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CO2 Certificates: Phantom Offsets and Carbon Deceit [1]
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Date: 2023-01-04
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The organization that ensures the international success of companies is far from world famous. It is located in a sterile office building in Washington, D.C., where not even the doorman is familiar with its name.
"V-E-R-R-A?"
He flips through the list of tenants. "Unit 1050, 10th floor."
There is nothing about the bare hallway on the 10th floor to indicate that it leads to the realm of an NGO that exerts control over a multibillion-dollar market. Yet senior executives from around the world rely on the people who work in Unit 1050: Gazprom in Russia, Apple in the United States, Volkswagen in Germany.
The organization claims that it is fighting the climate crisis with the money it receives from those companies. Its promise? Every ton of CO₂ emissions that the companies cannot eliminate is eliminated for them by others. In times when executives and management boards are setting clear climate goals for their operations, it is an attractive offer. It allows companies to pay a fee so that somewhere in the world, a climate project offsets the emissions they discharge as they extract natural gas, build cars and produce computers. Every ton of CO₂ is sold as a carbon credit.
On paper, it is a deal that produces only winners. After all, the atmosphere doesn’t care whether emissions are reduced in the Volkswagen factory yard or in a Zimbabwean forest. As long as they drop.
Just that somebody has to guarantee that the CO₂ emissions actually are offset.
And that is the job of the people working in Unit 1050. They are employed by Verra, the world’s leading certifier of carbon credits. Fully 75 percent of emissions compensated by offsets on the voluntary – as in, not state run – carbon credit market, which is our focus here, take place under their supervision. They make the rules. And they transform companies that damage the climate into companies that produce sustainably.
Four parties are involved in the deal. First, there are those acquiring the carbon credits, companies like Volkswagen who are interested in buying their way out of the pollution they produce. Then, there are the retail traders, usually startups or consultancy firms, which broker and sell the credits, earning a fair amount of money in the process. Then there are the project developers and operators who ensure that the credits make it to the market in the first place by eliminating or cutting carbon emissions – for example by ensuring that a chunk of rainforest is not clearcut as planned. Project developers also earn a share from the deal. The fourth partner in the system, situated above all the others, are the certifiers who decide how many carbon credits to assign to each project. In three out of four projects around the world, that evaluation is performed by Verra. It plays a supervisory role, but it isn’t a government agency. It is responsible for ensuring that carbon credits are only issued when CO₂ emissions are in fact prevented.
Thousands of companies around the world have been able to announce both large and small climate success stories thanks to Verra. The Walt Disney Company, for example, has claimed triumphantly that it has slashed its emissions by half since 2012.
Audi has celebrated the development of its first CO₂-neutral electric car.
Gucci has announced that its operations are completely climate neutral.
As have McKinsey, Netflix and Zalando.
So much progress. So much success. Everywhere.
But what if much of it isn’t actually real?
CO₂ on the Balance Sheet The role carbon offsets play at Disney emissions net emissions forest protection
certificates other certificates 2 mil. t CO₂ 1 mil. 0 -1 mil. -2 mil. 2011 2013 2015 2017 2019 2021 Sources: Verra Registry, corporate statements CO₂ on the Balance Sheet The role carbon offsets play at Disney emissions net emissions forest protection
certificates other certificates 2 mil. t CO₂ 1 mil. 0 -1 mil. -2 mil. 2011 2013 2015 2017 2019 2021 Sources: Verra Registry, corporate statements CO₂ on the Balance Sheet The role carbon offsets play at Disney emissions net emissions forest protection
certificates other certificates 2 mil. t CO₂ 1 mil. 0 -1 mil. -2 mil. 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Sources: Verra Registry, corporate statements CO₂ on the Balance Sheet The role carbon offsets play at Disney emissions net emissions forest protection
certificates other certificates 2 mil. t CO₂ 1 mil. 0 -1 mil. -2 mil. 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Sources: Verra Registry, corporate statements CO₂ on the Balance Sheet The role carbon offsets play at Disney emissions net emissions forest protection
certificates other certificates 2 mil. t CO₂ 1 mil. 0 -1 mil. -2 mil. 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Sources: Verra Registry, corporate statements CO₂ on the Balance Sheet The role carbon offsets play at Disney emissions net emissions forest protection
certificates other certificates 2 mil. t CO₂ 1 mil. 0 -1 mil. -2 mil. 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Sources: Verra Registry, corporate statements
The Walt Disney company claims it has halved its emissions since 2012. That was only possible through carbon credits.
