Controversy in the World of Carbon Credits

Recently, a group of 80 international non-governmental organizations (NGOs) called for the end of carbon credits, arguing that these mechanisms divert attention from real emission reductions and hinder the fight against climate change.

This demand reflects growing frustration with how carbon credits have been used by companies to offset their emissions, often without making significant changes to their operations.

The NGOs, including major environmental entities, assert that the carbon credit system often results in "greenwashing," where companies claim to be sustainable by purchasing credits while continuing to pollute.

These credits, critics argue, allow companies to delay necessary changes in their production processes and perpetuate an unsustainable economic model.

Controversy in the World of Carbon Credits

Problems with Carbon Credits

One of the main issues highlighted by the NGOs is the lack of integrity and transparency in the carbon credit market.

Often, credits are generated from projects whose effectiveness in reducing or avoiding carbon emissions is questionable. For example, Reducing Emissions from Deforestation and Forest Degradation (REDD+) projects have been widely criticized for not delivering the promised benefits, with only 70% of credits coming from avoided emissions.

Moreover, the credibility crisis in the voluntary carbon market is exacerbated by reports of fraud and inefficiencies.

The Brazilian Initiative for the Voluntary Carbon Market (IBMVC), for example, has been working to increase the credibility and transparency of the market in Brazil through agreements with organizations like Verra. However, challenges persist, and trust in the system remains low.

Impact on Policy and Economy

The impact of carbon credits on policy and economy is also a contentious point. Brazil's National Bank for Economic and Social Development (BNDES), for example, recently canceled carbon credit purchase contracts due to strategic changes and the credibility crisis in the market.

This shows how financial institutions are rethinking their support for the carbon market in response to growing criticism.

Additionally, international demand for carbon credits decreased in 2022, reflecting increasing distrust and questions about the quality and effectiveness of these credits. Large global companies have been moving away from carbon credits, opting to wait for a more robust and reliable system.

Arguments for Ending Carbon Credits

The NGOs argue that instead of relying on carbon credits, companies should focus on reducing their own emissions.

This can include investments in clean technologies, improvements in energy efficiency, and changes in production processes to minimize environmental impact.

The idea is that carbon offsetting should not be an excuse for inaction. Instead, companies should be encouraged to take concrete steps to reduce their emissions directly.

Purchasing carbon credits should be a last resort, used only when all other possibilities for internal reduction have been exhausted.

Seeking Alternatives

In light of these criticisms, there is a growing movement to improve the integrity and effectiveness of carbon markets.

The Voluntary Carbon Markets Integrity Initiative (VCMI) and the Integrity Council for the Voluntary Carbon Market are among the organizations working to define stricter standards and ensure that carbon credits genuinely contribute to emission reductions.

Additionally, there is an effort to develop new forms of climate finance that do not rely solely on carbon credits. This includes incentives for carbon capture and sequestration projects, which remove CO2 directly from the atmosphere rather than merely avoiding new emissions.

Conclusion

The demand by NGOs to end carbon credits highlights the urgent need to reassess current offset mechanisms.

While carbon credits have the potential to be a useful tool in the fight against climate change, their effectiveness depends on rigorous and transparent application. Without these guarantees, they risk becoming a smokescreen that masks real inaction.

Transitioning to a sustainable future requires a genuine commitment from companies to reduce their own emissions and adopt greener practices.

Only then can we ensure that global efforts to mitigate climate change are effective and fair.

For more information on the development and challenges of carbon markets, refer to the sources used in this article: Reset, CAF, Verra, and IBMVC.