Opaque carbon credit market undermines fight against climate change

Companies flock to cheaper CO2 offsets, whose effect is hard to gauge

Many carbon emissions offsets are issued based on forest preservation efforts, but the effectiveness of such projects is difficult to measure over the long term. © AP

KENJI ASADA, AIKO MUNAKATA and MARI ISHIBASHI, Nikkei staff writers

February 11, 2022 02:03 JST

TOKYO -- Nearly 40% of carbon credits purchased by companies are more than five years old, new Nikkei analysis of global data shows, a trend that experts say threatens progress on cutting greenhouse gas emissions.

A carbon credit is tradable right that allows the holder to emit 1 ton of CO2. The credits can be issued based on the amount of CO2 absorbed by protecting forests or introducing renewable energy, for example. The effect of the emissions cuts is validated by a third party and the credits issued through these efforts can be traded on carbon markets.