut greenhouse gases, increase rice productivity, and provide job opportunities - particularly for women”.

More than 450,000 credits issued by the rice farming projects in which Shell is involved have been purchased and used to compensate for emissions between June 2022 and January 2023, according to Verra’s registry.

The credits give polluters a license to emit 450,000 tons of carbon dioxide, more than Tonga emits in a year.

Over 85% of those credits ended up in the hands of PetroChina, the country’s state-owned oil and gas company. 

Verra says its investigation does not affect credits that were issued before the review began unless any excess credits were issued. "If Verra finds that excess VCUs [carbon credits] have been issued, the project proponent will be responsible for compensating for these excess VCUs," it added.

Shell and PetroChina are close commercial partners. In 2021 the companies signed a five-year deal for the supply of what they described as carbon-neutral liquified natural gas (LNG). For each cargo delivered under this agreement, PetroChina and Shell promised to offset the emissions generated using high-quality carbon credits. 

At the time environmental groups branded the initiative as 'greenwashing'. 

PetroChina did not respond to a request for comment.

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This – the Swiss giant says – not only captures carbon from the atmosphere, generating credits to be claimed against its climate targets.

But it also protects crops, reduces water reliance and supports workers on the very farms the company sources materials from.

This practice is called insetting, a term creeping into the “net zero” plans of a rising number of corporations.

Instead of buying carbon credits from unrelated third parties – as they would in traditional offsetting schemes – through insetting, companies invest in carbon reduction or removal projects on their own land or the land of their suppliers.

Critical report

Its emergence comes as more doubts are being cast over the reliability of carbon offsets. A new critical report says this is no coincidence.

The New Climate Institute (NCI), a German campaign group, says insetting is simply offsetting in disguise and is plagued by the same integrity issues.

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The report also raises concern over companies “successfully” lobbying standards-setters to rubber-stamp the inclusion of insetting claims within their net zero pledges.

In particular, the report points the finger at the Science Based Targets Initiative (SBTI), a corporate climate target watchdog supported by NGOs like the World Wildlife Fund and World Resources Institute. The report accuses it of “legitimizing” insetting.

What is insetting?

There is no single and universally-accepted definition of insetting, but the term generally refers to a company offsetting emissions through carbon reduction or removal projects along its own supply chain. Insetting is most commonly used by corporations with a large land footprint and involves protecting nature.

The International Platform for Insetting (IPI) – a business-led group – says insetting brings a more “holistic” approach. “Insetting is an important mechanism for companies not only to achieve their net zero commitments,” Michael Guindon, IPI’s executive director, told Climate Home. “But it also helps companies reach other goals, in improving biodiversity, ecosystems and livelihoods for communities they work with.”

But the NCI claims insetting is just a rebranding operation for “low-standard” offsetting. “The impression is that offsetting has gained a bad reputation, so companies are moving to a different term to avoid criticism, rather than abandoning it altogether,” Silke Mooldijk, co-author of the NCI report, told Climate Home News, “This distracts from the need for real emission reductions”.

The NCI scrutinised the climate pledges of 24 major multinational corporations. It found that the practice of so-called insetting is “gaining momentum and undermining more companies’ climate strategies”.

Offsets – also referred to as carbon credits – have come under increasing criticism over the last few years with academics, journalists and NGOs raising questions over the real contributions to emission reduction. In December 2022 a Guardian investigation  claimed up to 90% of forest-based carbon credits approved by a leading certifier are worthless – which the certifier Verra denies.

Methodologies questioned

The NCI report says the insetting claims it analysed are also plagued by a lack of robust methodologies and the required verification steps.

Insetting within a company’s supply chain may take the form of emissions reduction projects or carbon dioxide removals.

The NCI calls both “highly contentious”. It claims that describing emissions reduction projects as insetting is a “false concept”, because this is a measure of reducing its own emissions and should not be used to neutralise some of the companies’ other emission sources. The risk is that reductions may be counted twice.

