You have to hand it to The Guardian – they certainly created stir with this article! In the space of a few days there has been a flurry of impassioned responses. The article was amended today to include a submission by Verra and the tone is altered but the thrust was the same. This is our take:
Firstly, we agree that carbon projects need greater scrutiny. In 2021 we highlighted the risks of older credits undermining the positive intentions of companies to invest in carbon reduction projects. Trove Research will also shortly be launching its carbon credit integrity assessment tool to help users navigate these issues.
However, the Guardian has lost sight of the big picture -> private (voluntary) capital plays a crucial role in protecting natural stores of carbon and increasingly threatened ecosystems.
Between 2000 and 2020 the world lost 100m ha of tree cover, releasing 170Gt of carbon emissions. The voluntary carbon market currently has 84 registered REDD+ projects in 21 countries – mostly in tropical regions. Trove calculates these span over 20 million ha – an area just shy of that of the UK. These projects have been supported by some $2bn of capital from the voluntary corporate sector. Other studies show the private sector provides 20% of global funding to support avoided deforestation.
The Guardian article highlights the problem of poor baselines, which increase the number of credits being claimed. This needs addressing, but has it really enabled companies to pollute more? We doubt it – there is little to no evidence to support this. Carbon credits are used by companies to voluntary go beyond the short term efforts to control emissions. They are not compelled to do so. Companies rarely use carbon credits to meet compliance obligations and avert expensive fines or costly emissions abatement (California and S. Korea do but in small volumes). Purchases of carbon credits voluntarily is additional expenditure. More and more of this expenditure is now being invested in new projects, rather than buying older credits, as long term corporate commitments are needed to guarantee the finance to protect the forests.
To the Guardian – improvements in baselines and project scrutiny are sorely needed and being implemented, and too slowly. But be careful what you wish for in criticising corporate climate action. These capital flows are important and will be needed more than ever going forward.