Phantom Offsets and Carbon Deceit

The organization that ensures the international success of companies is far from world famous. It is located in a sterile office building in Washington, D.C., where not even the doorman is familiar with its name.

“V-E-R-R-A?”

He flips through the list of tenants. “Unit 1050, 10th floor.”

There is nothing about the bare hallway on the 10th floor to indicate that it leads to the realm of an NGO that exerts control over a multibillion-dollar market. Yet senior executives from around the world rely on the people who work in Unit 1050: Gazprom in Russia, Apple in the United States, Volkswagen in Germany.

The organization claims that it is fighting the climate crisis with the money it receives from those companies. Its promise? Every ton of CO₂ emissions that the companies cannot eliminate is eliminated for them by others. In times when executives and management boards are setting clear climate goals for their operations, it is an attractive offer. It allows companies to pay a fee so that somewhere in the world, a climate project offsets the emissions they discharge as they extract natural gas, build cars and produce computers. Every ton of CO₂ is sold as a carbon credit.

On paper, it is a deal that produces only winners. After all, the atmosphere doesn’t care whether emissions are reduced in the Volkswagen factory yard or in a Zimbabwean forest. As long as they drop.

Just that somebody has to guarantee that the CO₂ emissions actually are offset.

And that is the job of the people working in Unit 1050. They are employed by Verra, the world’s leading certifier of carbon credits. Fully 75 percent of emissions compensated by offsets on the voluntary – as in, not state run – carbon credit market, which is our focus here, take place under their supervision. They make the rules. And they transform companies that damage the climate into companies that produce sustainably.

Four parties are involved in the deal. First, there are those acquiring the carbon credits, companies like Volkswagen who are interested in buying their way out of the pollution they produce. Then, there are the retail traders, usually startups or consultancy firms, which broker and sell the credits, earning a fair amount of money in the process. Then there are the project developers and operators who ensure that the credits make it to the market in the first place by eliminating or cutting carbon emissions – for example by ensuring that a chunk of rainforest is not clearcut as planned. Project developers also earn a share from the deal. The fourth partner in the system, situated above all the others, are the certifiers who decide how many carbon credits to assign to each project. In three out of four projects around the world, that evaluation is performed by Verra. It plays a supervisory role, but it isn’t a government agency. It is responsible for ensuring that carbon credits are only issued when CO₂ emissions are in fact prevented.

Thousands of companies around the world have been able to announce both large and small climate success stories thanks to Verra. The Walt Disney Company, for example, has claimed triumphantly that it has slashed its emissions by half since 2012.

Audi has celebrated the development of its first CO₂-neutral electric car.

Gucci has announced that its operations are completely climate neutral.

As have McKinsey, Netflix and Zalando.

So much progress. So much success. Everywhere.

But what if much of it isn’t actually real?

Read more: Zeit Online