There’s a very real chance that the scale of “carbon neutrality” fraud could make California’s $600 million hospice fraud look like a shoplifter in a dollar store.
“Carbon neutrality” is what you get when you buy enough carbon credits to offset the carbon emissions from your operations. In 2020, Delta Air Lines began advertising itself as “the world’s first carbon-neutral airline.” The company slapped this message on its advertising, its social posts, even its in-flight napkins.
In 2023, a California woman sued Delta, accusing the company of leading her to pay more for airline tickets “due to her belief that by flying Delta she engaged in more ecologically conscious air travel and participated in a global transition away from carbon emissions.”
This was false and misleading, the complaint said, because the “voluntary carbon market,” in which Delta participated, has serious credibility problems such as inaccurate accounting and sketchy forecasts of emissions reductions.
California has strong consumer protection laws that prohibit false and misleading advertising. The lawsuit is ongoing.
Riding to the rescue is the California Legislature. Assembly Bill 1911 would offer legal protection to companies that advertise their carbon-neutral claims as long as they bought their carbon credits from an approved program that meets specified criteria, as determined by the California Air Resources Board or designated experts.
AB 1911 would create a presumption, in the event of a lawsuit, that the company’s “environmental marketing claim is valid.”
But is it?
What’s really behind the claim that carbon emissions are “offset” by the activities that are generating these carbon credits, which now are a $6 billion a year industry in California. And how is any of this protected from fraud?
The history of the problem is visible in the “criteria” for approved carbon credit programs. The requirements paint a clear picture of the schemes they’re intended to shut down. “A program shall qualify as a carbon crediting program” if it “satisfies the criteria” and “does all of the following,” AB 1911 states, before listing all the rules to be enforced, somehow.
The program must adopt “clear methodologies and protocols with transparent processes” and publicly disclose “all approved quantification methodologies.” That reveals the problem with opaque calculations. These can produce questionably high numbers of carbon credits that can be sold for a lot of money to companies with carbon neutrality slogans on their in-flight napkins.
An approved program must publicly disclose its “procedures for how carbon credits are discounted, issued, retired or canceled, and the length of the crediting period.” It also must have “mechanisms and procedures” to “track units,” “individually identify units through serial numbers” and “clearly identify unit holders.” It appears to be a challenge, once carbon credits are created, sold and possibly re-sold, to keep track of who’s claiming carbon neutrality from them and for how long.
Another requirement for an approved carbon credit program is “robust independent third-party validation and verification of mitigation activities.” There must be “oversight standards” and “verification bodies” and “an annual examination of a representative sample of project validations.” That reveals the problem of insider dealings.
More potential problems can be seen in the requirement for approved carbon credit programs to have “robust anti-money laundering processes” in place along with “robust antibribery and anticorruption guidance and regulation.” Apparently it has been possible to get all the serial numbers and verification you need to sell carbon credits for cash as long as some of the cash ends up in the right pockets.
Other requirements seek to prevent double-counting of credits, double-claiming, and conflicts of interest, such as the verification body being owned by the carbon credit producer.
What does carbon credit creation look like in practice?
Here’s one example. Earlier this month, Microsoft announced it will buy “626,000 metric tons of durable carbon dioxide removal credits” from a new “carbon capture facility” that takes the wood chips and sawdust from a sawmill owned by an Indigenous tribal council in Saskatchewan, presses this “waste” into blocks, and stores it permanently in a “geologic storage site.” This is “expected” to generate 90,000 metric tons of carbon removal credits annually. Microsoft will acquire the credits over 15 years.
The project is still in development. Microsoft is committing to purchase something that is not in existence yet. This is why the regulators are trying to establish requirements for quantifying, verifying and validating, independently and transparently, and free from the influence of bribery or corruption. And this project may well meet all of the required standards.
But there are other projects, all over the world, that may not. Everyone with a tree is a potential vendor of carbon credits, just by signing an agreement not to cut down the tree.
A lively new industry has arisen to assist tree-owners with the happy task of monetizing the fact that trees pull carbon dioxide out of the air, and if you don’t cut them down or burn them, they become “carbon capture” projects. It’s like a miracle.
Practitioners of the mystical art of carbon credits hold conventions and conferences, sometimes in luxury hotels, where they exchange “best practices” for selling their services. Somebody has to be paid to do all that quantifying and validating.
But what does it accomplish for anybody else?
The term “greenwashing” has been used by environmental activists who don’t buy into the idea that companies can purchase carbon credits instead of changing their operations to reduce carbon emissions. Lawsuits over allegedly false claims of “carbon neutrality” are one way to force the disgorgement of all the facts about sketchy dealings in the “voluntary carbon market.”
The California Legislature wants to shut down those lawsuits.
“Brainwashing” may be a bigger problem than “greenwashing.” If consumers ever became convinced that “carbon neutral” was a money-grabbing scam, companies would not have to pay Indigenous tribal councils in Saskatchewan to store compressed sawdust.
AB 1911 is the California Legislature’s way of making sure that never happens.
Write Susan@SusanShelley.com and follow her on X @Susan_Shelley