Carbon credits is this weird market, where the product is some positive externality. No one in the market has any incentive to be honest.
The buyer of the carbon credits doesn't actually need the carbon to be captured. They just want a certificate for X credits, so they can emit elsewhere or get some other benefit.
The seller doesn't actually need to capture the carbon. As long as they can make a convincing enough case to the buyer that they did capture the carbon, the buyer is happy to buy.
It's pretty much exactly the same as the plastic recycling market in Canada. The plastic waste is actually just shipped/sold to Asia. Not actually recycled.
Sometimes the only incentive is bad things that happen to you if you get caught. This has been true for pollution before carbon credits.
> The buyer of the carbon credits doesn't actually need the carbon to be captured. They just want a certificate for X credits, so they can emit elsewhere or get some other benefit.
This is correct, and I think works as intended.
The problem on the buyer's side is that the buyer has no incentive to emit no more than allowed by the certificates bought. This has to be verified, and the buyer punished for violation.
> The seller doesn't actually need to capture the carbon. As long as they can make a convincing enough case to the buyer that they did capture the carbon, the buyer is happy to buy.
The problem here isn't the buyer. Instead, the seller should have to prove that carbon has been captured before getting any carbon credits in the first place -- again, with punishment for violation.
Yes, it is working as intended; the buyer isn't liable. I guess this could still accomplish the goal of limiting emissions if you had effective outside policing of the seller side. I don't think we do and so the whole thing isn't working as intended.
If you made the buyer liable, as well, it would give them an incentive to validate claims, effectively policing the issue internally.
I think forging new credits is just inherently prone to fraud. I'd either just not permit it, or limit trading such credits very strictly. For instance, have a government subsidiary be the only valid buyer and auditor of such certificates (after which they enter general circulation).
Say you went to a state of the art carbon sequestering facility, and you see the machine pumping away, what can you verify? Do you trust bureaucrats to correctly measure an invisible 'good', that will be hidden/"stored" inaccessibly underground?
It's a world away from tangible goods, eg cars in a production line, or water in pipes. The whole business remains entirely invisible and has scam written all over it.
You absolutely can measure that, in the same way that you measure that manufacturers are producing cars that don't emit nitrogen oxides above regulated limits or that manufacturers aren't dumping cadmium into nearby rivers or that worksites aren't making employees work on telephone poles without safety gear: You have an organization that reads all the relevant research, develops tests, runs those tests, and is empowered to Apply Consequences To violators. You don't trust some anonymous "bureaucrats", you trust a dedicated organization of subject matter experts and specialist inspectors that know how things are supposed to work and understand all the dodgy tricks that people are going to pull. This is how we went from The Jungle and Silent Spring and the hole in the ozone layer to where we are today. This approach works.
The EPA. OSHA and per-state equivalents. The part of the FDA that inspects production lines. The FSIS. The NTSB. The USCSB. Essentially every individual city, municipal area, and state has its own health inspection service that shuts down unclean restaurants to keep them from killing people. Seriously, I listed Upton Sinclair's The Jungle for a reason, this is not a theoretical concern, this actually happens to this day and we know what it looks like when we don't have people dealing with it. This is not just something we can do, it's something we actually do, continuously and successfully, at every scale of government. This problem has known solutions that are reliable enough that every single city in the country has successfully implemented them.
The approach works but as The Jungle teaches us they (as in capitalists) will fight you every inch of the way and constantly try to roll back any progress.
This is not a smooth quick process - it takes generations and many many dead and suffering.
My prediction is before climate change effects get much worse in the west not many serious changes will be made.
No - its that they are in it together, working to (parasitically) extract even more wealth from the people creating the wealth.
When you use law to change the conditions, eg by creating a new product (carbon) that is invisible but licensed and that everyone is going to pay (on their bills) - ie a new wheeze or tax - you won't get acceptance without some sort of show.
A comparison would be the incentives around tax filing. Everyone has the financial incentive to cheat, but the enforcement is good enough (probability of being caught * punishment) that most people don't. The question is: how good is the enforcement mechanism as applied to sellers of carbon credits, and what is the added cost to the taxpayer of setting up such a system.
Carbon capture is real, carbon offsetting isn't. Offsetting is like making a "saving" by not buying something and then immediately spending the money you "saved".
Yes, it's a made up product (no one sees or wants 'carbon credits' like they want actual resources), a legislative illusion (the experience is a "y/n" on a screen, digital certificate shuffling), and an exercise in extending trust to the bureaucracy (if 80% or 90% of certs were fake, would anyone know?). What a waste of everyone's time.
But the consumer is meant to pay extra taxes for the privilege on their bills.
“ Under an agreement with the Alberta government, Shell was awarded two tonnes' worth of emissions reduction credits for each tonne of carbon it actually captured and stored underground at its Quest plant, near Edmonton.”
Kinda seems like you should try to smear Alberta not Shell.
If there's enough fluctuation in the price of carbon credits, Shell could make a profit even if they are required to buy them back to balance the books.
It was probably not a good idea to treat these things like financial instruments.
The buyer of the carbon credits doesn't actually need the carbon to be captured. They just want a certificate for X credits, so they can emit elsewhere or get some other benefit.
The seller doesn't actually need to capture the carbon. As long as they can make a convincing enough case to the buyer that they did capture the carbon, the buyer is happy to buy.
It's pretty much exactly the same as the plastic recycling market in Canada. The plastic waste is actually just shipped/sold to Asia. Not actually recycled.