80 NGOs Want To Blacklist The Carbon Markets
Video: Why do environmentalists hate the carbon markets?
Transcript
Greenpeace, Amnesty International, ClientEarth, and around 80 other NGOs are calling on companies to avoid using carbon credits to offset their emissions.
In this video, we’ll discuss why so many environmental organizations hate the carbon markets… and which criticisms they get right or wrong.
So, it’s no secret many environmentalists despise carbon credits…
There are two main reasons:
Because they view it as a shortcut that corporations can use to avoid reducing emissions in their own supply chains.
Because it’s difficult to determine how credible carbon credits actually are.
As we’ve seen with various scandals at Verra, the largest carbon registry in the voluntary carbon markets, some of the most popular carbon reduction project types and methodologies, like REDD+ or cookstoves, can be prone to manipulation. Where these carbon projects will generate more credits than they should, and they might actually not be helping the environment in the project areas at all.
This is something that I talked about in a previous video that I’ll link in the description. Essentially, these NGOs are correct about the over-crediting issue. It’s a problem that the market is working toward addressing.
But they like to dramatize it and pretend like none of these carbon projects are benefitting the planet. Which isn’t true. It’s more like approximately 70-75% of them are generating more credits than they should, or probably shouldn’t even be projects at all.
This isn’t a great percentage, by any means, but the carbon markets are redeemable. These NGOs are acting like they aren’t. As I’ve discussed, various organizations are bringing an ever-increasing level of oversight into these markets.
Carbon registries like Verra and Gold Standard are continuing to improve their methodologies.
The Integrity Council for Voluntary Carbon Markets (aka ICVCM) is starting to announce the first methodologies approved under its stricter Core Carbon Principles.
The US government has released guidelines for corporate buyers and carbon projects to follow to ensure that the VCMs are reaching a higher standard of credibility.
And we’ll see more news like this over time. Standards are continually improving, and there are plenty of projects doing the right thing. We can’t just get rid of the whole industry and focus on reducing emissions within the supply chain itself. Bringing everything to zero is impossible. Oil and gas are simply used in too many industrial processes and consumer products for this to be possible. Around 30% of carbon emissions will be too difficult to reduce to zero on any reasonable time scale, if ever.
So, the NGO dream of seeing everything emit zero carbon is just that—a dream. If we actually want to reach net zero, we need the carbon markets, at least in some capacity. Organizations like Greenpeace and The Guardian that continually attack this industry aren’t being constructive, in my opinion.
I don’t think they’re trying to be, either. They want to see the carbon markets die.
The various NGOs felt a need to release a new statement about how much they dislike the carbon markets because the Science Based Targets initiative (SBTi), the largest verifier of corporate climate targets, had announced they would allow the use of carbon credits for offsetting scope 3 emissions.
Which was great news for the carbon markets, and analysts estimated that would increase demand for carbon credits by about 10% on an annual basis.
This news, of course, made radical environmentalists upset, and even forced the CEO of SBTi, Luiz Amaral, to recently step down over the backlash…
He’s leaving SBTi at the end of July, which he attributed to personal reasons, but we all have a good idea of why he probably decided to leave. So, now they’re searching for a new CEO. There’s a decent probability his replacement will reverse the decision to allow carbon credits, so we’ll be right where we started… but who knows.
There was major backlash from many of the people working at SBTi over that change, along with media outlets and NGOs.
The fundamental problem with the voluntary carbon markets is that carbon registries and verifiers, the people who ensure that carbon projects are actually following strict environmental guidelines… are financially incentivized to issue as many carbon credits as they can.
Without strong safeguards from additional third parties, these organizations are likely to overlook flaws in their systems… because that’s what they’re incentivized to do.
As things stand now, it’s up to the buyer to ensure that the carbon credit they’re buying comes from a valid project. Third-party rating agencies and standards bodies like the ICVCM are starting to help in this effort… but it’s difficult to know who you can trust given the level of over-crediting in the space.
The last thing a corporate buyer wants is to receive political or social backlash over the carbon credits they bought, thinking they were doing something that would bring positive publicity for their company.
With that said, even with all the negative press the VCMs received in 2023, the volumes of carbon credits traded in these markets remained basically unchanged… which was pretty impressive, all things considered.
Seeing the media have little effect on demand leads me to believe that they won’t have much of an impact on these markets in that respect. Although articles from organizations like The Guardian did manage to make Verra change many of their methodologies.
At this point, I think the far larger concern for the carbon markets is the rise of right-wing political parties across Europe and North America and how that could impact demand. If large numbers of governments in the developed world start dropping their net zero commitments… or pull out of the Paris Agreement, how will that affect what corporations do?
It’s an interesting question.
The VCMs have been around for decades at this point, so clearly, they survived Trump once. But what happens if the developed world starts dropping off of the climate change agenda?
I’m not going to sell any of the investments I’ve made in the carbon markets, but I’m probably not going to be adding until we see how some of these geopolitical events play out and what the consequences might look like.
Anyway… again, the NGOs’ concerns about these markets are valid in many respects. The industry has much to improve upon, but their desire to destroy it entirely… reeks of malice. We have to see this industry increase its standards so we can reliably use carbon credits. If reaching net zero is actually our goal here, then that’s the only viable path to getting there.
Another reason the NGOs hate carbon credits is that they think this will somehow limit the funding that the “global south,” aka most of the developing world in the southern hemisphere, will receive.
It’s interesting that they say this… because many countries in the global south are liking what the carbon markets have going on.
In fact, ten different countries in West Africa sent a letter to SBTi in favor of allowing the use of carbon credits for scope 3 offsetting. You can see the countries on screen.
So, who do you think we should listen to? The countries themselves… or the virtue signalers that think they know what’s best for these people?
Because the majority of carbon projects are located in the developing world, they’re already receiving a lot more funding and business than they would’ve otherwise.
To be fair, not all NGOs hate the carbon markets.
In another letter sent to SBTi from the five NGOs shown on the screen… they want to see carbon credits used for offsetting, but they’d like to ensure that they’re high-quality.
This included some of the most influential environmental organizations, like the Environmental Defense Fund and Conservation International.
They too, would like to see the carbon markets improved, so carbon credits can be used reliably.
The next few years will really be a make-or-break scenario for carbon credits. Carbon registries and other verification bodies need to significantly tighten their standards, or these markets will risk a permanent lack of credibility. We’ll also need to see how they fare in rising political divisions across the globe.