To fight climate change, we need a better carbon market, wrote Peter McKoy for the New York Times in August. But how much better could the Voluntary Carbon Market really be?
Carbon credits are dirt cheap – just $2 to remove one ton of carbon dioxide from the atmosphere, or the equivalent of a one-way flight from Paris to New York – and simultaneously highly valued.
In 2021, the Voluntary Carbon Market was valued at $2 billion. The McKinsey group estimates it could grow as much as 2400 percent, or $48 billion, by 2030. Giant banks and hedge funds are pumping millions of dollars into the market to capture this moment of flourishing.
Still, a series of investigative stories by Guardian reporters Patrick Greenfield and Fiona Harvey on one of the world’s learning carbon offset certifiers, Verra, which stamped offsets used by Disney, Gucci, and Shell, among other large corporations, poked holes in the sweeping promises made by the carbon exchange industry.
Several large corporations are facing the consequences of relying on poorly regulated promises.
In May, the second largest airline in the world, Delta, was sued in California because many consumers felt they were not transparent and misleading by claiming to be the “world’s first carbon-neutral airline.”
The plaintiffs weren’t convinced that Delta’s carbon offsetting plans were ‘additional’ – wouldn’t reduce any pollution that wouldn’t already be removed by natural processes or other carbon offsetting projects.
As of August, Shell, Gucci, and other corporations retired their own carbon offsetting projects amid a growing number of scientific reports that demonstrate that carbon offsets do not provide the environmental benefits they claim.
Through it all, the market flourishes; dreams of its potential reaches across the globe.
At the first Africa Climate Summit in Nairobi, Kenya in September, many leaders expressed confidence in the economic potential of carbon offsetting.
And why wouldn’t they when companies like Ecologi make believing in carbon offsets’ role in fighting climate change as easy as the push of a button? Make believing their work as succinct a process as reading through their “trust through transparency” page?
But this trust is not shared by all.
Many campaigners raised concerns about the potential for greenwashing through disingenuous or mismanaged projects. And, they need not look far for examples.
The Africa-led Great Green-Wall project is one of the world’s largest ecological restoration projects. The concept spans 7,000 kilometers of the Sahel-Sahara region from Senegal to Djibouti. Thus far, with $2.5 billion invested, the project has created 350,000 jobs and restored 20 million hectares of land. In all, however, the project was supposed to receive $30 billion dollars, create 10 million jobs, restore 100 million hectares, and pull down over 250 million tons of carbon dioxide.
The project began with much enthusiasm and vision for uniting the African diaspora around regreening the continent to protect its people from climate change. Today, many leaders and their communities are lacking that trust Ecologi and Leugers consider the centerpiece for any functioning relationship around carbon offset projects.
In Brazil South American leaders finished a momentous meeting in Belém about the state of the Amazon rainforest. In recent years, the Amazon has experienced record levels of deforestation led by Pará State in Brazil, which lost around 1 million hectares of forest to deforestation between 2019 and 2022.
Now, however, Pará State has become a leading location for carbon credit investments in Brazil. And while communities have signed non-legally binding – or good faith – agreements, many community members have their doubts, noted Katy Watson for BBC.
And while many residents of the Amazon struggle financially without support from the Brazilian government, some still choose against carbon credits because they feel “It’s not that transparent.”
Many members of Amazonian communities urged leaders ahead of the summit to focus on a model for regulating carbon markets awareness for the Amazon’s value (upwards of $210 billion) expands. Unfortunately, carbon markets were not mentioned in the lengthy summit declaration.
So, without a strong model for regulating voluntary carbon markets in arguably the world’s most important ecosystem, where do we go from here?
In the next and final entry, I will go over a proposed futures for carbon markets within a broader burgeoning global green economy that can grow developing economies and mitigate the impacts of climate change.