Carbon offsets are 'riddled with fraud'. Can new voluntary guidelines fix this?

Voluntary carbon offsets are a way for individuals and companies to offset their carbon emissions by investing in projects that reduce emissions or remove carbon from the atmosphere. however, the market for voluntary carbon offsets is "riddled with fraud" and offset projects too often fail to deliver the promised emissions reductions.

Problems with voluntary carbon offsets include:

• Volatility: it is impossible to prove or expect that carbon removed from the atmosphere will remain removed.
• Non-replenishment: offsets do not lead to a greater reduction in emissions than would be expected without the offset project.
• Double counting: the same shift is counted towards the emission reduction targets of two separate entities.

These problems deter buyers from voluntary carbon offsets. According to a BloombergNEF analysis, concerns about integrity and transparency were the "biggest reason" that demand for carbon credits fell between 2021 and 2022, even as supply continued to grow.

To restore confidence, many buyers, sellers and brokers have turned to the Integrity Council for Voluntary Carbon Markets, or ICVCM, an independent non-governmental watchdog. ICVCM is working on a set of guidelines to create a "definitive global threshold standard for high-quality carbon credits" with rules on everything from permanence to monitoring and consultation with indigenous peoples. Last week, it finalized the final parts of the guidelines and called on carbon credit programs to apply for special labels showing that their credits comply with the new criteria.

However, it is unclear whether the ICVCM guidelines go far enough to address the industry's pervasive reliability issues. While some carbon registries and intermediaries praise the ICVCM for creating additional safeguards against double counting and requiring more documentation of how offset projects contribute to sustainable development, the problems with voluntary carbon markets run deep and, some say, require a more extensive overhaul.

Carbon Market Watch, a European non-profit organization, said the ICVCM guidelines "provide a set of much-needed incremental improvements, but fail to sufficiently increase the quality of carbon credits and leave too much room for us to really solve the climate crisis."

Overall, the voluntary carbon market is at an early stage of development and there is a need to improve its integrity and transparency. The ICVCM guidelines are a step in the right direction, but more needs to be done to ensure that voluntary carbon offsets have a real impact on the fight against climate change. (AI)