New research in Nature Communications shows climate impact of carbon crediting projects is significantly overestimated

Climate Impact of Carbon Crediting Projects Is Significantly Overestimated

A new meta-study published in Nature Communications has revealed that emission reductions from climate protection projects are significantly lower than claimed. The study, titled "Systematic Assessment of the Achieved Emission Reductions of Carbon Crediting Projects," was led by Dr. Benedict Probst, head of the Net Zero Lab at the Max Planck Institute for Innovation and Competition. More than 60 empirical studies were systematically reviewed, uncovering significant quality issues with carbon credits. Dr. Probst is a Fellow of the Department of Land Economy's Cambridge Centre for Environment, Energy and Natural Resource Governance (CEENRG). Professor Andreas Kontoleon and Professor Laura Diaz Anadon of CEENRG are co-authors of the study.

Carbon markets play a critical role in firms’ and governments’ climate strategies by enabling the purchase and sale of carbon credits. These credits represent a specific amount of carbon emissions (CO₂) that has been reduced or avoided through environmental projects, such as forest conservation or the elimination of harmful gases. These credits help organizations and countries meet their climate goals by offsetting a part of their own emissions.

THE PROBLEM
A pressing question is whether these carbon credits really reflect genuine emission reductions or whether they are just a smokescreen. Are these projects truly benefiting the environment or are we paying for something that lacks tangible value? Carbon crediting mechanisms allow project developers to earn credits through emission reduction projects. However, numerous studies have raised concerns about environmental integrity. So far, a systematic assessment has been lacking.

THE NEW STUDY AND ITS FINDINGS
The new meta-study published in Nature Communications analyses 14 studies covering 2,346 climate projects and 51 studies of comparable projects for which no carbon credits were issued. All studies considered were based on experimental or rigorous observational methods. The analysis covers one fifth of the total credit volume issued to date, which corresponds to almost a billion tons of CO₂ emissions.

The analysis shows that less than 16% of carbon credits issued to the evaluated projects represented actual emission reductions. Specific examples of this are:
 

• For clean cookstove projects, in which traditional stoves are replaced by cleaner ones, the actual emission reductions corresponded to only 11% of the carbon credits issued.
• In the abatement of the potent greenhouse gas SF6, the actual emission reductions amounted to only 16% of the emission credits issued.
• Avoided deforestation showed a 25% reduction.
• Reducing the harmful gas HFC-23 performed comparatively well with a value of 68%.
   

With regard to wind energy, the data shows that the projects would probably have been implemented even without the sale of carbon credits and that the issuing of credits has therefore not led to any additional climate protection. Improved forest management was also implemented in reference regions without access to carbon credits to the same extent as in areas that benefited from carbon credits.
 

In the case of projects to avoid the greenhouse gases trifluoromethane (HFC-23) and sulphur hexafluoride (SF₆) in industry, however, the data shows that more greenhouse gases were produced from the point at which the plants were able to receive emission reduction certificates.

URGENT NEED FOR IMPROVED CERTIFICATION RULES
Dr. Benedict Probst, Head of the Net Zero Lab at the Max Planck Institute for Innovation and Competition, emphasized, 

“There is an urgent need to establish better rules for issuing carbon credits. All project types face systematic quality issues, and the quantification of emission reductions needs substantial improvement.”

Professors Kontoleon and Anadon from CEENRG and the Conservation Research Institute point out that 

“in spite of many efforts, we do not yet have a system of certification that is fit for purpose that has been demonstrated at scale”.

In order to improve the quality of the certificates, the carbon market programs in particular are under obligation, the authors emphasize. Carbon market programs should enhance their approaches to assessing projects and calculating emission reductions to ensure they are based on conservative assumptions and the latest scientific findings.

THE SOCIETAL IMPORTANCE OF THE STUDY
Major climate goals are at risk: if carbon credits do not lead to real emission reductions, we will not make the progress we think we are making in combating climate change.

A potential trust issue looms: Governments and firms rely on carbon credits to meet their climate pledges. If these credits are ineffective, it could undermine trust in carbon markets, which are seen as an essential tool in the fight against global warming.

Avoiding potential greenwashing is critical: Some companies could use ineffective carbon credits to claim "carbon neutrality" without actually reducing their emissions, misleading consumers and regulators.

CONCLUSION
The study shows that carbon markets are not delivering the necessary and expected impact. Reforms are urgently needed to ensure that carbon credit systems are truly contributing to mitigate climate change. If we do not reform these systems, we risk missing climate targets and allowing companies to appear more environmentally friendly than they are.