HOW TO #OSINT: Investigating bad carbon credits
Carbon Credits: It’s a subject that preoccupies governments, activists & journalists. In a month-long investigation, we took a look at bad carbon credits, how they come together, who creates, audits and trades them — and how some could slip through checks, breaching basic principles of environmental standards and human rights.
The voluntary carbon credit market has received a cascade of bad press and criticism recently. But exactly those project were meant to endow firms with the potential to show off how great they can chase their own offsetting goals, by simply buying them. The motto so far: Cash is green. So why not. But it’s no good for business any longer. What went wrong?
As a consequence of all that criticism, voluntary carbon credit prices slumped. Demand, for projects based in poor developing countries, too. Interest among carbon credit buyers — mainly companies in rich developed economies, including Germany — plummeted.
The Problem: a considerable proportion of projects selling offsetting credits into the voluntary market, seem increasingly composed of poor quality projects — mainly due to how they are being calculated. Another problem: for a long time, there were few organizations involved that independently rated the quality of projects, challenging their methodology, and how they are being executed.
Voluntary carbon projects face a multitude of allegations, we found: They either overpromise and then underdeliver how much CO2- reduction/saving potential there is on offer.
Some, as we found in our investigation, may have a questionable approach to human rights, treating the people living in or near the carbon projects badly. Some are just terribly managed, operating under difficult conditions in Third-World countries, with instable economies and political climates. Some might check all of those boxes above.
Now, if no stock listed companies from the heart of the German or British economy would purchase these voluntary carbon credits to redress their emissions balancesheet, and people compained, perhaps no-one would notice.
But these companies were, and some still are, invested. They turned a blind eye. They wanted to present results fast. And how dire the situation is, that companies from all sorts of industries were “tricked”, show open-source data that proves it. A case for online OSINT investigators.
The Intel and the business clique
Let's talk about who is involved in this business, voluntary carbon credits? There are the likes of entities such as Verra, an organization (together with a number of others), who issue “Standards” for voluntary carbon credit projects. They then brand them “Verified Carbon Standard” approved.
These organizations usually keep online records and data registries open, so that clients of beneficiaries, who purchased voluntary carbon credits, see what good deed they did.
These records show WHICH projects the credits belong to, WHEN they were retired, and often, WHAT they were used for. If you have access to their website (here) or a historical dataset on purchases, then you can track, by year, companies across the global when and how they acquired and used (retired) their credits.
Companies such as Volkswagen, who only a few years was heavily affected by the “Volkswagen emissions scandal”, doubled down on purchasing voluntary carbon credits only a few years ago (after the scandal). In the case of credits for the “Katingan Peatland Restoration and Conservation Project” the company obviously got their fingers burned.
Among others, Katingan was heavily criticized by the media and a report by Greenpeace. The company says it didn't know anything about the criticism, that these are old stories anyway, and that it changed its corporate buying policy for carbon credits after the allegations emerged.
Another example is one of Germany’s largest insurance companies, Allianz. It not only appears in records to have purchased and retired many credits in voluntary carbon projects under Verra, that we took a look at — notably the “Rimba Raya Biodiversity Reserve Project, Indonesia”, that showed calculation issues for at least a decade. Allianz was also a shareholder, at least until recently, of a questionable carbon project in the DRC (Congo).
But also: The carbon standard organization “Wildlife Works Carbon” that operates the Mai N’domb Redd+ Project in Congo, is tied to more questionable credits. Jutta Kill, a researcher who wrote a review for the Bundestag last year, showed that the Allianz Group held a share of 10 percent of Wildlife Works Carbon.
The Mai N’domb Redd+ Project is among the biggest and also those that show a significant discrepancy — of about 30% — in how much carbon it can offer. In our investigation, we looked at Mai N’domb in detail, since it is part of a new push in Singapore to turn voluntary credits into those that the government accepts under the Paris Agreement and companies can run against their obligation to pay carbon taxes.
The company Allianz defends itself by saying that it invested in the protection of rainforests more than a decade, to preserve important carbon sinks and biological diversity. To achieve this, they use various project developers, some of whom are partly backed by Verra for certification.
“As part of our climate strategy, we promised to avoid net emissions in our investments and insurance business (both by 2050) and in our business operations (until 2030). One focus is on the reduction of emissions in accordance with science. We want to compensate for our remaining emissions through measures to remove carbon and not through emission avoidance certificates”, so a company representative.
Don’t Bite the Hand That Feeds You’
Then there are evaluators — auditors if you will. They are selected and operate in tight relationship with the voluntary standards organization. There is a big potential for conflict of interests, critics say. Since auditors are financially dependent on the relationship with Standard-forming organizations, their potential and political will to audit project organizations and project organizers thoroughly, is at best “limited”.
It's a classic case where auditing of a client doesn't work. Such parties can simply not guarantee an independent audit, some say.
Now, why does the audit matter so much now? A number of academic studies and checks by activists, such as Greenpeace and others, found that many of the projects did not deliver what they promise. Not only are badly audited carbon credit projects a waste of money for companies — those who “invest” in their carbon-neural PR messaging (something that soon may not be allowed any longer in the EU, under a new ban of carbon emissions' neutrality greenwashing efforts).
Secondly, there is increasing talk of merging the voluntary with the compliance market. Countrystates such as Singapore want to allow companies and buyers of such international voluntary standards to be used against their carbon tax burden, up to 5%. Badly audited and many riddled with problems, that is a huge risk Singapore’s government takes, as a number of sources confirmed to us.
Sure, not all are bad carbon credits. And if countries who buy them for their economies, do a decent job in applying their own checks and balance criteria, then perhaps there is a future.
Clear seems that because of the faulty works of auditing and some voluntary standard organizations, the trust in these carbon credits took a huge hit. And if anything is clear in this business, then that: confidence is a maker or a breaker of carbon credit market deals.
Who to listen to and trust now?
Increasingly there are independent organizations, such as rating agencies, that test voluntary carbon credit projects. These will issue big reports and mainly concentration on whether the math behind and calculations of the project fit the bill. However, they seem to lack focus on human right violations.
Why is there talk about human rights violations anyway?
Since project owners are under pressure to protect their areas from any illegal logging, artisanal exploitation and any human interference, they may act like colonial rulers — just the other way away around: Instead of exploitation, they may secure the forest heavy-handedly.
For locals, including indigenous tribes, who often rely on personal usage of wood to build houses etc, and food, such curtailing actions can be a grievance.
Some carbon project park rangers might be armed, might intimidate locals, hit them, or curtail them in ways breaching international human right law. After all, most of these projects are in the poorest of the poor of nationstates — In regions where human rights violations are often already part of everyday life.
Jutta Kill who looked at REDD projects, wrote in a report for the Heinrich Böll Stiftung that many of these private-sector REDD projects were exposed for overestimating the volume of avoided emissions, for causing conflicts over land use and evictions, and for reinforcing historical injustices of land allocation or for being linked to human rights violations.
Our own investigation also revealed that allegations of human rights violations often live in reports and public statement for years, before taken seriously by Verified Standard organizations. The latest example that we zoomed in on was one of the largest ones in the register of one verified standard organization, called Southern Cardamom. Read the piece of our collaboration at the SZ and at SourceMaterial.
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