Bangkok Post – Addiction to carbon emissions junk ‘is killing the planet’

Before This Is Why We Can’t Have Nice Things was a Taylor Swift song, it was the punchline to a Paula Poundstone joke from the ’80s about how, as a child, she once knocked a Flintstones glass off a table, prompting her mother to say, “This is why we can’t have nice things.”

It’s a phrase that comes up over and over again, and it seems to apply even to the world of carbon offsets — the absolution companies and people like Taylor Swift buy when they burn fossil fuels and contribute to global warming. A new study from Kyoto University suggests that the notorious failures of the carbon-offset market are partly the result of a handful of big companies buying the most dubious products available. If it weren’t for them, maybe there would be more demand for better offsets. Maybe we’d have good stuff.

According to the study, the top 20 market players between 2020 and 2023 — a list of companies that includes Shell Plc, Delta Air Lines Inc and Chevron Corp — mostly bought “cheap, low-quality offsets.” Specifically, 87% of their offsets “carry a high risk of not delivering real, additional emissions reductions.” It’s the latest embarrassment for a once-booming market that has begun to shrink under scrutiny and lawsuits. Last month, the Science Based Targets Initiative (SBTi), a group that monitors corporate decarbonization, said a review of third-party studies on carbon offsets found them to be “mostly ineffective.”

According to the study, most of the money spent by the top 20 companies on the market went to forestry and renewable energy projects. At first glance, it doesn’t seem so bad. Trees absorb carbon dioxide from the atmosphere and store it in their branches. Renewable energy replaces fossil fuels. Who wouldn’t want that?

For one thing, it’s very difficult to estimate how much a given forestry project actually affects the global carbon budget. These projects often sell absolution on the grounds that no trees are being cut down. But what if the trees were never going to be cut down in the first place? Should you really get credit for something that doesn’t happen? Or what if, as my Bloomberg Opinion colleague Matt Levine has discussed, the only way to make it look like your forest is measurably saving carbon is if a reference forest (the Goofus or the Gallant) chainsaws all of its trees? How much carbon was actually saved in the process?

Another problem with trees as carbon storage devices is that they are prone to catching fire and releasing all that carbon into the atmosphere, along with toxic smoke that spreads for thousands of miles. The warmer the planet gets, the more vulnerable these trees are to wildfires. The 2021 Bootleg Fire in southern Oregon scorched a forest managed by a timber company called Green Diamond, which sold carbon credits to Microsoft Corp. and others. It burned trees that stored 3.3 million metric tons of carbon dioxide, according to Oregon Public Broadcasting, “equivalent to the greenhouse gases produced over a year by more than 700,000 cars traveling 11,500 miles (18,400 km).”

Even if trees are not affected by wildfires, they could live a century or more at best before dying and releasing their carbon back into the air as they decompose. The carbon produced by Shell products or Taylor Swift’s private jet will remain in the atmosphere for many hundreds of years more.

As for renewable energy credits, again, good luck figuring out exactly how much a company’s financial contribution to a wind or solar farm affects the overall carbon balance. And as the Kyoto study points out, the capital raised through carbon offsets is not usually the deciding factor for building clean energy projects. Instead, they often make sense when a lot of electricity can be sold.

And now that the cost of building and maintaining clean energy is equal to or cheaper than that of dirty power plants, renewable projects are the norm, not the exception, around the world. As with trees that were never going to be cut down, why should anyone get credit for solar that would have been built anyway? No wonder the Voluntary Carbon Market Integrity Council, an independent watchdog, recently found that 263 million renewable credits — nearly a third of the entire market — failed to meet reliability standards.

Another big problem with our 20 offset market whales is that the credits they buy tend to be for projects that are too old to make a real new contribution to solving the world’s carbon problem. Three-quarters of their credits were from projects that started before 2016, which the study found to be the industry’s peak credibility age. Meanwhile, most renewable energy credits were tied to projects in countries that already had plenty of clean energy, suggesting that the companies weren’t encouraging development that wouldn’t have happened anyway.

Most companies in the study also bought the cheapest offsets, avoiding more expensive projects like carbon removal. Forestry projects command higher selling prices than renewables, but there are tricks to finding deals, the study notes, including buying in bulk.

And any offset is probably much cheaper than greening a company’s business practices and supply chains. But that’s what it will take to really get the world on track to eliminating its carbon emissions and thus avoid catastrophic global warming. There may be room for carbon credits in a net-zero world, but the current self-regulating market is not fit for purpose. It encourages the proliferation of low-quality offsets that put companies at risk of painting their pollution in a nice green hue. As my Bloomberg Opinion colleague Lara Williams has written, it also encourages secondary evils, such as sexual abuse and other human rights violations.

Shortly before its report concluded that offsets were mostly useless, the SBTi also opened the door for companies to use credits to reduce their Scope 3 emissions, which include those of customers, which could be a potential boon for the fossil fuel industry. A final decision is due next year. This could be disastrous if global efforts to reform and regulate the market don’t narrow it down to high-quality credits. Such a market could grow to $1 trillion, Bloomberg NEF has estimated. It would be a good thing, but only if we let it. ©2024 Bloomberg