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Carbon dioxide removals include carbon storage in soil or wood. These projects – the NCI says – may be compromised by the same integrity issues as any other offsetting project: the difficulty in demonstrating the emission reductions are additional to what would have happened anyway and that they are permanent.

Tree planting activity in Thailand. Photo: Chanklang  Kanthong / Greenpeace

Unlike offsets, insetting projects do not currently require verification against globally agreed standards.

“This could offer a potential avenue for companies to bypass those standards,” Justin Baker, a forest economist at North Carolina State University, told Climate Home News. “That raises concerns regarding the credibility or potential climate benefit of the insetting action.”

Nestlé and Pepsi

Nestlé and PepsiCo are among the companies relying on insetting for emissions reductions or removals.

Nestlé plans to halve its emissions by 2030 and to reach net zero by 2050. The company says it does not use offsetting outside its value chain to deliver emissions removals – even though some of its brands do buy offsets

Its main focus, it says, is instead on sucking in carbon through restoring forests, wetlands and peatlands on its suppliers’ land.

Climate Home News asked Nestlé to provide detailed information about the company’s projects but did not receive a response.

Nestlé ’s publicly available information on insetting overwhelmingly refers to tree-planting initiatives.

A chart from a Nespresso report shows the role of removals and insetting in the company’s net zero strategy. Credit: Nespresso’s Positive Cup report)

Critics like the NCI say tree planting does not always have permanent benefits. If, for example, trees were cut or went up in flames, the carbon sequestered would be immediately released back into the atmosphere.

A Nestlé spokesperson said that “when it comes to the food and agriculture sector, the NCI approach to decarbonization simply does not work”. “Food and agricultural companies like ours can and must play a role in adopting nature-based solutions to achieve their climate targets,” it added.

PepsiCo aims to reduce emissions by 40% by 2030 and to reach net zero ten years later. In its strategy, the company says it wants to deploy “carbon insetting at scale” without elaborating on specific practices and targets.

In 2021 PepsiCo announced a partnership with the Soil and Water Outcomes Fund to subsidize regenerative agricultural practices on 20,000 acres of land in Illinois, a supply area for the company. They claimed this project would “generate verifiable carbon reductions” that could be used to inset corporate emissions.

“Lobbying to legitimise insetting”

The NCI claims Nestlé and PepsiCo are “among the companies successfully lobbying to legitimise the contentious practice of what they label as insetting”.

Nestlé and PepsiCo are among over a dozen large corporations who provided input into SBTI’s guidance for the forestry, land and agriculture (Flag) sector, alongside experts from several NGOs.

The guidance was supported by the charitable foundation of Intel co-founder Gordon Moore and “additional support was provided” by companies in the Flag sector like furniture shop Ikea and food companies Cargill, Mars and General Mills.

The SBTI is the most prominent standard-setter for corporate climate targets globally. It says its targets are “grounded in an objective scientific evaluation” and represent a more robust approach for companies to manage their emissions.

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It treats offsets and insets differently. SBTI’s April 2020 guidance said that “offsets and avoided emissions should not count toward [science-based targets]”.

But, in its September 2022 Flag sector guidance, SBTI accepts removals within a company’s supply chain towards greenhouse gas emission reduction targets.

“No company can purchase offsets to meet its near-term Flag or energy/industry target,” the guidance says, “only removals on land owned or operated by a company or within a company’s supply chain can be included”.

In a separate document, the group said it would “assess insetting on a case-by-case basis during the validation process” due to the absence of a “standardization of the term”.

Climate Home News asked SBTI to provide details on the number of insetting claims approved or declined, but received no response.

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An SBTi spokesperson told Climate Home News that “carbon credits may be used between producers and buyers as evidence that a reduction or removal occurred in association with a commodity to ensure unique claim to the [greenhouse gas] reductions or removals”. It added that “this only applies for Flag if such a reduction or removal is associated with on-farm actions that sit within company value chains”.