CO₂ on the Balance Sheet The role carbon offsets play at Gucci emissions net emissions forest protection
certificates 2 mil. t CO₂ 1 mil. 0 -1 mil. -2 mil. 2015 2017 2019 2021 Sources: Verra Registry, corporate statements CO₂ on the Balance Sheet The role carbon offsets play at Gucci emissions net emissions forest protection
certificates 2 mil. t CO₂ 1 mil. 0 -1 mil. -2 mil. 2015 2017 2019 2021 Sources: Verra Registry, corporate statements CO₂ on the Balance Sheet The role carbon offsets play at Gucci emissions net emissions forest protection
certificates other certificates 2 mil. t CO₂ 1 mil. 0 -1 mil. -2 mil. 2015 2016 2017 2018 2019 2020 2021 Sources: Verra Registry, corporate statements CO₂ on the Balance Sheet The role carbon offsets play at Gucci emissions net emissions forest protection
certificates other certificates 2 mil. t CO₂ 1 mil. 0 -1 mil. -2 mil. 2015 2016 2017 2018 2019 2020 2021 Sources: Verra Registry, corporate statements CO₂ on the Balance Sheet The role carbon offsets play at Gucci emissions net emissions forest protection
certificates 2 mil. t CO₂ 1 mil. 0 -1 mil. -2 mil. 2015 2016 2017 2018 2019 2020 2021 Sources: Verra Registry, corporate statements CO₂ on the Balance Sheet The role carbon offsets play at Gucci emissions net emissions forest protection
certificates 2 mil. t CO₂ 1 mil. 0 -1 mil. -2 mil. 2015 2016 2017 2018 2019 2020 2021 Sources: Verra Registry, corporate statements
Gucci claims to be climate neutral. The carbon credits all come from forest protection projects.
CO₂ on the Balance Sheet The role carbon offsets play at Netflix emissions net emissions forest protection
certificates other certificates 2 mil. t CO₂ 1 mil. 0 -1 mil. -2 mil. 2019 2021 Sources: Verra Registry, corporate statements CO₂ on the Balance Sheet The role carbon offsets play at Netflix emissions net emissions forest protection
certificates other certificates 2 mil. t CO₂ 1 mil. 0 -1 mil. -2 mil. 2019 2021 Sources: Verra Registry, corporate statements CO₂ on the Balance Sheet The role carbon offsets play at Netflix emissions net emissions forest protection
certificates other certificates 2 mil. t CO₂ 1 mil. 0 -1 mil. -2 mil. 2019 2020 2021 Sources: Verra Registry, corporate statements CO₂ on the Balance Sheet The role carbon offsets play at Netflix emissions net emissions forest protection
certificates other certificates 2 mil. t CO₂ 1 mil. 0 -1 mil. -2 mil. 2019 2020 2021 Sources: Verra Registry, corporate statements CO₂ on the Balance Sheet The role carbon offsets play at Netflix emissions net emissions forest protection
certificates other certificates 2 mil. t CO₂ 1 mil. 0 -1 mil. -2 mil. 2019 2020 2021 Sources: Verra Registry, corporate statements CO₂ on the Balance Sheet The role carbon offsets play at Netflix emissions net emissions forest protection
certificates other certificates 2 mil. t CO₂ 1 mil. 0 -1 mil. -2 mil. 2019 2020 2021 Sources: Verra Registry, corporate statements
Emissions from Netflix have risen and are largely offset in the form of forest protection certificates.
Chapter 1: One Man Has a Suspicion
On an airfield north of Seattle in the U.S. state of Washington, a young man climbs into a propeller plane on this fall day. He wants to demonstrate why he is opposed to the people who work in Unit 1050. A thin veil of clouds hangs over the runway as he taxis in his small plane. "N7303, where are you headed?" the air traffic controller asks over the radio. "National park," Elias Ayrey replies from the cockpit.
