A Carbon Scam? BP-Owned and US Largest Offset Company’s Credits Are 80% Dubious

Some forest carbon offsets sold by Finite Carbon, the largest offsetting company in the US, offer minimal climate benefit, according to a satellite analysis by Renoster and CarbonPlan.

Finite Carbon, founded in 2009 and acquired by BP in 2020, manages over 60 projects covering 1.6 million hectares. These offset projects generate a quarter of the US’s carbon credits.

Finite’s business model involves encouraging landowners to protect forests that are supposedly at risk of being cut down. The carbon absorbed by these protected trees generates credits, which polluters can purchase to offset their emissions.

Since 2009, Finite claims to have offset over 70 million tonnes of emissions—more than double BP’s total emissions last year.

However, the credibility of Finite’s projects is under scrutiny amid rising concerns about the global carbon offset industry, which Barclays predicts could be worth $1.5 trillion by 2050.

An analysis of three projects, representing nearly half of Finite Carbon’s credits valued at $334 million, revealed significant issues. Their findings were alarming: about 80% of the credits should not have been issued.

Finite’s Carbon Offsets Under the Microscope

The scrutiny of Finite Carbon’s offsets coincides with growing concerns about the carbon offset industry. US Treasury Secretary Janet Yellen recently emphasized the need to address the industry’s significant challenges.

Finite Carbon defended its offsets, stating that all projects are independently verified and developed according to California’s cap-and-trade program standards.

The offsets developer sells most of its credits under California’s cap-and-trade system, which requires excessive polluters to buy offsets. Critics argue that flawed credits allow companies to continue polluting with impunity.

Finite’s offsetting process involves calculating a baseline of how many trees would be cut down without the project.

Renoster, an agency used by carbon credit buyers to verify real climate benefits, found significant issues in Finite’s offset projects.

One project in the Alaska Panhandle included trees not at risk of being cut down, resulting in about 79% of the credits being deemed invalid by Renoster.

Finite’s Sealaska project, covering 67,000 hectares, generated credits valued at over $100 million. The rating agency found that trees in the project area were unlikely to be cut down due to extensive prior logging, making the credits unjustifiable. They were in locations inaccessible to loggers, such as ravines and coastlines.

Finite’s approach of excluding logged areas and creating maps around small pockets of forest, sometimes fewer than 50 trees, may comply with technical rules but undermines the spirit of the regulations.

Gerrymandering Credits: The Integrity Crisis in Carbon Offsetting

Thus, Renoster concluded that the project’s credits should not have been issued, labeling the practice as “cheating,” accusing them of intentionally manipulating project boundaries to maximize credits. Elias Ayrey, Renoster’s head scientist, criticized this “gerrymandering,” which makes assessing real conservation efforts impossible.

Sealaska representatives defended the credits, claiming the remaining trees had economic value and could legally be cut. Brian Kleinhenz, a former Sealaska executive, argued that there was always market value for the trees, even in difficult-to-access areas.

The California Air Resources Board (CARB) supported the inclusion of these trees in baseline calculations. CARB spokesman Dave Clegern acknowledged concerns but maintained that projects are in compliance with all regulations.

Another Finite project analyzed is a 200,000-hectare forest in Washington state, owned by the Confederated Tribes of the Colville Reservation. It significantly overestimated the logging threat, according to CarbonPlan scientist Grayson Badgley. He noted that awarding credits for avoiding unlikely logging activities undermines the integrity of offsets.

Chart from SourceMaterial website Note: Finite Carbon timber harvest projection vs the tribe’s submitted management plan

The third project in West Virginia, covering 39,000 hectares and involving Lyme Timber, which promised to preserve trees in exchange for credits, was also found to be over-credited. Renoster concluded that many trees were in steep, inaccessible areas, making logging economically unfeasible.

Lyme Timber president David Hoffer contested Renoster’s findings, asserting that their harvesting practices have been conservative.

A Path Forward for the Carbon Offset Industry

Finite Carbon’s controversial offset projects highlight the complexities and challenges within the carbon offset industry. The scrutiny underscores the urgent need for increased transparency and accountability in the carbon offset market.

Amid all this turmoil, the moment represents a pivotal opportunity for the industry to evolve and enhance its credibility.

By implementing more rigorous verification processes, embracing advanced monitoring technologies like satellite analysis, and fostering collaboration among stakeholders, the carbon offset market can refine its practices and restore confidence. Ultimately, these steps will help ensure that carbon credits genuinely contribute to mitigating climate change.

READ MORE: Will This Be The End of Carbon Offsets?

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