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Scaling up carbon markets means scaling up emissions and abuse

Myth: “Carbon offsets need to be scaled up to have a real impact”

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Written by: Joanna Cabello
Written by: Ilona Hartlief
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reading time 7 minutes

SOMO’s ‘Facing the facts: carbon offsets unmasked’ series debunks eight myths promoted by the offset industry.

Carbon market proponents claim:

Industry proponents acknowledge that global emissions continue to increase, and carbon offsetting has not significantly impacted this. But the industry claims it is only a matter of scaling up carbon offsetting to achieve real impact. We need more, not less offsetting, they say. Expanding existing approaches and bringing new technologies online will allow for a much greater carbon-offsetting impact.

Reality check:

Carbon offsetting lacks effectiveness

Carbon offsetting, as the industry accepts, has not been effective in tackling climate change in the last two decades. Between 2004 and 2022, according to registry data(opens in new window) , 1.5 billion tons worth of carbon credits have been put on the Voluntary Carbon Market by four of the biggest registries , 864 million tons of which were officially retired. By comparison, Shell, one major buyer(opens in new window) of carbon credits, was responsible for emitting 10.7 billion(opens in new window) tons of CO2e into the atmosphere during the same period. Shell’s emissions are real; a significant proportion of the carbon credits are not.

Even if the carbon market grew by the most optimistic scenario, that would amount to a highly theoretical 1.5 billion(opens in new window) tons of CO2 offset annually by 2030. In 2022, it was revealed that major US corporations were planning the expansion of 22 new oil and gas projects that, together, would already emit 140 billion tons(opens in new window) of CO2. Globally, major corporations are planning a total of 195 new oil and gas projects that could emit an estimated 646 billion tons(opens in new window) of CO2 combined.

Carbon offsetting, even if scaled up, cannot address even a tiny fraction of the emissions that will come from ongoing fossil fuel extraction and burning. Its proponents claim it does not have to, as they only use it to address their hard-to-abate emissions. It is difficult to give credibility to this claim when it’s made by oil and gas companies expanding extraction. The bottom line is that offsetting does not stop the accumulation of greenhouse gases in the atmosphere that come with burning fossil fuels. However, there are other serious issues with ‘scaling up’.

There is nowhere near enough land to scale up carbon offsetting

Currently, the offsetting industry mainly comprises land-based projects. Scaling up would mean more land under offset projects. Oxfam(opens in new window) has calculated that “land-hungry ‘net zero’ schemes would require an area the size of all the farmland on Earth for tree planting.” Clearly, this is unworkable, but efforts to scale up will have serious negative impacts on food production and the livelihood security of millions.

The Intergovernmental Panel on Climate Change (IPCC) has raised similar concerns. In its 2019 Climate Change and Land report, the global scientific body concluded that(opens in new window) : “large-scale afforestation could cause increases in food prices of 80% by 2050, and more general mitigation measures in the [Agriculture, Forestry, and Other Land Use] sector can translate into a rise in undernourishment of 80–300 million people.”

Hunger is only one of the risks of scaling up offsetting. The Land Gap Report (opens in new window) – authored by a group of 20 scientists from five continents—noted that “the vast majority of lands and forests targeted by national and international pledges on climate change mitigation and forest restoration are neither unclaimed nor unused. They constitute the customary lands and territories of Indigenous Peoples and local communities.” Carbon offset projects are already criticised because of their harmful impacts on forest, traditional and Indigenous communities. Scaling up offsetting can only make matters significantly worse.

The expansion of injustice, dispossession, hunger, and human rights abuses that are inevitable consequences of scaling up land-based carbon offsetting must be viewed against the considerable evidence that offsetting cannot be an effective tool to reduce, remove or avoid emissions. Expanding carbon offsetting will increase emissions globally. It feeds the illusion that companies are reducing their emissions by purchasing offset credits, while in practice, they can keep releasing emissions into the atmosphere and avoid making structural changes.

Reinventing to expand: technological-based offsets are dangerous distractions

If some of these problems are – at times – admitted by the industry and supporting governments, the response is to evolve the range of offsetting projects and technologies. There are multiple problems.

Currently, significant attention is being focused on carbon dioxide removal (CDR) technologies, the most prominent of which is carbon capture and storage (CCS). This refers to the practice of capturing carbon emissions from industrial installations and then transporting and storing them deep underground. Yet, CCS has failed(opens in new window) , for decades(opens in new window) , to demonstrate it can work(opens in new window) effectively. It also poses a threat to public health where it operates due to the heavy contamination(opens in new window) of water sources when leaks occur. Despite this, governments have been persuaded to give the industry billions in subsidies(opens in new window) . Following the same logic, ‘Direct Air Capture and Carbon Storage’ (DACCS) is another proposal that attracts attention to offset fossil emissions. However, capturing carbon dioxide from the air is highly unlikely to be scalable by 2050. It is just too costly(opens in new window) , risky and energy-intensive(opens in new window) .

