Amid accusations of fraud, lax auditors and problematic offset certifiers, is the carbon credit market still … credible?
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Farmers plant rice in east China’s Huangshan region, Anhui province (Image: Leonardo Lazo / Alamy)
During the past few years, global voluntary carbon markets have been thrown into crisis by fraud and quality scandals. Verra, a major certifier of carbon emission offsets, announced in August that it was rejecting 37 Chinese rice cultivation projects and revoking issued carbon credits, due to quality concerns. Some of the credits from these so-called “phantom” projects had already been procured to offset greenhouse gas emissions by major companies, like Shell and China National Petroleum Corporation. But evidence seen by Dialogue Earth indicates something more serious than quality concerns: some of these projects never existed.
Experts say any forthcoming reforms of emissions-reduction methodologies and oversight processes should be accompanied by a return to the basic principles of carbon offsetting: it is a contribution to global action on climate change, not a way to offset a company’s avoidable emissions.
Farming in the dark
Three farmers in eastern Anhui province, China, could hardly have imagined their rice fields would be linked to some of the world’s largest energy companies. Shell, for example, used carbon credits from their fields to offset greenhouse gas emissions from “23 LNG [liquefied natural gas] cargoes between January 1, 2022, and December 31, 2023”. This enabled Shell to label the shipments as “carbon neutral.”
Rice farmers in Asia commonly grow rice in flooded fields – rice grows well in such conditions, weeds do not. However, these anaerobic soil conditions lead to the production of methane, a particularly potent greenhouse gas. In 2018, rice cultivation in China produced almost 9.33 million tonnes of methane – or 39.1% of the country’s total agricultural methane emissions. That made rice the second-largest agricultural source of the gas, after livestock farming.
Rice cultivation projects under carbon credit schemes aim to tackle this by promoting intermittent drainage, also known as alternate wetting and drying, which reduces methane emissions.
According to documents concerning the development of these projects, the rice fields of the three Anhui farmers were part of separate projects. The documents claim alternate wetting and drying was being used to reduce emissions. But the farmers tell Dialogue Earth that nobody had spoken to them about alternate methods to cut emissions, nor had they heard of carbon trading. Among the three, only one farmer (from the city of Tongcheng) had tried intermittent drainage, and only then in one small area while continuing with traditional methods elsewhere.
