As part of the Kyoto Protocol, the mechanism of ’emissions trading’ was established, which involves the legal buying and selling of pollution permits on the international market. Countries are given a number of ’emission credits’, which are then allocated at the national level, often so that the most polluting industries receive the most emission credits. Unused credits can be traded on the market. The polluter can also invest in pollution-reduction programmes in other countries and “earn” carbon credits, which they can then sell or use to make up for shortfalls in their original emission rights. However, such carbon credits are often “phantom credits” and do not contribute to actual emission reductions, potentially exacerbating climate change.
Phantom credits in emission trading schemes
As part of the Kyoto Protocol, the mechanism of ’emissions trading’ was established, which involves the legal buying and selling of pollution permits on the international market. Countries are given a number of ’emission credits’, which are then allocated at the national level, often so that the most polluting industries receive the most emission credits. Unused credits can be traded on the market. The polluter can also invest in pollution-reduction programmes in other countries and “earn” carbon credits, which they can then sell or use to make up for shortfalls in their original emission rights. However, such carbon credits are often “phantom credits” and do not contribute to actual emission reductions, potentially exacerbating climate change.
1) Global
2) North America, United States, California
3) South America, Colombia; Ecuador; Peru
- Climate & Atmosphere
- Industry Emission Reduction
- Implementation of Energy Storage Systems
Phantom credits in emission trading schemes
1) A joint investigation by The Guardian, Die Zeit and SourceMaterial into the carbon offsets offered by Verra, the Swiss standard-setting and verification organisation, reveals that more than ninety per cent of the rainforest carbon offsets sold by the organisation are “worthless” and do not represent any real carbon reductions. Companies using these offsets are effectively making false claims in an attempt to convince individuals that it is possible to purchase and consume their goods and services in a carbon neutral way.
2) An analysis using remote sensing to quantify the incremental climate benefits of carbon offset projects in Californian forests shows that the benefits of such projects are limited. Findings include the observation that, in general, carbon accumulation rates have not (yet) increased compared to the time prior to the enrolment of offset projects, and that timber harvesting rates have not decreased in most offset project areas. This suggests limited to no impact of carbon offset projects in California.
3) Carbon offset projects have been linked to land grabs that violate the rights of indigenous communities in Ecuador and Peru. In Colombia, the projected rate of deforestation in the absence of carbon-offsetting projects was overstated, leading to an overestimation of the carbon-saving benefits of such projects.
1) Harvey, F., & editor, F. H. E. (2023, January 18). Greenwashing or a net zero necessity? Climate scientists on carbon offsetting. The Guardian. https://www.theguardian.com/environment/2023/jan/18/greenwashing-or-net-zero-necessity-climate-scientists-on-carbon-offsetting-aoe
Fischer, T., & Knuth, H. (2023, January 18). CO2-Zertifikate: Der große Klima-Betrug. Die Zeit. https://www.zeit.de/2023/04/co2-zertifikate-betrug-emissionshandel-klimaschutz?utm_referrer=https%3A%2F%2Fwww.theguardian.com%2Fenvironment%2F2023%2Fjan%2F18%2Frevealed-forest-carbon-offsets-biggest-provider-worthless-verra-aoe
SourceMaterial. (2023, January 18). The Carbon Con – How offsetting claims are vastly inflated. SourceMaterial. https://www.source-material.org/vercompanies-carbon-offsetting-claims-inflated-methodologies-flawed/
2) Coffield, S. R., Vo, C. D., Wang, J. A., Badgley, G., Goulden, M. L., Cullenward, D., Anderegg, W. R. L., & Randerson, J. T. (2022). Using remote sensing to quantify the additional climate benefits of California forest carbon offset projects. Global Change Biology, 28, 6789– 6806. https://doi.org/10.1111/gcb.16380
3) Amazon Watch (2011, October 20). The Amazon Rainforest-Sized Loophole in Net Zero. Amazon Watch. Washington DC.
Bachram, H. (2006). Climate fraud and carbon colonialism: the new trade in greenhouse gases. Capitalism Nature Socialism, 15(4), 5-20. https://doi.org/10.1080/1045575042000287299
Greenfield, P. (2023). Revealed: more than 90% of rainforest carbon offsets by biggest certifier are worthless, analysis shows. The Guardian. Retrieved March 13, 2023, from https://www.theguardian.com/environment/2023/jan/18/revealed-forest-carbon-offsets-biggest-provider-worthless-verra-aoe
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