COP27 may allow greenwashing in carbon offsets

View showing a deforested plot of the Brazilian Amazon rainforest near the Transamazonica National Highway, in Apoye, Amazonas State, Brazil

Carbon credits derived from forest conservation, among other measures, will soon be available to companies through a market monitored by the United Nations.
picture: Bruno Kelly (Reuters)

As the COP27 conference in Egypt draws to a close, there are many important issues – including “Loss and Damage” financing, How countries should report on progress in reducing carbon, and whether all countries can agree on a long-term goal to cut fossil fuels – remains unresolved.

In a statement released late on November 17, Sameh Shoukry, Egypt’s foreign minister, who is chairing the summit, offered a grim assessment: “There are still a number of issues on which there is still a lack of progress. While some of the discussions were constructive and positive, there was no Others reflect the expected recognition of the need to act collectively to address the gravity and urgency of the climate crisis.”

One such problem is the emerging market for carbon credits, which in the COP are being structured in such a way as to leave loopholes open and open to corporate greenwashing.

Carbon markets can be shrouded in secrecy

The 2015 Paris Agreement calls for the formation of two types of carbon trading markets, which would, in theory, allow a high-emitting country to pay for another country’s carbon-cutting projects (preserving a forest, for example, or building a solar farm). The country that sells credit gets cash. The country that buys the credit pays for its emissions rather than reducing them directly. These credits are similar to the types of carbon offsets that exist today that plague me inconsistency, fraud or inadequacy.

In the first type of market, two or more countries can They agree to trade directly with each other; per secondThe marketplace, run by the United Nations, will collect carbon credits from around the world and make them available to countries or private companies.

Byzantine rules suggested this The markets are still being negotiated, but two big problems with their current form have independent experts worried.

The first problem relates to bilateral or multilateral carbon trading. The rules call for independence A commission to oversee that trade, so that, say, two countries acting in bad faith can’t create a fake carbon market and then claim to be doing their bit on climate. But the rules allow states to mark any amount of information about their carbon market as confidential, putting the entire process in the dark. The The committee may have access to confidential information but not disclose it, which prevents civil society groups or other watchdogs from holding states to account.

Moreover, the committee itself is completely toothless. “What is the outcome if the review finds the operation to be a complete joke?” said Gilles Dufrasne, senior analyst at Carbon Market Watch, a research and advocacy group. “The review team gives an opinion, and states can completely ignore it.”

Carbon markets allow for misleading accounting

The second problem concerns the broader UN carbon market. This system is only reliable if each credit is counted only once. For example, if carbon credits from the Zimbabwe Forest Conservation Project were created and then sold, via the UN market, to a US oil company, the credit could be calculated against either Zimbabwe’s national carbon footprint or the oil company’s carbon footprint, but not both. Doubling these credits would reinforce the illusion that global emissions are falling faster than they really are, and would amount to greenwashing.

tThe rules being developed for this market prohibit double counting of a single category from the credits. But another class of credits suffers from no such restrictions and, if priced more cheaply, could offer companies an attractive way to indulge in greenwashing. to circumvent this, COP late at night Negotiations on November 17 came to the decision to name the last class of credits as “contributions,” not true compensation. Discrimination is what is meant Clarify that companies are buying These credits Just supporting carbon reduction activity from a corporate social responsibility perspective and not directly offsetting its own emissions.

“contribute” language Dufrasne said it was a positive step. but without More specific prohibitionsHe said the rules still “leave the door wide open for double counting between countries and companies.”

Although the rules aren’t bulletproof against green bleaching, they provide a template for corporate climate plans. With the right kind of supervision and credit in these markets It may be more powerful than the current compensation. tClimate interested companies can Get rid of old school dependence on questionable compensation and refocus them Actions about their own reduction Emissions, more effective purchase credits, and “contribute” to emissions reductions elsewhere. Although the United Nations It has no direct control over the current $2 billion private carbon credit market, and the rules that are taking shape here will send an important signal to that market about what governments consider to be reliable.

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