The recent Climate Week NYC event, which convened corporate leaders, policymakers, scientists, and others to discuss climate solutions and drive progress toward decarbonization, underscored how forests have become big business. The fast-growing voluntary carbon market, where companies purchase nature-based offsets to compensate for their emissions, was worth US$2 billion in 2021 and could reach US$10 billion to US$40 billion by 2030. Some even see forest preservation and restoration as a silver bullet for climate change.
However, for indigenous communities, including my tribe in the Colombian Amazon, the arrival of carbon traders marked the start of a troubled history: dubious deals, land grabs and violent evictions in contested territories. Our collective experience raises serious questions about the integrity of a market that is poised to expand across Latin America and Africa, as the world’s largest companies increasingly rely on forest-based offsets to reach net zero emissions.
To be sure, carbon offsets, also known as credits, were a good idea. Companies, using market mechanisms, could cancel out their carbon dioxide emissions by recognizing indigenous communities’ superior conservation practices and paying them to prevent deforestation. The mechanism also reflects the importance of forests as natural carbon sinks that can contribute more than one-third of the mitigation required to meet the Paris Agreement’s goals by 2030.
Illustration: Constance Chou
The unregulated and opaque market that emerged, however, has major design flaws. Recent research by the Berkeley Carbon Trading Project shows that Verra, the world’s leading carbon-crediting program, has given project developers the freedom to cherry-pick methodological approaches to maximize the quantity of credits they can receive. This has resulted in offset schemes that absorb far less carbon than promised — or none at all.
Even projects that represent genuine carbon reductions are not without controversy. The Alto Mayo in the Peruvian Amazon, which accounted for 40 percent of Disney’s offsets from 2012 to 2020, has successfully stopped some deforestation, but not without generating ill will by violently evicting forest communities.
How did a good idea go so wrong? Weak regulation is largely to blame. Carbon credit dealers — often called “carbon cowboys” — target indigenous communities across Latin America and Africa, sweet-talking them into signing away their rights to the carbon in their forests. The contracts are almost always exploitative, ranging from 100-year irrevocable commitments to terms that award the dealers half of the income earned from carbon credits.
Some dealers have embraced a more aggressive approach. When TotalEnergies seized land from farmers in the Democratic Republic of the Congo for a reforestation scheme, it paid some landowners about US$1 per hectare and others nothing; women farmers reported being chased away from their fields by men in trucks. The document that the farmers signed described any payment as “symbolic” and made “with a view to clearing their rights of use” to the land.
Carbon-offsetting projects are often carried out in jurisdictions with complex land-rights issues that require diligence, precision, and knowledge of indigenous people’s customary land rights.
However, in the “Wild West” carbon market, where speed is of the essence, deals are made with little concern for history, culture, or rights. That puts indigenous communities like mine in a precarious position.
Meanwhile, the corporate appetite for forest-based carbon credits continues to grow. As businesses come under intense pressure to meet net zero targets, buying offsets is far easier and more expedient than reducing their own emissions. When this voracious demand collides with a disorganized and loosely regulated market, brokers are willing and able to create credits by any means necessary, regardless of the climate impact.
The voluntary carbon market’s widespread greenwashing is particularly galling. While many offset schemes overstate the amount of carbon that they capture, an investigation by the Guardian, Die Zeit and SourceMaterial, a nonprofit investigative journalism organization, concluded that 94 percent of Verra’s rainforest offset credits yielded no benefit to the climate.
Guyana’s unprecedented carbon scheme has faced similar scrutiny. Earlier this year, the Hess Corporation, which was granted a concession for oil exploration off the coast of Guyana, purchased US$750 million worth of forest-based carbon credits from the country, but indigenous peoples have watched over these forests for centuries, and the threat of deforestation is very low. In fact, the project permits a level of deforestation that is higher than the country’s historic levels. Activists point to the climate damage caused by greatly exaggerated emissions-reduction claims, especially in South America’s newest oil-producing country, while some indigenous communities said the authorities have sold off what is not theirs to sell.
Indigenous peoples should be fairly compensated for the important work that we do to safeguard forests. Instead, the current system has forced us to contend with volatile offset prices, extractive brokers and markets that disregard human rights. Even the regulatory framework for carbon markets being developed by the UN — which could set a dangerous precedent for all other standards — does not yet account properly for human rights.
An incremental approach to reform would not be enough to restore the voluntary carbon market’s credibility. Funding for forest-protection schemes must be strictly regulated, based on credible science and impervious to companies’ demand for easy offsets. Forest communities like mine must be provided with long-term financial security and a seat at the decisionmaking table, not in the observers’ gallery.
Nature-based carbon-offset schemes get some things right: we must look to forests as a tool for mitigating global warming and pay the people who protect them. As it stands, however, the voluntary carbon market is riddled with shortcomings, resulting in forest-protection schemes that inflate their climate impact and exploit local communities. The time is right for a radical overhaul.
Mateo Estrada is lead advocacy strategist at the Organization of Indigenous Peoples of the Colombian Amazon.
Copyright: Project Syndicate
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