US firms turn carbon credits to ghost credits amid greenwashing fiasco

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Planting trees and protecting tropical rainforests have become attractive tools for businesses looking to offset their carbon footprint and demonstrate their environmental commitment.

Recent scandals, however, have cast a shadow over the carbon credit sector, exposing a world filled with chances for greenwashing.

Walt Disney, JP Morgan Bank, and other prominent corporations have been accused of acquiring carbon credits from forest protection projects in places where deforestation was not genuinely a threat.

Read next: UK company heavily linked to Amazon deforestation

Separately, a business responsible for maintaining 600,000 hectares of land in the United States is said to have earned $53 million in carbon credits over the last two years despite not changing its forest management practices considerably.

None of these projects sequestered more carbon than trees would have absorbed through photosynthesis under normal conditions.

Still, firms included the resultant carbon credits in their own reduction targets, allowing them to offset emissions in the carbon accounting of their operations.

The One Forest Summit will bring together leaders and experts from around the world on March 1 and 2 in the Gabonese capital Libreville.

Co-presided by France and Gabon, the meeting will focus on developing financial instruments aimed at conserving the world's forests.

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Carbon credits are already in widespread use. According to various estimations, the amount of tons of CO2 they represent (one credit equals one ton) might more than tenfold by 2030, reaching over two billion tons.

"The risky aspect of the carbon credit market is that it is not self-regulating," Cesar Dugast from French environmental consultancy Carbone 4 was quoted by AFP as saying.

"Everyone has an interest in maximizing the number of carbon credits. It enables the project developers to spread the total cost over a maximum number of credits, offering a lower cost to buyers."

"Even the certifiers have an interest in the proliferation of projects," he added.

It is worth noting that The Guardian, Die Zeit, and an NGO revealed, in mid-January, that more than 90% of projects certified by leading verifier Verra for forest conservation under the UN program to reduce deforestation and forest degradation (REDD+) were likely "ghost credits" that did not represent "real emissions reductions".

According to Verra's CEO, David Antonioli, "REDD projects are not some abstract concept on a piece of paper; they represent genuine projects on the ground that bring life-affirming benefits."

Paula VanLaningham, worldwide head of carbon at S&P Global, acknowledged that the price of nature-related carbon credits has plummeted since the story broke.

The disclosures regarding REDD+ initiatives have spurred a broader discussion about the entire carbon credit system.

In short, companies financing forests to offset carbon emissions is appropriate, but not as a way to avoid cutting their own emissions.