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Breaking Down Carbon Markets: The Challenges with Quick Solutions to the Climate Crisis - Intro

This summer was a huge moment for mainstream environmentalism.

In July, the planet was the hottest it’s ever been. Smoke from Canadian wildfires suffocated the east coast. Hurricanes flooded Southern California. Fueled by generations of intensive extraction, Maui burned to the ground in the largest documented wildfire in history.

More than ever, people are acutely aware of the reality that our planet is struggling ecologically; that our global climate is rapidly changing.

Urgently, many are looking for solutions to return to “normality”.

For some trading carbon credits, flawed though they may be, is the way out of our ecological, or climate, emergency.

In this series, I will go over recent discourse on carbon credits beginning with the earth-shaking carbon offsetting stories from the Guardian that spotlighted the dangers of unregulated carbon markets. I will end with recent discussions on (the lack of) green investments in the global south (i.e., in Belém, Brazil and Nairobi, Kenya) and the perceived role of carbon markets therein.

But, first, what are carbon credits and the markets in which they are traded?

Carbon credits (or carbon offsets) can be broadly defined as permits that allow the owner to emit a specified amount of carbon dioxide and other greenhouse gasses (GHG). Title V in the Clean Air Act Amendment of 1990 established one of the first tradable carbon offsets through a permit program that is now known as the “cap-and-trade” program.

Under the “cap-and-trade” program groups that emit at least 10 tonnes of regulated GHGs per year are classified as “sources”. Sources must register for permits to emit regulated GHGs, at a cost.

In 2005, the Kyoto Protocol instituted a global carbon credit trading program, albeit via a more flexible trading process, regulated under three programs: (1) international emissions trading – countries party to the Protocol below their emissions limits can “sell” emissions to countries above their limits; (2) clean development – countries with emissions-limiting/reducing commitments can implement an emissions-reducing project in a developing nation party to the Protocol; and (3) joint implementation – a country with an emissions-reducing commitments can partner with another country with an emission-reducing commitment to implement and emissions-reducing project to earn “emissions reduction units” equivalent to one tonne of carbon dioxide emissions.

Carbon markets instituted by the Clean Air Act and the Kyoto Protocol are classified as compliance markets. That is they were implemented to regulate emissions at the national and international (as well as regional) levels.

From 2005, as the compliance market created by the Kyoto Protocol began to mature, demand among corporate groups grew – because of moral cause and PR positioning – and voluntary offset programs emerged.

Voluntary Carbon Markets (VCM), however, operate outside of compliance carbon markets. This means that the Voluntary Carbon Market, currently valued at $2 billion and is only expected to grow further, is largely unregulated.

Groups like the Integrity Council for the Voluntary Carbon Markets, the Gold Standard Foundation, and Verra publish criteria for certifications for carbon credit projects, but each set of published criteria follow a different set of standards.

What processes are important for carbon offsetting projects to track are subject to broad interpretations of fundamental biogeochemical processes, which track how much carbon is pulled out of the atmosphere by plants, how much carbon plants emit naturally, and how much carbon the entire ecosystem emits naturally, respectively.

Most standards groups have thus far overestimated the amount of carbon pulled down by plants compared to how much could be emitted by the plants over the course of a project, or undervalue how much carbon can be emitted by an ecosystem, namely by the soil – where the most (~80 percent) is stored on land, thus, over-valuing the carbon reductive-capacity of projects being certified.

It is, therefore, the responsibility of project directors to establish trust with stakeholders in the validity of their carbon offsetting projects.

But that trust is breaking down.

Earlier this year, reporters from the Guardian, Patrick Greenfield and Fiona Harvey, published a series of investigations spotlighting the dangers of ill-managed carbon offsetting projects. Ill-managed carbon offsetting projects have the potential to violate human rights, overestimate carbon offsets (via ‘phantom credits’), and even contribute to GHG emissions.

In the next article I will look into recent research findings showing that timber harvesting projects, including those that made up 45% of carbon offsetting projects of the Bonn Challenge, actually contribute to annual GHG emissions and environmental racism in the US.

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