The post Corporations push “insetting” as new offsetting but report claims it is even worse appeared first on Climate Home News.

As a growing number of companies set net zero goals, the UN is working to establish standards and best practices. That means cutting their own emissions with minimal reliance on carbon offsets, a taskforce led by Catherine McKenna recommends.

But as talks in Sharm el-Sheikh entered their final scheduled day, the latest draft text allowed for double claiming under the Paris Agreement. That means a company can buy credit for an emission reduction that is also being counted by a country towards its climate goals. It would support US climate envoy John Kerry’s push for corporations to plug gaps in climate finance.

A broad coalition of developed and developing countries oppose the proposal. “This would be really bad. It has to go,” one negotiator told Climate Home News.

“This is largely about whether the claims companies are making are truthful or not,” Gilles Dufrasne of Carbon Market Watch, told Climate Home.

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Negotiators outlined a broad framework for establishing a new global carbon trading scheme at Cop26 last year. Now they are filling in the details.

In Glasgow, countries agreed there would be no double counting: if one country buys an emission credit from another to use towards its target, the host country needs to make an accounting adjustment. This also applies to international compliance markets such as aviation’s trading scheme Corsia.

Two-tier system

But the Sharm el-Sheikh talks could create a second-tier market for carbon credits. Called “mitigation contributions”, these would be used by private companies towards their climate goals, without any accounting tweak.

In that case, both the host country where the carbon-cutting project is located and the company paying for it could claim the same emission reduction.

Matt Williams, climate and land lead at the London-based Energy and Climate Intelligence Unit, told Climate Home these were “junk credits that create a sub-prime carbon market”.

“Calling these credits a ‘contribution’ is “an important signal,” said Williams. It implies they should not be used by companies to count towards a target but only as a way to fund climate action.

If they are used by the private sector as offsets, “we might kid ourselves we’ve achieved net zero when we haven’t by any stretch,” he said.

Country opposition

Small island developing states and an alliance of Latin American and Caribbean nations are among those pushing for tighter rules.

Switzerland, which is relying on the carbon market set up under the Paris Agreement to meet its 2030 climate targets, has called for restricting the use of these “mitigation contributions” so they cannot be used as offsets by private companies.

The European nation proposed to rename them “unadjusted contributions” to make them unattractive for businesses to buy.

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What a company can claim when it buys an carbon credit is a key question for the credibility of the market.

Allowing a company to claim an offset already being used by a country is “corporate greenwashing,” Argentinian campaigner Catalina Gonda, of the Environment and Natural Resources Foundation (Farn), told Climate Home.

The Voluntary Carbon Market Integrity (VCMI) initiative is due to publish recommendations on this in late 2022/early 2023.

An outcome which rules out double claiming would send the voluntary market a strong signal, Gonda said.

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Hugh Salway, head of environmental markets at Gold Standard which verifies carbon credits, told Climate Home there is a role in the market for credits which don’t carry an accounting adjustment. “But how they are being used is the big issue,” he said.

These credits could be bought by companies to comply with a domestic carbon trading scheme to accelerate national emission cuts, for example. But Gold Standard advises companies against claiming offsets that are already being used by a country.

Confidentiality

Separately, countries including European nations have raised concerned that a proposal for an oversight mechanism for countries bilaterally trading credits lacks enforcement capabilities and transparency.

The draft text includes a clause which allows countries to designate as “confidential” any information about the credit they are trading, making it more difficult to expose irregularities.

Gonda said the current proposal would render any oversight “toothless” and impede accountability. “It will be the wild west,” she said.

The post Greenwash alert as Cop27 draft allows double claiming of carbon credits appeared first on Climate Home News.

China’s Xie Zhenhua told a press briefing Kerry had not asked him directly during their informal meetings. (Relations are still frosty since US house speaker Nancy Pelosi’s visit to Taiwan “hurt China’s peoples’ feelings”.)

