Offsetting at the Outset: Carbonwashing and Beyond in Asia

This year has been more dramatic than any before for global climate. The EU Climate Change Service registered 2023 as the hottest summer in recorded history in the Northern Hemisphere, and throughout the world extreme weather events have become a staple of virtually every news cycle. A much-anticipated UN report made landfall in September, concluding “there is a rapidly narrowing window to raise ambition and implement existing commitments in order to limit warming to 1.5 °C above pre-industrial levels.”

But as the public is increasingly threatened by climate change and demands solutions to stem its worst effects, the world of climate mitigation—reducing levels of greenhouse gas emissions in the atmosphere—has received far less scrutiny outside expert circles. Although this fact has changed slightly with recent media coverage, it continues to be true of carbon credits.

While the idea of tradeable air pollution permits goes back almost 60 years, the carbon market has seen its ups and downs. Last year was an advantageous one for investors  with robust numbers driven in part by recent policy changes ushered in by the UN climate change COPs. This has since changed, though, and the image of carbon credits appears to be undergoing a reappraisal. Indeed, many scientists and NGOs insist; that most voluntary credits (not to be confused with those in the compliance market) are little more than greenwashing, but some financial analysts are holding firm.

Forest carbon credits, especially voluntary offsets, have been a key pillar in most mitigation schemes globally. The UN’s REDD+ program is the colossus in this world, with more than 600 projects in the framework accounting for roughly a tenth of the entire world’s land area. REDD+ is the fruit of negotiations surrounding the Kyoto Protocols in 1997 (COP3); it has been operational for more than decade. At COP26, just two years ago and 24 years later, 200 countries agreed to implement Article 6 of the 2015 Paris Agreement, which made it increasingly easy for countries to meet their climate targets by buying voluntary offsets.

Firms and countries with significant forest cover continue to be in a prime position to benefit, even while the voluntary market faces turbulence. Already, countries across the Asia-Pacific region, from India to Vanuatu have offset projects in place, which commit to sequester carbon in their forests and soil. A handful either have operational carbon-trading markets in place or plan to soon.

Interestingly, the recent UN Global Stocktake report makes an almost dispassionate nod to it all: “Land carbon accounting and incentive systems, such as REDD+ and payment for forest-based ecosystem services, are increasingly implemented by governments as an approach for incentivizing forest conservation and restoration at different scales.”

The motives for promoting offsets seem solid on their face: Deforestation and other land-use changes, primarily in the tropics, lead to 5 billion metric tons of carbon dioxide emissions annually (this is a distant second only to fossil fuel consumption, at 35 billion tons); tackling deforestation with whatever tools are available is appealing. It is useful to recall that so-called "cap-and-trade" policies have repeatedly faced setbacks to being implemented globally. A tax on emissions is considered to be even less odds-on by most experts.

At this point, then, many scientists and policymakers have called for a two-tiered system of emissions trading and carbon taxes with a universally agreed upon carbon price that would advance the world one step closer to Paris Agreement goals.

Yet the rush to voluntary forest carbon offsets may sustain the argument that not all that glitters is green. As the authors in an August publication of Science point out, voluntary offset projects around the world, from South America to Africa to Asia, are deeply flawed. In fact, in an accompanying analysis piece, the journal notes “that offsetting through paying projects to reduce emissions by conserving tropical forests is not reducing deforestation as claimed and is worsening climate change.”

This leaves the world in a predicament: The voluntary carbon market is worth at least US$2 billion and could be worth $40 billion by 2030, so much cash is at stake. But the dramatic need to cut greenhouse gas emissions by nearly half is what the IPCC has called for. No reasonable person thinks carbon offsets alone will get us there, but advocates, especially in the business community, argue they are necessary to get us part way there.

Much of the criticism stems from methodology. Carbon credit auditing organizations like Verra have been accused of not always being transparent in the manner they verify offset projects and register resulting credits. An auditor’s whole job is to ensure that the carbon offset is in fact “real.” However, scientific studies in the last couple of years have continued to shed light on how the apparent links to forest protection credits have not delivered promised CO2 reductions. This has compelled Verra, for instance, to make a public rebuke of both scientific inquiry and press coverage. Eventually, the powerful CEO of the company was forced to resign in May, which yet again set off alarm bells for investors worldwide.