Other proposals have also emerged, including ‘Bioenergy with Carbon Capture and Storage’ (BECCS), which is based on the idea that emissions produced by the burning of biomass for energy can be stored and locked underground. BECCS, however, also requires large amounts of land(opens in new window) and, therefore, reproduces the problems associated with other land-based offsetting schemes. Moreover, it is based on the flawed assumption(opens in new window) that biomass is ‘carbon neutral’, which neglects all the emissions related to land use change (like deforestation(opens in new window) ) and transport of such biomass.

Some scientists and even industry insiders share concerns about these approaches. Climate researchers involved with the IPCC, for example, have written(opens in new window) that “In private, scientists express significant scepticism about the Paris Agreement, BECCS, offsetting, geoengineering and net zero”. David T. Ho, a professor and a reviewer for the $100-million XPRIZE Carbon Removal competition, has stated(opens in new window) that “Carbon dioxide removal is not a current climate solution” and that “we must be prepared for CDR [carbon dioxide removal] to be a failure.”

Despite this, the attention paid to offsetting, and the funding poured into it (many schemes are heavily subsidised by wealthy states) reflect the extent to which a narrow economic and corporate narrative has paralysed the real climate responses. The focus is on finding ways to maintain the current economic system and manage the risks that climate change poses to that system. The ‘solutions’ proposed involve an unrealistic belief in technological fixes, grabbing control over large areas of land and the creation of new businesses to help the existing businesses continue to emit greenhouse gases.

Scaling up failing systems or blindly hoping the next “fix” will work cannot be the strategy. Mandatory and real emissions reductions, including phasing out fossil fuels, is the only real solution.

Regulation of the carbon offset market as a solution?

There has been an increasing push within UN climate negotiations (linked to the negotiations around Article 6 of the Paris Agreement), as well as at the national level in several countries, for establishing regulated frameworks for trading carbon credits. This would enable and promote a major expansion of offsetting. However, most of the main failures associated with the voluntary carbon market schemes are being replicated. The first regulated international offset scheme under the UN, called the Clean Development Mechanism (CDM), has been extensively criticised for failing to achieve its promises. Nothing has structurally changed.

In parallel, various industry-wide schemes, like the one for the aviation industry known as CORSIA, are also capitalising on these markets since it is set to allow high-polluting airlines to offset their emissions. Moreover, discussions for interconnecting Article 6 of the Paris Agreement with national(opens in new window) and sector-wide schemes(opens in new window) , as well as with the voluntary carbon market(opens in new window) , will vastly expand the problems that already exist and create a set of new ones, including the risk of credits being packaged, sold and resold.

Scaling up a broken system

In the introduction to this series, we set out the history of climate breakdown and the links to colonialism and capitalism. We mapped key moments in which corporations increased their political influence over international climate negotiations. We began by summarising the growing body of evidence showing that the claims about the quantity and quality of carbon credits lack any credibility and are based on misleading assumptions. We then exposed the fallacies that underpin the concepts of carbon offsetting and pricing carbon and explained how these fallacies have created a system in which industries are allowed to ‘pay to pollute’ while maintaining business-as-usual – and profits. Logically, the argument should stop here. Carbon offsetting does not work, and cannot work, as a way to meaningfully reduce emissions or combat climate change. It is a dangerous distraction.

However, the offset industry, corporations and wealthy governments, who desperately want carbon offsetting to exist because its market logic allows the continuation of the business-as-usual, have wrapped the system up with other myths. So, we turn to the false claim that carbon offsetting protects forests and biodiversity, showing how offsetting not only fails to deal with the main drivers of deforestation but actually shields the very actors most responsible for these problems while targeting forest communities as the threats to deforestation.

We then showed that the industry’s claims that carbon offsets move funds to the Global South and support communities conceal an insidious reality. Most of the money involved in offsetting circulates amongst companies and private actors in the industry. Very little finds its way to communities. Meanwhile, communities face a range of serious human rights abuses, including forced evictions, denial of free, prior and informed consent, loss of livelihoods, and increased insecurity and vulnerability as they are forced into a dependency on volatile carbon markets. One would conclude that all of this was enough proof to stop the offset scam.

The industry, however, produced reports that claim that companies who offset their emissions decarbonise faster and are ‘climate leaders’. We looked into those reports and exposed the serious gaps and weaknesses in such industry-backed research, which is based on self-reported, unverified data and/or compiled by entities owning or representing commercial interests in this same industry.

Given the mounting evidence, why is carbon offsetting still so popular, and why are companies and policymakers considering scaling up?

The truth about carbon markets is that they have nothing whatsoever to do with addressing climate change. They are a business opportunity with a wealthy customer base, and the products they sell help their multinational buyers continue maximising profits and shareholder value. In pursuit of those goals, companies have always exploited the Global South and vulnerable communities worldwide, pressured policymakers not to regulate them and lied to the public. We should not be surprised to see the same playbook being used again.

In a nutshell

Scaling up carbon offsetting will result in scaling up emissions, injustice, dispossession, human rights abuse and, for some, corporate profits. There is no climate argument in its favour. Only a narrow, economically self-interested one advanced by a small minority of very rich and very powerful actors. The same actors who are driving the climate crisis.

What’s the alternative? Read more about how to think outside the ‘offset box’ at the end of this series.

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