By Charles Bedford, Founder and Chief Impact Officer at Carbon Growth Partners

My father is a biology professor, and often likes to repeat the saying that academic politics are so bitter because the stakes are so small.  The debate that has roiled the nascent voluntary carbon market over how much carbon has been saved by forest conservation projects in the tropics has far higher stakes than whether an English lit prof gets tenure or a slightly bigger office.  Indeed, the stakes could not be higher, both for the global climate and for the local communities and indigenous people that have been subsidising the rest of us for millennia with their stewardship of the massive carbon sink that are the worlds tropical forests.

Times have changed, though, and these forests, the oxygen they produce and the carbon they suck from the atmosphere, are increasingly under pressure from logging, mining and agriculture.   We lose 11 million hectares per year of forests to industry, accounting for 20% of global emissions.  These uses, as important as they are for providing food, fibre and materials for all of us, are financially far more rewarding for local people than continuing to manage the forest sustainably.  According to a recent study by my former employer, The Nature Conservancy, 38% of the remaining intact natural landscapes, and 80% of global biodiversity, are under the management and control of indigenous people and local communities.

Many of these groups have not had the capacity to resist illegal land grabs that destroy these forests and release the carbon that they store.   That began to change about 15 years ago with the creation of a payment system to protect forests called REDD+, reducing emissions from deforestation and degradation.  REDD+ matches people, companies and governments that have money with protectors of the forest.  Communities get paid to keep their forests standing in the face of those land grabs based on how much deforestation was happening around them.

The carbon accounting framework and calculations in the neighbourhood of the REDD+ projects, though created and managed by third party certification standards and independently audited, has led a few news outlets and academics to call into question this forest carbon accounting system that has provided a brand new, and alternative, income stream to local people.  In fact, the price per tonne of carbon for these projects has dropped from $16 to $2 over the course of the last year.  $2 a tonne is insufficient to do most of the things that are necessary to prevent deforestation and land grabbing — patrols, education, securing legal title — much less the funds to build schools and hospitals, dig wells and assure good nutrition for children.

Here’s a good example. Ten years ago in a forest called the Selva De Mataven in eastern Colombia, a group of nine extremely poor communities, upon hearing about REDD+, banded together to protect 1 million hectares of their historic forest lands from mining and clearcutting.  The basic math is that the project would receive carbon credits (and the corresponding market funding) in the amount that is the difference between doing nothing at all and thereby losing their forests to land grabbers (business as usual) on the one hand, and protect their forest on the other.  The project, in other words, had to make a prediction about the future of deforestation in their area.  A tall order indeed, as Yogi Berra was known to say, “It’s tough to make predictions, especially about the future!”  Navigating the complex application process and creating the social structures and plans to carry out this protection project took five years.   After a few years of certification, auditing and marketing, the first payments came through in 2019.  The schools, clinics, canoes for transport in the rivers and marshes, hygiene facilities, and clean water came shortly afterwards.   And the people of the Selva came through with their end of the bargain.   The 1 million hectares remains intact and forested in the face of increased pressure from the south in the Amazon or from the east in politically chaotic Venezuela.

So, it seems in extremely bad faith to the people of Mataven, and REDD+ projects around the world, to now be told that academics and NGOs in Europe and North America are calling their efforts into question on behalf of what appears to nearly everyone involved as an accounting glitch.   Here’s the basic info about the glitch.  The academics have gone back to the original start date of the project and tried to recreate the calculations around how much carbon would have been released by the land grabbers, versus how much was saved by the efforts of the communities.   Essentially, the academics, with the benefit of hindsight and better technology and using different accounting rules, are second guessing the efforts of the local people of the Selva de Mataven to predict the future.  And a lot of very poor people, managing enormous chunks of the worlds tropical forests are feeling betrayed, and will be desperate to maintain funding for those schools and hospitals, and the compensation for  protecting the forests that have provided their modest livelihoods, that REDD+ funding brought them.

Local people have seen this movie before.  Aid agencies, oil, timber and ag companies, their own governments and the international community have been promising good things for decades.   “If you allow us into your forest to mine or drill, then we’ll do some nice things for your people.”   But the nice things don’t turn out to be nice after all, and the damage to the rivers and forests are permanent.  “Here’s a group of missionaries, or volunteers, or aid workers to help dig toilets or wells, or teach English or farming.”  But they all leave after a couple of years and that infrastructure or technology decays because the aid agencies lose interest or funding or move on.  “We in the global north hereby commit to $100 billion a year in climate finance to the global south.” (Copenhagen COP 2009). But the money still hasn’t been delivered, and it turns out that the global north really just wanted to make loans and get paid back with interest.  And, obviously, protecting forests from logging doesn’t generate any revenue to pay back the loans.