Warning against reopening the Paris Agreement, Xie said China made voluntary contributions through south-south cooperation and was under no obligation to do more.

“We hope…. that we can set up this new mechanism and then we can discuss how to resolve it in a more in depth way,” said Xie.

Meanwhile a few millions of dollars trickling in from the likes of New Zealand and Scotland won’t go far.

This stalemate has vulnerable nations looking for so-called “innovative finance”. That could mean anything from air passenger taxes to debt cancellation.

Barbados’ prime minister Mia Mottley is pushing a levy on fossil fuels – including during a phone call to John Kerry.

“It’s time for the private sector to stand up and we need to hold them accountable”, said Michai Robertson, the small island (Aosis) negotiator on loss and damage, on Wednesday.

Developed nations seem more open to this idea than to another demand on their public finances. Asked about it in a Cop27 press conference, after pausing for a plane to pass overhead, the EU’s Jacob Werksman said “we’re all looking for innovative finance”.

But it’s not going to be easy. Robertson said it was only in the “exploratory phase”. Getting buy-in from petrostates is an obvious obstacle.

Kerry’s offset plan is ‘raw cookie dough’

UN special climate envoy John Kerry came to Cop27 determined to have something to say about how to fund the transition from coal to clean energy.

Perhaps he recognises that the US’ $1 billion in loans for South Africa’s just energy transition deal didn’t cut the mustard. As he prepared for Cop27 the midterms were not looking promising for a climate-friendly majority to pass more support through Congress.

On Wednesday, Kerry sketched out a plan to use carbon credits to finance coal retirement and deploy solar, wind and geothermal energy in developing countries.

Philanthropic groups Rockefeller Foundation and Bezos Earth Fund are interested in the idea and have partnered with the US State Department to put flesh on the bones. It’s being called the Energy Transition Accelerator.

Kerry’s team “worked on this like crazy for a while,” he said. We first reported the idea at the start of November.

Yet the result “is not so much half-baked as it is raw cookie dough,” said Leo Roberts, of E3G’s coal transition team. There are virtually no details.

That makes it difficult to judge against the recommendations of UN chief António Guterres’ greenwashing taskforce, which set high standards for using offsets to meet net zero pledges.

Kerry promised “strong safeguards” and no repeating past mistakes, which allowed dodgy carbon credits to flourish.

A campaigner against the East Africa Crude Oil Pipeline confronts an adviser to Japan’s MUFG bank at Cop27. According to 350.org, campaigners asked the bank to say they would not support the pipeline and the bankers replied they could not comment on individual cases. (Photo: 350.org)

In brief…

Distancing – Sustainable Energy for All (SE4All) has pulled out of Team Energy Africa, a UN-backed initiative to mobilise private sector energy investments across Africa. The move comes after we reported on the involvement of NJ Ayuk, an oil and gas lobbyist and convicted fraudster.

Should China pay? – After reports that small islands (Aosis) want China to pay into loss and damage, Antigua and Barbuda’s prime minister and Aosis lead Gaston Browne told Climate Home: “All polluters, especially large ones, must contribute to the fund.” He added the “differentiated assessment” should include “historical emissions and the current level of development”.

Scramble for green hydrogen – Egypt and Norway have signed a deal to establish a 100 MW green hydrogen plant 100 MW in Ain Sokhna on the Red Sea. Egypt and Belgium also announced a green hydrogen project, Egypt Today reports.

Methane action – China has drawn up a draft national strategy on methane, its climate envoy Xie Zhenhua said at Cop27. The strategy will target the three main source of emissions – energy, agriculture and waste. They will set preliminary targets which are only preliminary because China has “rather weak statistical capability in this area”. He said public leveraged finance would be key.

Congress in balance – The Democrats are doing better than expected in the mid-term elections, winning Senate seats in Pennsylvania. At the time of writing, who will control the two chambers of Congress – the House and Senate – was unclear. Democratic control would improve prospects for climate finance.

