Net zero means different things to companies, from eliminating heat-trapping emissions to using offsets and claiming carbon neutrality. Companies can often ratchet down their carbon-dioxide releases by consuming cleaner energy and deploying energy-efficient technologies.
But they can’t get rid of them entirely. So they buy carbon credits — financial vehicles that go into such things as saving tropical rainforests. Saving trees that are natural carbon-dioxide vacuums is a noble cause. In theory, it is. But it is eye-catching when the chief executive of the world’s largest standard-setting organization must step down.
Verra’s chief executive, David Antonioli, has been through a tumultuous year caused by a nine-month investigation into the carbon market led by the Guardian newspaper. It found that more than 90 percent of Verra’s credits were “worthless” and that it had overblown its influence. Gucci, Unilever and Nestle are among the businesses purchasing those credits. Gucci has stopped and quit calling itself “carbon neutral.”
“Together, we have built an organization that ensures integrity and embraces innovation to tackle some of our most vexing environmental and sustainable development challenges,” Antonioli said. The organization calls the investigation into its business practices “grossly misleading.”
Those who set standards for market carbon credits say they are preventing deforestation, providing jobs, and building schools and hospitals. Indeed, Verra, which has issued carbon credits since 2009 worth $2 billion, says it enables companies to reduce atmospheric carbon.
Nevertheless, Verra and the carbon credit market are under the microscope. The World Economic Forum said voluntary markets lack transparency, and it cautions against buying credits instead of cutting emissions. And Follow the Money alleges that South Pole — the world’s largest seller of carbon credits — exaggerates the number of trees it saves, causing major companies to spread such falsehoods to their customers and shareholders.
Its cash cow is a mega-project in Zimbabwe called Kariba. According to Bloomberg, most of the $109 million invested in Kariba’s rainforests has gone to South Pole and its partner, Carbon Green Investments.
The denunciation has slowed the market. Xpansiv reports that brokers traded 9 million tons of project-based forestry projects in the first quarter of 2023 compared to 47 million tons in the first quarter of 2022.
The fundamental problem is the need for more oversight. Brokers will match landowners and companies, which get pictures of rainforests — ones not used for farming or timbering. But they won’t get photos of uprooted trees. Landowners in Bolivia prevented the deforestation of hillsides, but they chopped down trees on the plains. The carbon impact trumped the carbon credit, allowing the communities to sell the wood and get paid to preserve some trees.
It’s positive that companies are purchasing new technologies to become more energy efficient. But merely buying carbon credits is potentially wasteful. A cynical person might conclude it is a public relations stunt. The Carbon Disclosure Project says that less than 1 percent of companies have a “credible climate transition plan.”
What now? Rainforest nations need $100 billion to ensure the survival of their lands. The carbon markets will raise some of that money. But the trading system must be transparent and trustworthy. To that end, Verra and the voluntary carbon market will reinvent themselves. At COP27 in Egypt last November, the global community affirmed the right of national governments to issue carbon credits to corporations.
No matter who underwrites them, they must be appropriately accounted for. The money must stop deforestation and build infrastructure — the kinds of things to mitigate the effects of climate change. After all, these are low-lying nations vulnerable to rising tides and droughts.
If carbon credits keep trees standing and the rights of indigenous peoples intact, that’s a good thing. But right now, those markets are embattled and have a black eye — manifested by the resignation of Verra’s CEO. The goal is to get off the mat and re-emerge stronger and better, enticing wealthy nations, corporations and philanthropists to buy in.
