There are 3 major categories of problems in the voluntary carbon markets:

1) Impact failures – The offset projects do not accomplish their stated reduction in greenhouse gasses, either because of poor measurement, overstatement of expected impact, or project failure

  • Measurement example: The UN Intergovernmental Panel on Climate Change (IPCC) reported that the margin of error in measuring emissions and reductions can be as high as 60 percent in utilities and 100 percent in agriculture.[i]
  • Overstatement example: One million LifeStraw water filters are being distributed free in Kenya, because carbon offsets will allow the manufacturer to profit from the project. Gold Standard certified this project based on a predicted local boiling rate for water of 71% found in a 17-household study, despite massive evidence that the actual boiling rate is below 25%.[ii]
  • Project failure example: Forestation projects regularly fail to accomplish their promised carbon capture. If a tree dies, burns, or is harvested for timber, there is “no legal requirement – and little incentive – for the buyer or the seller to replace the lost carbon savings.”[iii]

 

2) Additionality failures – The offset projects would have happened anyway due to economics or tax incentives, so the emissions reduction would have occurred without the offset funding

  • Research examples: A Stanford study examined 3,000 projects applying for $10 billion worth of energy credits, and found that one-third to two-thirds of them would have been built without CDM funding. International Rivers (a US watchdog) claimed that almost 75% of CDM projects were completed by the time they received funding .[iv]
  • Field examples: Blue Source sells offsets from oil companies who pump CO2 into depleted wells to extract residual oil, even though oil companies do this regardless.[v] Terrapass’ offset portfolio includes numerous methane reduction projects started three to six years before Terrapass was founded.  Seattle paid DuPont $600,000 in 2005 to offset the entire city’s municipal electricity usage from a DuPont greenhouse gas reduction project that “would have continued” anyway.[vi]

3) Monetary failures – By going through third-party providers, most offset funding does not end up assisting projects to reduce emissions, and sometimes fraudulent providers do nothing with it at all

  • Fraud examples: Vatican City in 2007 declared itself carbon neutral by purchasing offsets from KlimaFa, yet the so-called “Vatican Forest” had not been started by 2010.[vii] GreenSwitch in Australia sold tens of thousands of dollars worth of credits, but did not actually purchase certificates until it was forced to do so recently by the Australian government.[viii]

 

Rolk Skar stated it best.  The Greenpeace senior investigator and forest conservationist said, “I think you are looking at 75 percent of [voluntary carbon offsets] as garbage, at least.”[ix]

 

 

[i] “Conning the Climate”, Mark Schapiro, Harper’s Magazine, February 2010

[ii] Starr, Kevin. “Thirty Million Dollars, a Little Bit of Carbon, and a Lot of Hot Air,” Stanford Social Innov. Review, June 16, 2011. http://www.ssireview.org/opinion/entry/thirty_million_dollars_a_little_bit_of_carbon_and_a_lot_of_hot_air/

[iii] “Buying carbon offsets may ease eco-guilt but not global warming”, Doug Struck, CSM, April 20, 2010

[iv] “Billions wasted on UN climate programme”, John Vidal, The Guardian, May 26, 2008

[v] “Industry caught in carbon ‘smokescreen’”, Fiona Harvey and Stephen Fidler, Financial Times, April 25, 2007

[vi] “Another Inconvenient Truth” – BusinessWeek, March 26, 2007

[vii] “Buying carbon offsets may ease eco-guilt but not global warming”, Doug Struck, CSM, April 20, 2010

[viii] “Carbon offsets: Australia leads the pursuit of ‘greenwashing’”, Kathy Marks, CSM, April 20, 2010

[ix] “Buying carbon offsets may ease eco-guilt but not global warming”, Doug Struck, CSM, April 20, 2010