Reining in the carbon cowboys - what we can learn from shift2neutral

If only those carbon credits had been used on this. Flickr/Roberto Verzo

Fairfax papers reported this morning that one of the world’s biggest carbon offset firms, located in Sydney, has been “shifting paper certificates instead of saving forests”.

Shift2neutral has sold carbon credits to leading businesses and events, saying they are saving jungles in Africa and Asia in return. But none of the projects seem to be going ahead.

How can this happen?

It’s like with any business venture: there are dodgy people out there. There’s no mandatory regulation of carbon offsets at this time.

Any business that wants to sell carbon offsets has to meet other laws, like the Trade Practices Act. But there’s still the possibility of shonky carbon offset dealers setting up and trying to fleece people of their money.

How common is this?

There are certainly anecdotal stories around the industry about carbon cowboys. They’re in it more to make money than to do their bit for the environment, and they’re not doing their bit for the environment. But dodgy practices like this are another level entirely.

There’s been the occasional case overseas where this kind of thing has happened. When we did our carbon offset watch survey, there were a lot of companies that didn’t respond. You have to wonder why they didn’t want to have scrutiny and whether they might have something to hide.

Is there any point in having voluntary regulation?

There is a point in voluntary regulation. There’s an Australian National Carbon Offset Standard. I would advise consumers to only buy offsets that are accredited under the standard, or at least some other international standard that’s got some credibility behind it. That can avoid this kind of thing happening.

The standard provides that extra level of scrutiny beyond the requirements of the Trade Practices Act. It looks through the auditing process, looks at the projects that are sitting behind the carbon offset, and makes sure things are above board and credible.

Do we need mandatory regulation?

There’s definitely value in mandatory regulation.

The carbon offset industry is small one and it’s not like it would be a huge regulatory burden to go down that path. There aren’t that many companies operating that you’d need to scrutinise.

It is the kind of industry where, if it’s going to survive, consumers need to have a feeling that there’s credibility in the products they’re buying. They want to know that for their hard earned money they’re actually going to get reductions in emissions. Mandatory regulation would give them assurance of that.

Will consumers shy away from carbon credits now?

Consumer confidence will take a hit. Having stories like this will lead to uncertainty about the quality of these products.

Why should consumers put money into carbon credits when there are plenty of other things they can do with their money?

Where to now for the industry?

At the very least we should see every offset provider ensuring that they are accredited under the national carbon offset standard. I know most of the major carbon offset providers have gone down that path already.

The question is whether there should be a move to mandatory regulation and whether that would be something the industry will be open to or will resist. I think that’s something for the industry to have some debate about.

Chris Riedy’s most recent article for The Conversation discussed better regulation for the carbon credits market.