Estimated Carbon
The Role Of Carbon Registries
Fox In Charge Of The Henhouse?
Carbon registries are supposed to act like the auditors in the system, keeping everybody honest. However, anyone can become a carbon certifying entity, since the system really isn't regulated in any meaningful way. Instead of being hindered by the unverifiable nature of their forecasts, these organizations actually benefit from the leeway it provides, as it makes it harder for outside observers to prove them wrong. So everybody along the chain is incentivized to inflate their carbon estimates: the companies buying them look better, the carbon offsetting projects earn more, and the registries attract more business by being lenient on standards. As a result, most claims of carbon neutrality are at best exaggerated, and at worst, outright fraudulent. When making money out of thin air, it's easy to gloss over some inconvenient facts, either deliberately or not.
Gold Standard, American Carbon Registry, Verra and Climate Action Reserve are the most popular carbon registries in the U.S. today1. They allow the sale of carbon credits before the carbon is actually removed from the atmosphere. Simply put, organizations can get cash today on the promise they will protect the forest over the next couple of decades. Whether that organization is able to live up to that promise is debatable. It's like those companies that sell plots of land on the moon. They sell something today that they only have to deliver in the future (and besides, that lunar real estate wasn't theirs to sell anyway).
But when the buyer, seller and intermediary (i.e. the registries) are all better off believing an exaggeration than reality, predicting any other outcome than a race to the bottom is patently naïve. Pressure will mount on any honest participants to fall in line with the diminishing standards of the worst offenders. In the carbon market, the lowest price matters more than a proved track record of achieving targets – though that's partly because the market is still in its infancy.
Net-Zero Commitments Are Pervasive
Net-zero is fashionable these days, even for big business and serial polluters.
Source: Last Week Tonight With John Oliver, S09E21, HBO.
And most companies plan to use carbon offsets to reach those ambitious targets.
For example, by buying credits on the open market, Disney was able to spin its program as "equal to taking over 900,000 cars off the road". Needless to say, that wasn't even close to being true, despite Disney's PR push.
This race to meet targets (even though they may be 10 or 20 years away) in turn creates a lot of demand for projects that claim to mitigate the release of more carbon.
There's a lot of money to be made by selling carbon offsets. It was a $2B industry in 2021 according to the WSJ1.
All you need to get started is a plot of land and an estimate of how much carbon you are keeping from being dumped into the atmosphere. In theory, a rancher could sell "credits" for sending his cows to the slaughterhouse on the improbable claim that allowing the herd to continue grazing into their old age would create lots of greenhouse gases. Does that make meat production a green industry? Not by a long shot!
Notes
1 : Last Week Tonight With John Oliver, S09E21, HBO.