A new study from Kyoto University highlights significant issues in the carbon offset market, pointing to major companies such as Shell, Delta Air Lines, and Chevron, which have been purchasing low-quality offsets. From 2020 to 2023, the 20 largest players in the market, including these companies, primarily bought offsets that have a high risk of not delivering real emissions reductions, with 87% of their purchases deemed ineffective.
This revelation follows the broader scrutiny of the carbon offset market, which has seen a decline due to legal challenges and criticism. Last month, the Science Based Targets Initiative (SBTi) labelled most carbon offsets as “mostly ineffective,” further undermining confidence in the market.
While these companies invested heavily in forestry and renewable energy projects, the actual impact of such investments on the global carbon budget remains dubious. Many forestry projects claim credits for preventing deforestation, but if the forests were not at risk of being cut down, the claimed carbon savings are questionable. Additionally, trees are vulnerable to fires, which can release stored carbon back into the atmosphere, as seen during the 2021 Bootleg Fire in Oregon that destroyed carbon credits purchased by Microsoft.
Renewable energy credits pose similar challenges. The global shift towards renewables means many projects would proceed regardless of offset investments. The Integrity Council for the Voluntary Carbon Market found that nearly a third of all renewable credits do not meet reliability standards, highlighting the limitations of current market practices.
The Kyoto study also found that many of the offsets purchased by these companies were from projects that began before 2016, raising questions about their relevance to current carbon reduction efforts. The report indicates that companies often opt for cheaper offsets, avoiding costlier but potentially more impactful options like carbon dioxide removal.
The flaws in the carbon offset market suggest that simply buying credits will not suffice to achieve net-zero carbon emissions and avert climate catastrophe. Effective solutions will require a thorough overhaul of business practices and supply chains to genuinely reduce carbon footprints. As the market stands, it fosters the proliferation of low-quality offsets that provide a false sense of progress while failing to address the underlying emissions problem. Without stringent regulations and a commitment to high-quality offsets, the market risks expanding into a $1 trillion sector that falls short of its climate goals.
– Bloomberg