At this key juncture, in-depth investigative reporting on the part of Internews’ Earth Journalism Network's partners at SourceMaterial and Pulitzer’s Rainforest Investigations Network has been essential to public awareness of the post-COP26 carbon credit regime. These journalists have uncovered just how troubling offset projects can be at times, including the existence of phantom credits, forested areas that are double-counted for their “additionality” (referring to whether emissions reductions or removals would exist if not for income derived from the sale of a credit), land that remains degraded and human rights abuses to suit the interests of powerful parties.

A gully rich in carbon

A boat is sailing between two steep mountains, while Singapore is shrouded in the forest and setting sun in spring. Sparse clouds are hovering in a gully rich in carbon, while the lights shine on layered mountains.

This poem, written in 1872 by the Chinese writer Wang Zhi about Singapore, seems as appropriate as any verse to describe where carbon credit offset projects stand in Asia these days. More interesting still, perhaps, because Singapore is positioning itself to be a regional leader in the voluntary carbon market. Today, a century-and-a-half later, the “gully rich in carbon” could just as easily refer to carbon markets as it does the above ground biomass of trees so many expect to sequester CO2. The boat “sailing between” is an apt metaphor for the certifiers who provide the backing for the value of credits in the first place.

Asia Pacific represents 18% of global forest cover (740 million hectares of forests), according to the Forest Stewardship Council, and Southeast Asia, the region’s richest carbon gully, makes up the world’s third-largest forested area. It is no wonder that REDD+ developers and other carbon credit entrepreneurs have targeted the region. A less charitable reading is that some countries with offset projects have suspect democratic institutions and human rights records, which also make them appealing to “carbon cowboys.”

Cambodia, for instance, has seen failed projects lead to credits traded on markets all the same, and land disputes and conflicts over rules required to maximize benefits to surrounding communities persist there as well. Indonesia’s experience has been one of limited progress in deforestation, while powerful economic interests grow and the basic calculations tying avoided deforestation to credits are questioned. In the Philippines projects may come and go, and in some cases flee shortly after the first tree is planted -- only to have phantom credits live on. And in Thailand, critics cite the same old same old: From logging concessions to forest reclamation projects, voluntary offsets are perceived as land grab entry points.

Then there are afforestation and reforestation (A/R) projects -- these are a separate class of schemes also well-represented in Asia. A/R activities can cause no more than limited annual changes in carbon stocks over long periods of time, while the promise of avoided deforestation and degradation, which is what REDD+ exemplifies, are premised on large changes in carbon stocks over much shorter time frames.

In India, repeated instances of ghost plantations, many of which have infringed on traditional land rights, abound; they may in fact be worsening as the government tries to advance its climate objectives. In Vietnam, the national government seems driven toward ambitious reforestation targets—but must somehow balance this reality with a regional demand for wood pellets sourced from its fragile forests (the details are complicated by community dynamics, of course).

Even the fiercest critics of voluntary carbon credits and A/R projects recognize the severity of the climate crisis. This is indeed why such scourgers highlight the need to reform methodologies or junk them altogether for a global carbon tax. But in the Asia Pacific, as other parts of the world, just as many questions about the effectiveness of offsets are being raised as answered.

It would appear at times that Wang Zhi’s carbon gullies in Singapore and beyond are now further shrouded with greenwashing. As the sparse clouds grow thicker, journalism as exemplified by “It’s a Wash” must shed much-needed light through these layers.

Sam Schramski is EJN's Special Project Editor and coordinator of the "It's A Wash" collaborative reporting project on greenwashing in the Asia Pacific.

Banner image: Vegetation crowds out sign promoting a $500 reward for any person with information about deforestation within Cambodia’s Southern Cardamoms National Park / Credit: Anton L. Delgado/Southeast Asia Globe.