Businesses and experts reveal plans for carbon offset regulator

tree planting

A new independent body is to regulate carbon offsetting and try to allay fears of greenwashing raised by the controversial practice, under plans put forward by a group of businesses and experts.

The regulator, proposed by the Taskforce on Scaling Voluntary Carbon Markets, would begin operating later this year and oversee the issuance of carbon credits, in projects such as tree-planting or forest protection schemes, to businesses who want to buy them to make up for the impact of their own greenhouse gas emissions.

However, green campaigners attacked the plans, which they said would not lead to genuine reductions in greenhouse gas emissions.

Charlie Kronick, senior climate campaigner at Greenpeace UK, said: “This plan fails to get to grips with the real challenges of carbon credits – it’s a trader’s charter, written by and for the companies that want to buy and sell pollution, not cut it. It ignores what leading scientists have made clear, that offsetting can’t be used instead of action to directly cut carbon emissions. Polluting companies will be rubbing their hands at the idea that this get out of jail free card allows them to greenwash their ongoing emissions at exactly the time the world needs to dramatically cut them.”

The carbon offset market could provide a tenth of the effort needed to cut greenhouse gas emissions in line with staying within 1.5C of global heating, according to the taskforce.

Mark Carney, the former governor of the Bank of England and envoy to the Cop26 climate talks, said: “[Carbon offsets] could provide a modest but meaningful contribution to the 1.5C goal. Carbon offsets have many benefits. They are complementary, first and foremost [to companies’ efforts to cut greenhouse gas emissions] – companies must focus on absolute emissions reductions. Carbon offsets can be catalytic, used to fund projects that would otherwise not be funded, such as new technologies.”

The taskforce drew up its roadmap after an extensive public consultation, with more than 130 expert responses. The roadmap sets out legal principles to guide the market and criteria for ensuring that carbon credits are genuine and that they represent real reductions in greenhouse gas emissions.

Bill Winters, chair of the taskforce and group chief executive at the banking company Standard Chartered, said: “Our consultation shows that diverse stakeholders across the world want to see a unified voluntary carbon market, with high-quality credits and legal standards, overseen by a strong and independent governance body. This market will allow participants to trade with confidence, safe in the knowledge that this activity is making a difference to the planet and its people, while complementing their efforts to cut greenhouse gas emissions.”

Carbon offsets are controversial because many of the carbon credit schemes used by companies to offset their emissions over the past two decades have been found problematic in various ways. Some fraudulent schemes have been uncovered, in which carbon credits did not exist or did not represent an actual reduction in greenhouse gas emissions. Other schemes, including schemes investigated by the Guardian earlier this year, have been found to fail to protect forests, allowing logging to continue while selling carbon credits based on keeping forests standing.

Frédéric Hache, executive director of the Green Finance Observatory, said: “The elephant in the room is that offsets are fundamentally not about mitigating climate change, or even about removing past emissions, but about enabling future emissions, about protecting economic growth and corporate profits. Carbon offset markets have had an appalling track record for the past 13 years. At a time when Canada is burning, can we really afford to waste another 13 years?”

Campaigners also criticise carbon credits based on tree planting, because trees take decades to grow and absorb carbon dioxide from the atmosphere, while the emissions that companies release into the atmosphere cause global heating straight away.

Gilles Dufrasne, policy officer at Carbon Market Watch, said the roadmap released on Thursday did not solve these problems: “The taskforce leaves most issues to a future governance body, and allows active market players to participate in that body. This creates a clear and highly problematic conflict of interests, especially since we’re still far away from seeing a clear break from the market’s existing shortcomings.”

Though the carbon offset market has been tainted by fraud and failure, there have also been more robust schemes for carbon credits, including a system regulated by the UN called the clean development mechanism, and a system called the Gold Standard, which requires companies seeking credit for their carbon-cutting activities to register and pass various tests.

Carney was criticised over a claim earlier this year that the investment firm he works for, Brookfield, was “net zero” because its substantial investments in coal and oil sands were balanced by investments in renewable energy.