A United Nations-backed scheme of carbon credits — in which companies unable to reduce their own emissions could buy "credits" from companies that did — actually increased greenhouse gas emission, a study suggests.
The credit scheme created a "perverse" incentive to generate more waste and may have increased those emissions by as much as 600 million tons of carbon dioxide, researchers at the Stockholm Environmental Institute report.
They point to countries like Russia and Ukraine, where chemicals known to harm the climate were purposefully created and then destroyed to claim cash for carbon credits, they said in a study appearing in Nature Climate Change.
Those countries were allowed to create credits from activities like reducing fires in coal waste, or limiting gas emissions from the production of petroleum.
The credits were sold in the European Union's carbon market to companies buying the offsets rather than pursuing expensive emission cuts of their own.
However, the researchers say, the majority of the credits didn't represent actual reductions in emission, because they didn't meet the criteria of "additionality"; in other words, the projects involved would have been undertaken anyway without the carbon credits.
"Some early projects were of good quality, but in 2011-2012, numerous projects were registered in Ukraine and Russia which had started long before and were clearly not motivated by carbon credits," says study co-author Vladyslav Zhezherin.
"This was like printing money."
The carbon credit scheme was part of the Kyoto Protocol, allowing countries to generate Emission Reduction Units from greenhouse gas reduction projects that they could then sell to other countries.
More than 800 million ERUs have been issued as of March of this year, 90 percent coming from Russia and Ukraine, but the SEI study found almost 80 percent of them were tied to projects of questionable environmental worth.
"What went on was that these countries could approve these projects by themselves [because] there was no international oversight, [and] in particular Russia and the Ukraine didn't have any incentive to guarantee the quality of these credits," study co-author Anja Kollmuss says.
In those two countries, operators of chemical plants would remove safeguards, which led to increased production of greenhouse gases, which they could then claim to have eliminated to earn financially lucrative credits, the researchers charged.
"If you produced more greenhouse gases only to destroy them and generate more carbon credits, you would essentially be damaging the climate for profit," says SEI associate and study co-author Lambert Schneider.
