Estimated Carbon
Case Study
JP Morgan Chase
Under the current system you can take land that already has forests and get credit for keeping things as they are. Yes, it's called forest management!
How exactly does managing an existing forest remove excess carbon from the atmosphere? Companies are relying on the concept of additionality to count those credits. What would happen if it weren't possible to sell carbon credits? Organizations are free to imagine the worst possible outcome, usually selling the land to a developer that would clear cutting all the trees (extra points for thinking outside the box: e.g. a coal mine would be built in its place, or a coal-powered power plant, or a coal anything...). Of course, that's a hypothetical since the seller is by definition trying to manufacture credits.
Take for instance JP Morgan, who claimed in its annual report that it had bought offsets for its employees' travel. Sounds good right? Well, let's look at it in more detail.
From JP Morgan Chase's annual report2.
Source: Bloomberg
These credits were purchased from the Nature Conservancy. The Hawk Mountain Sanctuary Association, a non-profit, has owned that piece of land in Pennsylvania for over 85 years. The trees are in no danger of falling into the hands of an evil logging company! The Sanctuary Association is in the business of preserving bird habitats; and last time we checked, birds like to live in wooden areas with lots of trees, not in a bunch of newly-built gentrified condos! Hence, this area is already preserved. In fact, it has the word "Sanctuary" in its name!
Look how the project of "doing nothing" was modeled. The baseline involves an implausible worst-case that wouldn't even happen in an alternate universe!
The Nature Conservancy got to sell whatever difference they could project on a graph. They had every reason to overestimate the green line and every reason to underestimate the red one.
Source: Bloomberg (Nature Conservancy's New Imminent Threat Assumption)
"Trust us" is the motto of the carbon offset market. Sellers pinky swear not to fudge their carbon estimates, even though it's in their best interest to do so.
Source: Wendover Productions (Hawk Mountain Preserve's Carbon Registry Plan)
The project's paperwork shows that the baseline scenario involves "large scale clearcuts" and "represents an aggressive industrial harvest regime".
And who's going to check Nature Conservancy's logic? As long as they could keep a straight face, the carbon registries would take everything at face value. It would take anyone opposed to the credit system until 2040 to prove otherwise, and even then, the alternate scenario would never play out (because the Conservancy conserves habitats, it doesn't destroy them for profit).