Nature gets money – The Climate Investment Fund announced it will deploy over $350m for nature-based solutions, globally, starting in Egypt, the Dominican Republic, Fiji, Kenya. COP27 host Egypt is set to invest in adaptation of the Nile Delta area, which stands to lose 30% of its food production by 2030 as a result of climate change.

Latin America united – The Community of Latin American and Caribbean States (CELAC in Spanish) issued a joint call for new climate finance through sovereign funds and debt-for-nature swaps. Colombia’s Environment minister, Susana Muhamad, said debt swaps could help unify the region at climate talks, which is usually divided in two groups: left-leaning Alba nations and right-leaning Ailac.

Petroleum financing – The African Development Bank (AfDB) signed an agreement with OPEC Fund to “to expand their partnership to support sustainable economic and social development”. OPEC has contributed more than $1 billion to projects co-financed by the AfDB.

UK ups adaptation – The UK will provide £200 million ($228m) to the African Development Bank Group’s climate action window, a new mechanism set up for adaptation finance.

Weather watching wonga – Spain has announced it will fund the Systematic Observations Financing Facility, which aims to bring early warning systems to more countries. Norway has increased its donation. The beneficiaries of the facility are mainly African nations or small islands.

The post Cop27 bulletin: Could polluter taxes fund loss and damage? appeared first on Climate Home News.

At the Cop27 climate summit, US special envoy John Kerry launched a proposal to use carbon credits to speed up the retirement of coal power and the roll out of renewables in developing countries.

The idea, first reported by Climate Home News earlier this month, is still in its infancy and most of the details remain to be worked out.

On Wednesday, Kerry announced a partnership between the US State Department, philanthropic groups Rockefeller Foundation and Bezos Earth Fund to deliver the initiative, called the Energy Transition Accelerator.

Kerry insisted that the initiative would align with Guterres’ expert group’s recommendations that offsets should be high quality and used as a last resort, after a company has reduced its emission reductions.

But analysts are sceptic the barely fleshed out concept will meet the high bar of standards set out by Guterres’ expert group.

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The expert group’s standards “allow very little space for carbon offsets,” Teresa Anderson, global lead for climate justice at ActionAid International, told Climate Home. “It’s hard to see how Kerry can claim his initiative fulfils all the required criteria.”

The UN chief warned that all new voluntary carbon market initiatives must abide by the group’s recommendations. One of the key principles is that companies setting net zero goals must stop funding fossil fuels.

Kerry said that only companies with set science-based targets and commitments to achieve net zero emissions by 2050 would be able to take part. Fossil fuel companies would be excluded.

However, oil and gas companies are among the largest buyer group on the $2 billion voluntary carbon market.

“We have seen a consolidation over the last 24 hours of what net zero really means,” said Rachel Kyte, co-chair of the Voluntary Carbon Markets Integrity Initiative, which is also working on offsetting standards. “We can innovate… but we have got to meet the standards.”

What’s the noun for those who call for and support the establishment of a standard and then undermine it when it’s inconvenient? #COP27 #climate

— Rachel Kyte (@rkyte365) November 9, 2022

Kerry promised that “strong safeguards” will ensure the credits are aligned with best practice. The partnership will ensure “that we are not repeating the mistakes of the past: no double counting, no greenwash,” he said.

Broad principles agreed by the partnership include limiting the lifespan of the scheme to 2030 or 2035. Kerry suggested the number of credits for sale could also be limited.

Credits will be issued at the jurisdiction level, either by countries or at the sub-national level. Buyers “must use these credits to supplement and not substitute emission reductions,” Kerry said. “This is not in lieu of any other finance commitment.”

The US State Department’s press release states that companies could use credits to support emission cuts “above and beyond their interim targets”. But Kerry also suggested they could be used towards companies’ near-term targets or to address a limited share of the emissions from a company’s product use.

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In addition, 5% of the value of the credits would go towards supporting climate adaptation in developing countries. It is unclear whether the money would go to the Adaptation Fund or another institution.

