Despite the wishful thinking of champions of carbon offsetting at COP28, the voluntary carbon market will only play a role in tackling the climate crisis with stricter standards and greater transparency.
The CMW team at the COP28 in Dubai has been up to its ears in statements about carbon credits saving us all from climate Armageddon. Even the COP presidency managed to graciously find some time in its busy schedule to organise a roundtable on scaling up voluntary carbon markets.
We must not be reading the right media articles, because 2023 has not been sunshine and roses. Instead, it’s been quite apocalyptic for carbon offsetting, with countless scandals emerging: overestimated emissions reductions, forced displacement, sexual abuse, and more.
This year has been so bad that, when announcing the US’s new Energy Transition Accelerator (a carbon crediting scheme), the only positive example of an emission trading market that US Special Presidential Envoy for the Climate John Kerry could come up with in his speech was a system that didn’t involve carbon offsets, didn’t focus on greenhouse gases, and was implemented 30 years ago.
Follow the money
A big question that still bugs us is: where is the money? The (self-interested) predictions of banks and consultants forecasted that we were only a few years away from the emergence of a market worth tens or hundreds of billions of euros. And who will actually benefit from this money? Could it be those making the predictions?… It is certainly a possibility.
In the voluntary carbon market, intermediaries buy and sell credits with zero transparency. Who holds units? At what price are they purchased? What cut do project developers receive? How much money trickles down to local communities or indigenous peoples?
Countries and companies pledging to invest in carbon credits and market “infrastructure”, should remember that it’s not just about buying credits, it’s primarily about slashing your own emissions first, then supporting climate action where it is most needed and in accordance with what the local people want, human rights law, and ecological integrity.
Without transparency on where the money is flowing, there will continue to be opportunities for the wrong players to step in (such as investment bankers registered in tax havens) and for actions that benefit carbon cowboys in an unregulated Wild West at the expense of people and planet.
Fixing Article 6
This issue can be addressed. Under Article 6, countries must ensure the maximum level of transparency, including by disclosing account holdings in the numerous registries that are being established. They also need to close the gaps in the loose confidentiality provisions by developing a dedicated work programme and code of conduct.
A clear system to track carbon units must be implemented, allowing the maintenance of a public record of carbon credit transactions and end use. Some actors in the Voluntary Carbon Market are already showing examples of how this can be done (but notably not the major standards), and others should follow.
Without transparency, any semblance of credibility is unlikely to be restored for carbon markets. Integrity and transparency go hand-in-hand. And just repeating the word integrity over and over again does not make it true.
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A version of this article drafted by CMW appeared in CAN International’s ECO newsletter.
