As the world anticipates discussions on regulating the carbon market at the upcoming Dubai UN 28th climate conference, an eye-opening investigation by the India-based Centre for Science and Environment (CSE), has unveiled the murky world of voluntary carbon credits trading.

The report, titled "Discredited: The Voluntary Carbon Market in India," was unveiled during a webinar on Thursday, shedding light on the practices and pitfalls within this clandestine market.

Carbon credits have long been hailed as a crucial tool in the fight against climate change. These credits are allocated to projects that can effectively reduce greenhouse gas emissions, measured in tonnes of carbon dioxide-equivalent (CO2e).

Businesses and individuals can purchase these credits to offset their own carbon footprints, thus contributing to carbon neutrality. However, with no official global carbon market in place yet, a voluntary carbon market has flourished. This market, shrouded in secrecy, is the focal point of CSE's extensive investigation.

Sunita Narain, Director General of CSE, emphasised the potential of carbon markets to fund climate-friendly projects but raised significant concerns about the current state of the voluntary carbon market.
Narain pointed out the purpose of this market seems to be to serve the interests of project developers, auditors, and others who profit from the lucrative carbon business.

“The carbon market as it exists today is not designed to mitigate emissions – in fact, it might actually be increasing emissions across the world,” she said.

As per Sunita's statement, purchasers could persist in releasing emissions and even raise their emission levels while asserting that they have acquired credits, thereby presenting themselves as carbon-neutral.

The investigation delved into India's role in the voluntary carbon market. India stands as the world's second-largest supplier of carbon offsets, boasting a market worth over US $1.2 billion, with 1,451 projects registered with leading carbon registries Verra and Global Standard.

However, the CSE-Down To Earth team discovered concerning issues during visits to project areas, including overestimation of emissions and the exploitation of local communities, who often have no say in the carbon credit transactions.

The Climate Change Program Manager at CSE, Avantika Goswami reports that the world's two primary carbon registries, Verra and Global Standard, have collectively recorded 6,481 projects worldwide. As of May 2023, these registries have issued a total of 1.4 billion carbon credits.

Goswami explains that CSE and Down To Earth researchers embarked on a journey to 40 villages and towns across India to gain insight into the market's operations. In each place, they discovered that communities, their lands, and their labor played integral roles in the industry. However, it was striking that community members were often unaware that their efforts contributed to the generation of carbon credits, yet they had no ownership or control over these credits.

"The projects also raised fundamental concerns about the accounting practices of these transactions and the companies behind them,” he said.

CSE team identified a significant issue with the exaggerated estimation of emissions in Madhya Pradesh and Karnataka where EKI-Energy Services and Greenway Grameen Infra Pvt Ltd. had provided enhanced cookstoves.

Likewise, during visits to Araku Valley, it was discovered that indigenous communities had effectively relinquished their rights to carbon credits by engaging with a local NGO intermediary, the Naandi Foundation, which was acting on behalf of Danone. These credits were subsequently transferred to the Livelihood Fund based in Paris. Danone, known for its premium water brand Evian, then claimed these credits to portray itself as carbon-neutral. The Michelin Group also utilized these credits to offset the emissions generated by its employees' travel.

However, as revealed in field reports by Rohini Krishnamurthy and Trishant Dev, this business practice left local residents without any tangible benefits.

Rohini and Trishant's discoveries were made in spite of the resistance they encountered from project developers, who either insisted on non-disclosure agreements or denied access to the project areas.

“Our findings came despite the discouragement that we faced from project developers, who demanded that we sign non-disclosure agreements or simply did not permit us to visit the project areas,” said Rohini and Trishant.

The CSE-Down To Earth investigative team outlined key recommendations to reform the voluntary carbon market. These recommendations include ensuring transparency in project details and pricing, paying for genuine emission reductions, sharing the proceeds with affected communities, simplifying project designs, and aligning the market with each country's Nationally Determined Contributions (NDCs) to reduce emissions.

The investigation highlights the pressing need for transparency, accountability, and fairness in the voluntary carbon market as the world grapples with the urgent challenges of climate change. The findings underscore the importance of addressing these issues during discussions at the upcoming Dubai UN climate conference to ensure a just and effective global approach to carbon trading.