The focus on accelerating the shift away from coal as the key purpose of the scheme is also unclear.

The partnership hailed interest from Chile and Nigeria in taking part in the initiative. But Nigeria isn’t reliant on coal for economic revenues or energy use.

“There are next to no details on how this would even work in practice. This is not so much half-baked as it is raw cookie dough,” said Leo Roberts, of E3G’s coal transition team.

Roberts told Climate Home the US had in its hands “much more impactful and much less reputationally damaging levers” for scaling up private finance for the transition.

Recommendations made to the G20 to reform the World Bank, in which the US is the largest shareholder, and multilateral development banks “could leverage a trillion in concessional finance,” he added.

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The details will have to be worked out in broad consultations with stakeholders, with a plan more a more concrete proposal to be presented at Cop28 in Dubai next year, Kerry said.

According to the State Department, Bank of America, Microsoft, PepsiCo, and Standard Chartered Bank have said they are interesting in taking part and would like to be involved in the initiative’s development.

Angela Churie Kallhauge, executive vice president at the Environmental Defense Fund, told Climate Home: “This is about the importance of opening up for an inclusive process. It is now an opportunity where we can jointly be shaping this initiative rather than us come with a fully ready proposal that has not had a chance to be tested, discussed and debated.”

The post John Kerry’s offsets plan sets early test for UN net zero standards appeared first on Climate Home News.

Following several instances of cryptocurrency enthusiasts buying carbon credits which don’t do much good for the climate, this project’s backers want to keep those buyers but steer them onto carbon credits which have been verified by organisations like Verra and Gold Standard.

Steve Glickman, an Obama-era White House official whose company Aspiration is part-funding the project, told Climate Home that “we haven’t seen nearly as much capital and nearly as many institutional investors… that we need to see to have the kind of impact on nature-based carbon removal and reduction strategies that are required for us to hit net zero”.

“Our analysis of why that’s slow,” he said, “is that there’s real questions in the marketplace around how you would do this type of carbon credits, investing in a highly credible, responsible way and so we want to build the mechanisms of methodology for doing that… and that’s where the blockchain comes in.”

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The blockchain is a computer-based system that use digital keys to prove and display who owns what. A blockchain combined with a central registry of carbon credits helps ensure that those who are carrying out green projects aren’t selling the credit for one tonne of emissions reductions to more than one buyer.

Gilles Dufrasne is the policy officer for a watchdog NGO called Carbon Market Watch. He said this kind of transparency was “useful”.

Rachel Kyte is a former CEO of Sustainable Energy for All and leads an initiative to promote integrity in carbon credits. She told Climate Home: “Blockchain offers opportunities to build high integrity voluntary carbon markets and it is good to see IFC looking for ways to bring high integrity to many developing countries who could benefit.”

But Dufrasne warned that the information provided must be understandable to be truly transparent. He said financial technology (fintech) companies often claim their projects are transparent because all the information is public. “It may be transparent, but it’s not accessible because nobody understands how it works apart from the fintech people,” he said.

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Blockchains can use lots of energy. But this project uses a blockchain run by a company called Chia which relies on a system called “proof of space and time” which uses far less energy than the “proof of work” system used to produce Bitcoin.

Catherine Flick, a computing academic at De Montfort University, told Climate Home this method “is less problematic but relies on the miners proving they have the space to store the data (so memory and hard drives) for a period of time. So instead of energy use there is demand for storage which is problematic in terms of electronic waste and demand for rare earth metals and chips required for the storage”.

Companies buy carbon credits and retire them to offset their emissions but investors also buy them and don’t retire them, in the hope that the price of carbon credits will rise and they can sell them for a profit. Or companies can snap up cheap carbon credits and retire them when the price is high, polluting for cheaper than they would otherwise have done.

Glickman said: “From our standpoint, it doesn’t really matter why you’re coming into this to invest, that capital is going to support the climate finance necessary to support those projects and we think it’s a good thing that there are more ways that these carbon credits can be liquid beyond just being retired against a carbon footprint.”