Which all leads to the question of Why?  Why are there continuous Bloomberg and Guardian headlines about arcane and complex REDD+ deforestation accounting?   Very little money is at stake—last year the whole voluntary carbon market, of which REDD+ projects account for about a third, was only worth $2 billion dollars.  Elon Musk could buy the whole market 100 times over.

Are we back to my dad’s old aphorism that because the stakes are so small the fight is so bitter?  It seems that way to me.  The IMF last week estimated the annual global subsidy from governments (basically us as taxpayers) to the fossil fuel industry amounts to 7 Trillion dollars. (the size of the carbon market is 0.014% of that figure).   The big oil and gas majors recorded enormous profits last year of $200 billion and bought back stock and paid out huge dividends.  Green groups and civil society should increase their effort on rolling back these subsidies or regulating the oil companies, instead of focusing on accounting irregularities surrounding complex forest protection projects in a tiny  and nascent market.  

How did we end up with this lopsided economic situation? How did we get here?

Three explanations come to mind.

First, and most likely, is that many environmentalists just don’t trust markets and capitalism.  It’s not an unfair criticism—how can the thing that got us into this climate problem be used to solve it?  This reminds me of saying that democracy is the worst form of government except for all of the rest of them.   I’m an environmentalist, and I’d definitely like to see the Democratic Republic of the Congo place all of its forests into national park status, zone the country, and lift all of its people out of poverty, but in the 60 years since its independence there is precious little evidence that that will happen on its own any time soon.  Rather, we’ve seen illegal or unsustainable mining, logging and agriculture proliferate across the country, alongside corruption and very little advancement of the human development indices, all in the service of generating cash for development by selling raw materials into the global economy.   There’s an alternative, though, and that is putting a price on the services that the people of the Congo basin have been providing for free for so long—that service being the atmosphere and the air we breathe.

Second, journalists and environmentalists just don’t trust corporations.  The way the voluntary carbon market works is that companies voluntarily pledge to reduce their carbon emissions as fast as they can, and then pay for someone else to reduce carbon elsewhere to compensate for what they cannot immediately reduce.  The cynicism about companies comes into play because many don’t trust that companies are going to do the hard work of decarbonising their operations and will just rely on carbon offsets to “greenwash” their image.   Of course this just disregards the basic reality that companies are not required in most parts of the world (especially in the US!) to do anything at all on decarbonisation, much less compensate for their remaining emissions.  More importantly, this cynicism also ignores the ample evidence from recent studies that show that companies that make these pledges are two times as likely to be reducing their emissions, and at a faster rate, than those that do not.

A clear consequence of this cynicism about the motivation and action of companies happened several weeks ago when Shell Oil walked back their $100 million annual pledge to finance carbon projects because of criticism of their participation in carbon markets.  That’s a huge loss for the rainforest, and nowhere in the articles about their withdrawal was there any mention of the many oil companies that are doing nothing whatsoever to advance the climate agenda.  All we saw were criticisms of Shell for changing their pledge—which is a powerful lesson for companies interested in making public their climate actions.  How can you blame them?

Third, fighting fossil fuel subsidies is harder work, super complex and a longer project than attacking companies and projects in the carbon market.  It’s intimidating to NGOs because the power dynamics are so lopsided.  And it’s extremely complicated, it’s country by country specific, and it’s a whole-world project.  In comparison, pointing out accounting irregularities, in the capitalist market system that you don’t trust, and that is being used by companies to compensate for the emissions they can’t immediately reduce, is far safer ground to tread.

Tolerating some inaccuracy in carbon accounting seems a reasonable trade-off when the (very small) funding is going to compensate forest guardians and indigenous people for the hard work of protecting their forests and foregoing the income available to them from more destructive mining, logging and agriculture.   Of course, the accounting methods for REDD+ continue to improve, as they have over the 15 years of their existence, and better remote monitoring and verification technologies are fast becoming the norm in the market.  So, accounting should cease to be an excuse to not protect the forests, as long as there is some tolerance for a market system with a commitment to continuous improvement.

My prescription? Let’s err on the side of action rather than caution on carbon markets.  Give environmental markets a chance to get as big as a trillion dollars, and the reporting, accounting and impact will be extremely accurate.  The problem for us, and the climate, is time.  Scaling these markets now is critical.  Lots of smart people must lean in, without cynicism and with authenticity, to ensure that they are simple, fair and transparent, and that they have the space to make and correct mistakes.  Accounting rules are important, but, in a system where the fossil fuel industry is receiving a $7 trillion annual subsidy without any accounting rules whatsoever, fixing small historical inaccuracies and solving for complexity in what is now a micro-industry is far more constructive than ripping down the whole notion of environmental markets.  Indigenous people and local communities can work well companies and countries to make a big dent in climate action, but only if the market is allowed to work.

Charles Bedford is Founder and Chief Impact Officer at Carbon Growth Partners and an adjunct professor at Hong Kong University of Science and Technology.

Any opinions published in this commentary reflect the views of the author(s) and not of Carbon Pulse.