Why so many forest projects are a scam
If you save a forest from the chainsaw, you can apply for CO₂ certificates - and sell them for a lot of money to companies that want to offset their emissions, go green and suddenly become "climate neutral". Experts estimate that this market could generate a trillion US dollars worldwidefrom offsetting projects as early as 2040 . However, on closer inspection, many forest projects turn out to be a scam and many certificates are worthless. "There is no state regulation," says Lambert Schneider from the Öko-Institut in the "Climate Lab", identifying the biggest problem in an industry where only voluntary standards apply. There is also a lack of objective and clear criteria as to what exactly a project must achieve in order to receive CO₂ certificates. The result is climate protection projects in which balance sheet optimization is part of everyday life - and which have recently aroused the interest of Belarus and Russia.
ntv.de: Are there any projects on the market for CO₂ certificates that actually reduce emissions?
Lambert Schneider: Yes, but these projects are difficult to identify for both laypeople and institutional buyers. You have to look carefully, because a lot of things can go wrong with carbon credit projects. For example, if I plant a forest that later burns down, the CO₂ is still in the atmosphere. That's why the project must be additional; the reductions must be robustly quantified and must not be massively overestimated, as often happens. A lot of details have to be taken into account, which is what makes it so complex.
What does "additional" mean?
Let's take a wind turbine: if it would be built anyway, but I still receive CO₂ certificates and can cause further emissions, I have emitted more CO₂ but actually saved nothing. It must therefore be proven that a climate protection measure is only made possible by the certificates and would otherwise not be implemented. As you can imagine, this question is very hypothetical. How do I know that a forest would be cut down without an offsetting project? No one can answer that with certainty.
One of the best-known compensation projects is the Kariba project in Zimbabwe. However, the New Yorker reports that this flagship project has sold many worthless CO₂ credits - surprisingly, because too few trees were felled in another forest.
The key question for deforestation prevention projects is: when would the forest be cut down and to what extent? In order to answer this question, comparative areas are used - a kind of control group, as in medicine. We then check how much more is being cut down in this comparison area than in my area. However, this only works for comparison areas that are actually representative of the project. In the case of Kariba, it turned out that the difference between the reference area and the project area was not as great as assumed. This is why too many certificates were issued.
Who determines the reference areas and checks the data? Such markets are regulated.
There are voluntary standards such as the Verified Carbon Standard from Verra. They lay down the exact rules. If I want to protect a forest from deforestation, I have to register the project there. You then have to document and prove that the emissions have actually been reduced. This can be done, for example, by creating alternative sources of income for the local population so that they are no longer dependent on logging. The calculations of the emission reductions are validated by a verifier, which in Germany is done by TÜV, among others. At the end, I receive CO₂ certificates for the avoided emissions.
Does this verifier come on site and inspect the project with their own eyes or is it done remotely?
This is regulated differently depending on the regulatory standard. Most require you to be on site at least some of the time, but this doesn't apply to all projects. Some rely on video data or satellite images. Validation is usually done when the project starts. A few years later, the inspection follows.
Do you think Verra is a reliable standard?
Definitely not. We have massive quality problems with forest projects, but also with other projects. The majority of certificates do not reduce emissions, even if there are some good projects. One big difference to organic farming is that I have relatively objective and clear criteria there that are easy to check: Pesticides or certain fertilizers must not be used. With carbon credits, I find myself in a what-if world: I have to estimate what would have happened without the project. This is also made more difficult by the information asymmetry: the project developer has more information than the validators or standards such as Verra and knows exactly which data source leads to more certificates. For example, the historical reference period is not the last five years, but the years before that, when much more deforestation took place.
In business, this is called balance sheet optimization.
But in business, the accounting rules leave less scope for fraud. We analyze the carbon market very closely at the Öko-Institut and find time and again that project developers have a lot of creative leeway when calculating reductions. And certifiers such as TÜV are paid by the project developers. That reduces the incentive to complain, because otherwise you lose your customers.
And there is no one to supervise Verra?
No. This market is voluntary. Verra is a non-governmental organization that was founded by the industry. There is no government regulation, apart from legislation on advertising that distorts competition in some countries. In Europe, for example, the Green Claims Directive is currently being negotiated: This directive stipulates that companies are no longer allowed to talk about climate-neutral projects if the emissions are offset with certificates.
Essentially, this approach is not wrong. We need to find ways to avoid CO₂ emissions. Do you believe that the market can develop in a serious direction or will one project after another blow up and companies stop buying carbon credits?
Some companies have already pulled out, so this market really is at a crossroads. In science, we have been seeing these problems for years. Really old studies show how much is going wrong. But the topic is only now increasingly making its way into the media. As a result, there is a different level of attention and pressure. However, there are many initiatives to improve the quality of the market. It remains to be seen whether carbon programs like Verra will seriously reform their rules or not.
Are companies putting pressure on programs like Verra? After all, they lose money and trust if they buy worthless CO₂ certificates.
Various stakeholders are currently exerting pressure, including companies, because their reputation is suffering and they could be sued under certain circumstances. In recent years, a whole series of rating agency start-ups have also emerged that rate individual projects in the same way as credit rating agencies do on the financial market. This creates yet another level of transparency.
But the rating agencies also failed before the 2008 financial crisis. And now there is a brand new initiative from Africa, where many of these forests are located. Understandably, they would like to get a slice of the multi-billion dollar cake and set up a kind of Wall Street for the international compensation market. However, Belarus, which wants to sell certificates for Russian forests, has been brought on board as a partner ...
There are great expectations of the carbon market in Africa, but it is questionable whether they can be fulfilled. I don't know the details of this deal and can't judge the plans, but Russia has already issued lots of questionable CO₂ certificates from all kinds of activities in the past. Only forest certificates have never been registered, not even with Verra. I really don't know what's behind these certificates or whether it's just hot air. In any case, it sounds very questionable.
Do we even need this voluntary market for CO₂ offsetting or would it be better to look for another way?
In any case, we need funding for climate protection - from the state. We also need state regulation. That will get us out of the climate crisis. Voluntary action can complement this, but it cannot be the main building block.
Clara Pfeffer and Christian Herrmann spoke toLambert Schneider . The interview has been shortened and edited for clarity.
Despite the potential trillion-dollar market for CO2 offsetting by 2040, many forest projects fail to deliver on their climate change mitigation promises. In fact, Lambert Schneider from the Öko-Institut highlights the lack of regulatory oversight as a major issue, as the industry relies solely on voluntary standards.
Moreover, the validation of CO2 reduction projects can be complex and flawed. For instance, the Kariba project in Zimbabwe, hailed as a flagship initiative, was found to have sold an excessive number of worthless CO2 credits due to insufficient tree planting.
This highlights the need for tighter regulation, transparent reporting, and stricter verification processes within CO2 offsetting markets. Such measures would help prevent greenwashing and ensure that companies truly contribute to climate change mitigation efforts.
Source: www.ntv.de