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Turning credits into “tokens” is an attempt to attract investors who have become caught up in the “non-fungible token” (NFT) craze where people have paid up to $69m to be recognised as the “owner” of digital art.

Dufrasne said that buying a carbon credit, whether it’s an NFT or not, doesn’t help the climate unless it is retired rather than being sold on. He said: “I’m not under the impression that so many actors in the in the cryptocurrency space are there to just buy these tokens and then make them disappear because then they don’t have anything else to sell.”

While blockchain can help avoid double-counting, it doesn’t help solve other problems with carbon credits like whether the emissions reductions claimed for wouldn’t have happened anyway and whether the emission-cutting projects will survive for as long as the credit sellers claim.

The post World Bank backs carbon credit blockchain registry to attract crypto investors appeared first on Climate Home News.

They have proposed a methodology, pending approval from the UN’s Clean Development Mechanism (CDM), for calculating emission reductions from green hydrogen projects to sell as carbon credits. The buyers of those reductions – mainly countries and companies – could use them towards their net zero goals.

The first project in line for this new market is a hydrogen production station (called Guohua Hebei Chicheng wind hydrogen project) in the city of Zhangjiakou, in northwest China.

The project was one of the stations that provided fuel for more than 1,200 hydrogen powered vehicles during the Beijing 2022 Winter Olympics. The city of Zhangjiakou, in particular, has become a hub for hydrogen infrastructure, among them is a 20MW plant operated by Shell.

Submitted in May 2022, the proposed methodology comes two months after China unveiled its first long term green hydrogen plan, which seeks to ramp up production to 100,000-200,000 tonnes a year by 2025.

The CDM is the world’s largest carbon offsetting programme, set up under the Kyoto Protocol. If approved, the methodology would also be included in the new Paris Agreement carbon market mechanism, up for review by the programme’s supervisory body, said UN Climate Change.

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Hydrogen can be produced in a number of ways, with different carbon footprints. One method is dividing molecules of water using electricity from renewables, which is known as green hydrogen, but it can also be produced using fossil fuels such as gas or coal.

Green hydrogen could play an important role in addressing climate change, fueling sectors that are difficult to electrify such as steel, shipping and aviation. However, at the moment almost all commercially available hydrogen is produced using fossil fuels.

China’s domestic carbon market does not cover green hydrogen projects. The proposal hints at Chinese companies looking for global funding instead, said Luyue Tan, senior carbon analyst at the financial data company Refinitiv.

China United Hydrogen Technology Research Institute and the carbon trading companies Long yuan (Beijing) Carbon Asset Management Technology and Shanghai Environment and Energy Exchange are the proponents of the methodology. 

“It’s positive to develop the methodology to encourage the market. With more methodologies you get a more integrated system,” Tan said.

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According to the CDM methodology panel‘s preliminary recommendation, green hydrogen projects should only qualify for the emissions reductions scheme if they install a new greenfield power plant, add capacity to an existing one or retrofit it. Otherwise, they wouldn’t be making significant changes to the dirty electrical grid, and therefore would not create new emissions reductions. 

To avoid double counting (which can undermine carbon markets), carbon credits can only be issued by the hydrogen producer, not the consumer, the panel recommended. 

The proponents need to address these concerns, said Perumal Arumugam, a regulatory official at UN Climate Change, before the CDM executive board decides to approve or reject the proposal. 

For emerging economies, it could mean an easier way to export wind, solar and hydro, said Rosilena Lindo, Panama’s national subsecretary of energy.

Panama is one of the developing countries with big plans for green hydrogen, aiming to produce it in tax-free zones and supply aviation and shipping demand from its widely used transport routes such as the Panama Canal.

Although Panama was not counting on carbon market revenues to develop the sector, it could help fund some of the planned projects, she said, which require external investment.

