NGOs call for corporate climate targets to exclude carbon credits

In a fresh attack on the voluntary carbon market, more than 80 nongovernmental organizations have called for corporates to exclude carbon offsets from their transition plans as they are misleading and delay concrete climate action.

In a letter published on July 2, the NGOs said that allowing companies and countries to meet climate commitments with carbon credits is "likely to slow down global emission reductions" as it simply moves emission reductions from one place to another.

"We call for scientific, ambitious, equitable, robust, credible and transparent rules around carbon accounting and corporate climate target setting. Voluntary and regulatory frameworks on climate transition planning must exclude offsetting," the letter said.

This condemnation comes at a critical juncture for the voluntary carbon market, which has been facing intense scrutiny over the last couple of years.

Criticism of the quality of some carbon projects has had major repercussions for offset prices, dissuading some companies from participating in the market.

Platts, part of S&P Global Commodity Insights, assessed current year nature-based avoidance carbon credits at $3.70/mtCO2e on July 1, slightly up from a record low of $2.70/mtCO2e seen in most of February this year.

Climate politics

The subject of carbon credits has become heavily polarized and politicized in recent years, with opponents and proponents clashing often.

The letter called out the lack of credibility of carbon offsets, saying there are very few high-integrity credits.

"Carbon credits send a misleading signal about the efforts required to pursue climate action, and they undermine carbon prices by providing a false sense of the existence of ultra-cheap abatement options around the world," the letter added. "They also risk disincentivizing the significant investments needed to ensure profound changes to corporate value chains and economic systems."

Among the signatories of letter were NGOs such as Oxfam, Amnesty International, Greenpeace, ClientEarth, Carbon Market Watch, Friends of the Earth and Global Witness.

Defenders of carbon markets argue that offsets are important to ensuring that companies keep reducing emissions.

A report last year by Forest Trends' Ecosystem Marketplace presented data indicating that corporates that are active buyers of carbon offsets are reducing their emissions faster than peers.

The study showed that participation in the voluntary carbon market is a signal that a company is likely already addressing climate change in its direct operations and throughout the value chains.

But critics argue that carbon credits allow emitters like oil and gas companies to continue releasing greenhouse gas emissions while claiming carbon neutrality.