Doubts have emerged over the credibility of the carbon market’s primary credit source as the partnership supporting Zimbabwe’s Kariba mega-project falls apart. South Pole, the leading global carbon offset seller, has ended its participation in the main forest conservation project in Zimbabwe due to concerns about exaggerated claims. This decision may result in job losses for approximately 20% of South Pole’s workforce. The company employs around 1,200 workers across 30 countries.
Carbon offsets allow businesses and individuals to balance their carbon emissions by paying for the removal of carbon elsewhere. This has become a billion-dollar global market, projected to reach $50 billion by 2030. South Pole’s decision was prompted by concerns about the Kariba REDD+ project’s compliance with their partnership standards. REDD stands for “Reducing emissions from deforestation and forest degradation in developing countries”. The Kariba REDD+ project, owned and developed by Carbon Green Investments (CGI), is one of the world’s largest forest conservation initiatives, covering an area the size of Puerto Rico. It has issued approximately 36 million credits since 2011, representing the removal or prevention of a ton of carbon dioxide from the atmosphere.
South Pole has ended its collaboration with CGI, but has emphasized that the existing carbon credits remain valid. However, the termination of the partnership comes amidst increasing scrutiny and challenges to the project’s integrity and the associated carbon credits. Reports from The New Yorker and an ongoing investigation by Verra have cast doubt on the effectiveness of the sold carbon reductions. South Pole has stated that it will cooperate with the investigation and reassess its involvement in Kariba based on the findings.
The Kariba REDD+ project, launched in 2011, aims to conserve 785,000 hectares of forest in northern Zimbabwe. It has received significant funding through carbon credits, with companies such as L’Oreal, Gucci, Nestlé, McKinsey, and Volkswagen voluntarily purchasing credits from Kariba to offset their emissions. However, recent scrutiny and challenges have raised concerns about the project and carbon offset initiatives in general.
South Pole CEO Renat Heuberger has defended the company’s practices, stating that carbon offset methodology is not perfect, but they consistently adhere to the approved methodology for the Kariba project. Heuberger also highlighted the uncertainties involved in deforestation projects, noting that predicting rates 10 years in advance is challenging. Verra, the leading carbon credit certifier, has acknowledged the imperfections in the system and emphasized their commitment to continuously improve methodologies to reflect evolving best practices and scientific insights.
Safeguards are crucial in carbon offset programs to maintain climate integrity. These programs typically allocate 10-20% of nature-based project credits for insurance purposes, known as a buffer pool. However, experts suggest that the buffer may not be enough to cover the risks posed by climate change, particularly for forest offset projects vulnerable to natural phenomena like wildfires. Carbon insurance can provide a creditworthy wrapper around investments, increasing confidence in the market and helping to reduce risks.
The controversy surrounding the Kariba REDD+ project calls for a re-evaluation of existing methodologies and safeguarding practices to restore credibility to carbon markets. The legitimacy of the project as a key carbon offset source has been questioned, leading South Pole to sever its ties with the initiative. This highlights the need for robust calculations, a cautious approach to safeguarding credits, and the implementation of carbon insurance to ensure the integrity of carbon offset projects and build trust in the market.