“Green hydrogen transforms global energy geopolitics. We’ll finally be able to export our energy without electrical grids. We’re in some way exporting our sun, wind and water,” Lindo said. 

The post Chinese companies seek global carbon market for green hydrogen appeared first on Climate Home News.

The Integrity Council of the Voluntary Carbon Market, one of two bodies set up to address greenwashing concerns, launched a 60-day consultation on Wednesday to define “core carbon principles” for high quality carbon credits.

One of the proposed principles is to align with the Paris Agreement, including by levying a share of the proceeds of selling carbon credits to help vulnerable communities adapt to the impacts of climate change. Others seek to ensure robust carbon accounting and human rights safeguards. Buyers could burnish their climate credentials by choosing credits that meet these standards.

Ousmane Fall Sarr, a carbon market negotiator for Senegal who heads the West African Alliance on Carbon Markets, told Climate Home News it would be “a very big step forward” for the proposals to be endorsed by market stakeholders. “A very clear signal has not yet been sent to developing countries in terms of mobilising adaptation funding,” he said.

Money for climate vulnerable nations to cope with intensifying impacts persistently lags behind finance for cutting emissions, only accounting for around a third of international climate finance.

The value of the voluntary carbon market exceeded $1 billion in 2021 and is projected to grow to $30-50bn in 2030, as big businesses increasingly look to offsets to meet net zero targets. On that basis, a 5% levy on all transactions could deliver up to $2.5bn a year for adaptation by the end of the decade.

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There is a precedent. One of the most predictable sources of adaptation finance used to be a 2% levy on revenues from the Clean Development Mechanism (CDM), the UN’s offsetting scheme established under the Kyoto Protocol to allow rich countries to meet their climate obligations by funding carbon-cutting projects in developing ones.

While the CDM market crashed in 2012 and the Kyoto Protocol was superseded by the Paris Agreement in 2015, this levy still makes a significant contribution to the Adaptation Fund. As of June 2021, 19% of the resources pledged to the fund, or more than $200m, came from the sale of CDM credits, according to its latest financial report.

Efforts by developing countries to replicate this adaptation levy under the new carbon market rules of the Paris Agreement were partly successful.

Countries agreed that a 5% share of proceeds from transactions under a new centralised carbon market would go to the Adaptation Fund, but the same doesn’t apply for bilateral trading. The African Group, which strongly pushed for more more predictable sources of adaptation finance, had to settle for assurances of voluntary contributions.

“It would be very relevant if the voluntary carbon market can be used as a vehicle for collecting this share of proceeds that will contribute a lot of financing to adaptation,” said Sarr.

The proposal in the consultation doesn’t specify the percentage of revenues that could be earmarked for the Adaptation Fund.

Developing countries had lobbied the council to include the proposal in the consultation document, arguing that the 5% levy for the new Paris carbon market was “a hard-fought win“.

It “would allow the voluntary carbon market to provide adaptation benefits in an equitable manner… which would not only benefit our countries, but also put the [market]  in the vanguard of progressive instruments to tackle the climate emergency,” Abul Kalam Azad, Bangladesh’s special envoy for the Climate Vulnerable Forum, Madeleine Diouf Sarr, of Senegal, chair of the least developed countries group and Sarr of the West African Alliance on Carbon Markets wrote in a letter to the council’s board.

The move was backed by the Alliance of Small Island States. “The voluntary carbon market is a significant and growing source of climate finance,” said Conrod Hunte, of Antigua and Barbuda, chair of the Alliance of Small Island Developing States.

“We need to see the standards the world’s governments set for international carbon markets in Glasgow become widely and consistently applied, including in the voluntary carbon market. For those of us representing the world’s most vulnerable populations, the increased mitigation ambition and funding for adaptation this will generate is absolutely vital.”

This article was updated on 27 July 2022 to clarify that the principles are just proposals and are subject to consultation.

The post Make polluters pay for climate adaptation, voluntary carbon market body proposes appeared first on Climate Home News.