Junk offsets feeding wave of greenwashing: Study

investmentnews.com:

Corporations relying on carbon credits to support their green claims now face “robust and credible” proof that the vast majority of such securities aren’t fit for that purpose, according to a study published in the journal Science.

The research, which analyzed 18 carbon-offset projects across Peru, Colombia, Cambodia, Tanzania and the Democratic Republic of Congo, found that only 5.4 million — or 6% — of a potential 89 million credits were linked to additional carbon reductions through preserved forests. More than 60 million carbon credits originated from projects that barely reduced deforestation.

“There has been a suspicion that these carbon credits lead to greenwashing,” Andreas Kontoleon, the study’s senior author and a professor of environmental economics and public policy at the University of Cambridge, said in an interview. “We now have robust and credible evidence that offset programs have deficiencies.”

A carbon credit is a paper security that’s supposed to represent one ton of CO2 reduced or removed from the atmosphere, generated by projects like wind farms or planting trees. Buyers can trade the units or use them to offset their own emissions, in which case they must retire the credit to avoid it being used twice. 

The study’s findings underscore the risk of stranded assets in carbon offsetting. They also raise questions about the carbon-neutral claims of companies that rely on such credits.

The forest-protection projects, known as REDD+, generate carbon credits that represent the carbon that will no longer be released through deforestation. All told, voluntary REDD+ projects in 2021 issued 150 million credits valued at $1.3 billion, according to the study in Science. An earlier draft of the study