Engines roaring, he takes off and slowly climbs over the Pacific Ocean. Ahead lie icy glaciers, mountains and a rainforest stretching for miles, one of the largest in North America. "Spectacular, isn’t it?"
U.S. ecologist Elias Ayrey © Grant Hindsley für DIE ZEIT
Ayrey, 32, is an ecologist. And he is obsessed by forests. On weekends, he enjoys flying as a hobby pilot – as he is now – over the forests of Washington in his aging plane, simply to admire them.
He cruises just a few hundred meters over the rainforest, swooping above tall trees and pointing to the green expanse stretching toward the horizon. His mission is the preservation of forestland, which is why he isn’t just deeply moved by the beauty of nature that spreads out beneath him. He is also furious.
Until a short time ago, he worked for a startup in San Francisco that promised its customers it would find the most trustworthy carbon credits available from forest conservation projects. Many of the projects that he was responsible for verifying had been certified by Verra.
Verra supervises a wide variety of credits – including things like solar power facilities and hydroelectric projects. Most of the credits produced under the organization’s supervision, though, come from forest protection – 40 percent. Those hearing such a thing for the first time might think: There are people planting trees somewhere in the world. But that’s not how it works. Project developers merely promise that existing forests will be preserved. It was Ayrey’s job to evaluate the projects’ claims – a job that he wasn’t able to perform up in the air, but on the ground, behind a computer. He examined satellite data to try to differentiate the good projects from the bad.
A forested area in the U.S. state of Washington © Grant Hindsley für DIE ZEIT
The first time he stumbled across a project where the developers claimed to save far more CO₂ than seemed realistic, Ayrey thought to himself: Yeah, OK, it happens. But then he found another, and another. More and more forest projects whose numbers looked anything but credible. Yet most of them had been certified by respected market leader Verra.
Back on the ground, Ayrey explains how he recalculated the data provided by the projects. In doing so, he says, he realized that Verra had apparently developed a system "prone to systematic manipulation." It is, Ayrey says, "like doping. Three people dope, so everybody has to dope. And everybody knows about it."
Ayrey is one of the few people involved in the system willing to discuss the flip side of the climate success stories. The side where good intentions are abandoned, and the abyss opens up. Where the interests of a marketplace have become entrenched, far removed from state supervision. A marketplace where participants claim to want to save the climate – but in addition to failing to meet that goal are also likely making things even worse. Because they may be damaging the climate even more.
A joint investigation by DIE ZEIT, the British daily The Guardian and the British investigative consortium SourceMaterial has revealed that millions of carbon credits have apparently been sold over the years that should never have existed in the first place. The reporting indicates that numerous forest conservation projects have vastly overstated the amount of emissions they prevent – because the rules of the most important certifier on the market allow them to do so. And because supervision has failed.
In reporting this story, DIE ZEIT traveled to the Netherlands, the U.S. and Peru and spoke with dozens of scientists and industry insiders about the system’s shortcomings. In the past, doubts have been expressed about specific forest protection projects. The full extent of the problem, though, is now shown for the first time by two studies, whose data DIE ZEIT was able to exclusively analyze. A global research team examined 29 of the 87 forest conservation projects that are currently certified by Verra. Analysis of the data indicates that over 90 percent of all carbon credits issued by those projects are worthless.
A heap of junk.
The analysis found that 89 million tons of CO₂ ended up on the carbon credit market despite representing nothing at all, the equivalent of annual emissions from Greece and Switzerland combined. Companies across the globe are impacted, including Shell, Gucci, Disney and Boeing, along with several companies listed on Germany’s blue-chip index DAX, like SAP and Bayer. And the 89 million tons only represent the third of Verra-certified projects that were part of the analysis. The true number of unbacked credits is likely to be far higher.
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[1] Url:
https://www.zeit.de/wirtschaft/2023-01/co2-certificates-fraud-emissions-trading-climate-protection-english
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