Major Companies' Use of Low-Quality Carbon Credits Casts Doubt on Climate Claims

Major Companies' Use of Low-Quality Carbon Credits Casts Doubt on Climate Claims
by Riko Seibo
Tokyo, Japan (SPX) Aug 21, 2024

Claims by large corporations of achieving carbon reduction or even carbon neutrality are increasingly under scrutiny, with a new study suggesting these assertions may not hold up to closer examination.

In a study published in 'Nature Communications', researchers from Kyoto University have found that the 20 companies retiring the most carbon offsets from the voluntary carbon market (VCM) over the past four years have primarily relied on low-quality, low-cost credits. The list includes prominent oil companies, airlines, aircraft manufacturers, automotive companies, logistics operators, and others.

"Concerns are growing that many projects supplying carbon credits on the VCM are of low quality and fail to achieve the emissions reductions claimed by their developers," explained Gregory Trencher, the study's lead author and a researcher at Kyoto University's Graduate School of Global Environmental Studies. The study highlights that these companies together account for over 20% of all offsets retired from the world's offset registries.

The research draws on a publicly accessible dataset tracking offset retirements from 2020 to 2023, covering the three largest offset registries in the VCM: Verra's Verified Carbon Standard, the United Nations' Clean Development Mechanism, and Gold Standard. This collaborative effort included co-authors from EPFL in Switzerland and the University of Hamburg.

The analysis reveals that none of the 20 companies could claim a significant portion of their retired offsets met well-recognized quality standards within the VCM. Moreover, the study found that many companies deliberately opted for cheaper offsets, often from projects that were implemented over a decade ago. This trend suggests that most of the money spent by these companies on offsetting has not contributed to new investments in climate mitigation.

"This suggests that the VCM's unresolved quality issues stem not only from the supply side, but also from the demand-side, particularly from the purchasing decisions made by individual companies," Trencher continued.

These findings are particularly troubling as 19 out of the 20 companies have set net-zero climate targets, with many also promoting services as "climate neutral." This only amplifies concerns that some firms may be engaging in "greenwashing" practices.

"Prevailing offsetting practices on the VCM cannot be seen as an effective substitute for robust government policies that mandate physical changes in the energy technologies, supply chains, and business models of large emitters," Trencher added.

Research Report:Demand for low-quality offsets by major companies undermines climate integrity of the voluntary carbon market