In a new study published in the journal Science, researchers have determined that a significant portion of the carbon credits tied to forest preservation may be based on inflated figures.
The research, led by an international consortium of scientists and economists from the University of Cambridge and VU Amsterdam, has found that the majority of carbon offset schemes might be significantly overestimating the deforestation levels they are preventing.
“This means that many of the carbon credits bought by companies to balance out emissions are not tied to real-world forest preservation as claimed,” says the report.
A system known as REDD+ (Reducing Emissions from Deforestation and Forest Degradation) enables the generation of these carbon credits. These schemes invest in the protection of crucial forest sections across the globe, spanning areas from the Congo to the Amazon basin.
By safeguarding these forests from deforestation, the carbon that would otherwise be released into the atmosphere is “stored,” forming the basis for these carbon credits.
Organizations, as well as individuals, can subsequently offset their carbon footprints by purchasing these credits, thereby compensating for a specific amount of their emissions.
However, the researchers argue that the calculations used to determine these credits often inflate the conservation successes of these voluntary REDD+ projects. They claim that many tons of greenhouse gas emissions considered “offset” by trees that would not otherwise exist have, in fact, only added to our planetary carbon debt.
The carbon credit market has witnessed exponential growth in recent years. Data from 2021 reveals that more than 150 million credits, valued at a staggering US $1.3 billion, originated from voluntary REDD+ projects.
This surging interest has raised concerns among researchers, especially when some companies, under the cloak of carbon offsetting, tout progress towards achieving “net zero” emissions, yet make minimal genuine efforts to mitigate greenhouse gases.
The researchers behind this revelation have raised an alarming perspective. Drawing parallels with the concept of a “lemons market” in economics, they suggest that the burgeoning carbon credit market may be heading towards a precarious state.
In such a market, discerning the quality of products becomes a challenge for buyers, which allows some sellers to saturate the market with inferior products. The inevitable consequence is a severe erosion of trust, which could culminate in a market collapse.
“Carbon credits provide major polluters with some semblance of climate credentials. Yet we can see that claims of saving vast swathes of forest from the chainsaw to balance emissions are overblown,” explained study senior author Professor Andreas Kontoleon, from Cambridge’s Department of Land Economy.
“These carbon credits are essentially predicting whether someone will chop down a tree, and selling that prediction. If you exaggerate or get it wrong, intentionally or not, you are selling hot air.”
Professor Kontoleon points out that overestimations of forest preservation have allowed the number of carbon credits on the market to keep rising, which in turn suppresses the prices.
“Potential buyers benefit from consistently low prices created by the flood of credits. It means that companies can tick their net zero box at the lowest possible cost,” he said.
The investigation was led by Dr. Thales West, a Fellow of the Centre for Environment, Energy and Natural Resource Governance at Cambridge, currently stationed at VU Amsterdam,
“We used real-world comparison sites to show what each REDD+ forest project would most probably look like now, rather than relying on extrapolations of historical data that ignore a wide range of factors, from policy changes to market forces,” explained Dr. West.
For their analysis, the research team selected 18 REDD+ projects dispersed across five tropical countries: Peru, Colombia, Cambodia, Tanzania, and the Democratic Republic of Congo.
They then identified existing forest areas within each region that closely mirrored the specific characteristics of the respective REDD+ project. This meant matching levels of forest cover, soil fertility, and even historical records of mining and deforestation.
Their findings were both revealing and alarming. Among the 18 projects, only one had a conservative estimate of its deforestation rates, and merely one had predictions that matched its real-world comparison site.
Astonishingly, the remaining 16 projects claimed that without their intervention, much higher rates of deforestation would have occurred, a claim which their comparison sites did not support.
The numbers are even more stark when it comes to carbon credits. The 18 REDD+ projects were anticipated to generate about 89 million carbon credits in 2020. The study, however, asserts that a staggering 68% of them (equivalent to over 60 million credits) would be from projects that made little to no genuine impact in reducing deforestation.
To make matters worse, the remaining 32% of carbon credits, which originated from REDD+ projects, were also found not to have conserved forests at the levels boasted by the project developers.
Dr. West and his team recalculated carbon credit values by replacing the deforestation levels anticipated by each REDD+ project with real-world forest cover data from their comparison sites.
They found that a mere 5.4 million carbon credits could be attributed to actual reductions in carbon emissions owing to preserved trees, which forms the foundational logic behind selling these credits. This implies that only 6% of the total carbon credits churned out by all 18 REDD+ projects in 2020 might hold any real value.
By November 2021, an astonishing 14.6 million carbon credits from these 18 REDD+ projects had already been purchased globally as an attempt to offset greenhouse gas emissions. With the disparity between theory and reality unveiled by this study, it raises pressing questions on the integrity of the REDD+ system and calls for a thorough reassessment to ensure it meets its intended objectives.
“These projects have already been used to offset almost three times more carbon than they have actually mitigated through forest preservation,” said Kontoleon. “And that’s with over 47 million credits still available in the market.”
“There are perverse incentives to generate huge numbers of carbon credits, and at the moment the market is essentially unregulated. Watchdog agencies are being created, but many of those involved are also linked to carbon credit certification agencies – so they will be marking their own homework.”
“The industry needs to work on closing loopholes that might allow bad faith actors to exploit offset markets. It must develop far more sophisticated and transparent methods of quantifying the amount of preserved forest to become a trusted marketplace.”