The carbon credit market is booming right now, and its rise is expected to continue. The market is set to see up to 80% growth this year and could equal up to $1.7 billion by year end. Buying carbon credits has become a very popular method of demonstrating dedication to sustainability, and the world’s biggest companies – Disney, JP Morgan, and Microsoft, to name a few – are all on board.
Underneath these promises, however, lies, in many cases, a market filled with false promises, non-existent action, and questionable motives. Welcome to the world of carbon offsetting.
On the surface, carbon credits should be simple. Each credit, supposedly, represents 1 ton of carbon that has been reduced. Companies can volunteer to purchase these credits in bulk and use them towards their overall carbon reduction figures or they can sell them on. Carbon credits also reduce in value year on year, so companies who don’t use them are losing money.
However, with the market’s rise comes an increase in offsetting initiatives that range from questionable to completely false.
Companies can buy voluntary carbon credits for offsetting projects that do nothing to reduce emissions yet can still claim to have cut carbon through them. An example: JP Morgan purchased 96,000 carbon credits to offset their emissions by protecting 2380 acres of trees in Pennsylvania that were at risk of deforestation. The only problem? The trees were never in danger to begin with. The forest was being preserved by the Hawk Mountain Sanctuary Association, a $3 million organisation that protects the forest area and sees 60,000 visitors per year. The trees haven’t been touched in 85 years and aren’t going to be at risk any time soon, yet JP Morgan still used their purchase to cancel out their employee air travel emissions.
Another example: French company Total announced plans to develop oilfields in the Republic of Congo and Suriname, ones which would significantly impact surrounding wetlands and endanger the tropics largest peat deposit. Total claimed that these effects would be offset by providing money to the government for wildlife protection and by planting fast-growing trees in the savannah. If these plans go ahead, natural habitats will be lost, and masses of carbon will be emitted – damage that cannot be mitigated by planting a few trees. Once again, a large corporation has used the loopholes provided by carbon offsetting to continue to damage the natural world to line their pockets.
Shady business practices attract shady characters so, when WeWork’s Adam Neumann recently made headlines with his newest company Flowcarbon, many of us were unsurprised. Neumann wants to take offsetting to the crypto world with the $70 million backed company putting carbon credits on the blockchain. So, a man worth $1.5Bn is using investors’ money for his new company!! Combining this already questionable practice with the volatile and unstable crypto landscape is surely a recipe for disaster and represents another example of an egotistic business mogul hopping on a bandwagon that’s sure to fail.
It’s simple: carbon offsets have rapidly transformed into another form of greenwashing, something to make the public and investors think that positive change is being made when, in reality, it’s just business as usual.
Thankfully, there are a few companies who are striving to better the market. One of these companies is Pachama, which recently received $55 million in Series B funding. Pachama uses AI and satellite imagery to monitor forests to verify whether they’re in danger of destruction. Determining which forests are at risk decreases the chance of situations like the one in Pennsylvania, making sure money is going to projects that actually need it.
There’s also Earthbanc, who uses technology like AI, web3, and satellite data to annually audit carbon credits. Although standard practice sees that carbon credits are verified through third parties, there are plenty of loopholes which enable companies to get away with emitting the same amounts they always have been whilst enjoying the PR benefits. For carbon credits to become a legitimate force for good in the fight for climate change, the market needs transparency, or the biggest corporations will keep getting away with business as usual as the world suffocates.
The world of carbon offsetting has become a goldmine for companies who want to keep up green appearances whilst still pumping out dangerous levels of carbon emissions. Unfortunately, many still see the climate crisis as simply an inconvenience to the bottom line. Greenwashing is rampant right now, and some companies are constantly looking for the next bandwagon to hop on. Currently, that bandwagon is carbon offsetting.
The state of the carbon credit market is just another example of how, despite constant warnings, rising temperatures and carbon emissions are still seen as something that can be ignored. Companies shell out the bare minimum on so-called offsetting efforts that not only do nothing, but actively draw money away from climate projects that are actually making a difference. If there was a stronger focus on actions like green retrofitting, biodiversity, and sustainable cities, net-zero may be possible by 2050.
Right now, carbon offsetting is being used as an excuse for companies to keep destroying the planet. The public must be ready to scrutinise what these companies are doing and hold them accountable for continuing to push our climate to the point of no return.
The carbon credit market must change dramatically, otherwise we’re just putting money into the pockets of a snake oil salesman.