Carbon credits are a way to reduce our carbon emissions and our carbon footprint to ensure a sustainable planet for future generations. Like with most ideas, carbon credits started with honest intentions, but loopholes have turned it into a bookkeeping trick. Credits can be a greenwashing tactic that allows companies to mislead customers without making any improvements to their business model.
There are 2 broad types of carbon markets. The first is a mandatory ‘cap and trade’ program. Governments set a limit or cap on the emissions permitted across a certain industry. If a company exceeds its allowance, it can buy more carbon credits from its market to continue emitting gases. The second type of carbon market is the voluntary offset program. This allows businesses, nonprofits, and individuals to offset their emissions by choice.
The carbon credit market was created as part of the 1997 Kyoto Protocol. This legally binding international agreement required only developed nations to cut CO2 emissions. It aimed to decrease overall emissions by 5% from 1990 levels. However, UN officials have since confirmed that Russian and Ukrainian oil and gas companies exploited loopholes and actually increased carbon emissions by 600 million tonnes.
The Paris Agreement of 2015 declared a new set of targets and asked all nations to reduce greenhouse gas emissions, not just developed nations. Its goal is to limit global warming to 1.5 degrees Celsius, compared to pre-industrial levels. The Paris agreement is voluntary and non-legally binding.
Here’s another example of dodgy carbon credits. An oil company, Royal Dutch Shell, delivered a carbon-neutral tanker of LNG or liquified natural gas to Taiwan by investing in ten-year-old forest projects in Ghana, Indonesia, and Peru. In 2020, a French oil company, Total, also delivered its first shipment of carbon-neutral LNG. How can you extract natural gas in Australia, ship it to China, and claim it’s carbon neutral? By buying a 10-year-old wind farm in northern China called Hebei.
In addition to these greenwashing loopholes, the actual cost of each carbon credit can vary drastically from less than $1 per ton to over $50 per ton. The cost depends on the effectiveness of the carbon offset project, the location, and additional benefits. For example, Bill Gates spends $600 per ton to negate emissions from his private jet. Microsoft pays an average of $20 per ton. On the lower end, Delta Air lines pays about $2.30 per ton. They spent $30 million on 13 million offsets, so they were able to declare themselves carbon neutral last year.
Tackling carbon emissions and climate change is very tricky. Carbon credits are a way to quantify emissions and pollutants, so they are a step in the right direction. But it is very important to identify the loopholes, flaws, or scams in the system and address them instead of ignoring them due to the fear of being labeled a climate change denier.
SOURCE: Exposing the Carbon Credit and Offset SCAM - Belinda Carr