A recent study published in the journal Nature shows that only 16% of carbon credits result in actual emissions reductions, raising doubts about the effectiveness of carbon markets. As the 29th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP29) prioritises new carbon trading mechanisms, the study raises serious concerns about the credibility of emission reduction claims.
Key highlights of the study
- Ineffectiveness of carbon credits: The study analysed projects that generated carbon credits equivalent to one billion tonnes of carbon dioxide (CO2) under the Kyoto Protocol, 1997 mechanism and found that only 16% of these credits corresponded to actual emission reductions.
- Success in HFC-23 elimination: The most effective emission reductions were seen in projects that focused on the elimination of hydrofluorocarbons (HFC)-23, a potent greenhouse gas. About 68% of the credits received from these projects resulted in actual emissions reductions, making them the most successful of the projects reviewed.
- Challenges for other projects: Deforestation avoidance projects had an effectiveness rate of only 25%. “Deforestation avoidance projects” are conservation efforts that prevent deforestation and the emissions of CO2 that occur when trees are cut down. The effectiveness of solar cooker deployment projects was even lower, with only 11% of credits reducing emissions. The study found that many projects failed to meet the “additionality” rule under the Kyoto Protocol, which means emissions reductions would have occurred even without the revenue from carbon credits. Additionality requires projects to reduce emissions by more than they would have done under a business-as-usual scenario. The study highlights flaws in current assessments, with many Kyoto mechanisms issuing credits for non-additional reductions, thereby weakening emissions claims. These issues underscore the need for a more robust carbon trading mechanism under the Paris Agreement, 2015, on which progress is expected at COP29 in Baku.
- Recommendations: The study calls for stricter eligibility criteria and improved standards and methodologies for measuring emissions reductions. Projects with higher potential for additionality should be prioritized. The study also highlights the need for a robust carbon trading mechanism under the Paris Agreement, with safeguards to ensure that credits reflect actual emissions reductions.
Carbon Credits
- Carbon credits or carbon offsets refer to the reduction or removal of carbon emissions, measured in tonnes of carbon dioxide equivalent (tCO2e). Each carbon credit allows the emission of one tonne of CO2 or its equivalent to be amortised. These credits are generated by projects that absorb or reduce carbon emissions and are certified by international bodies such as the Verified Carbon Standard (VCS) and the Gold Standard.
Carbon Markets
- The carbon markets established under the Paris Agreement aim to create more robust, reliable systems for trading carbon credits and ensure transparency in emissions reductions. Under Article 6 of the Paris Agreement, countries can work together to transfer carbon credits earned from emissions-reducing projects to other countries to help them meet their climate goals.