| The Biden administration hopes to use voluntary carbon markets to help supply international climate aid. The only problem is the economic tool might actually make climate change worse. Dozens of carbon market leaders, including buyers, sellers and portfolio managers, have descended on New York for Climate Week with the goal of convincing the public otherwise, write Chelsea Harvey and Sara Schonhardt. The PR blitz aims to spotlight the potential of voluntary carbon markets and reflects the industry’s continued struggle to gain legitimacy. How markets work: Climate-friendly projects generate credits that polluting companies or individuals voluntarily buy to cancel out their own carbon emissions and meet their climate goals. The Biden administration is encouraging the use of these carbon markets to finance ballooning funding needs for international mitigation projects, such as planting mangroves on low-lying Pacific islands, building solar farms to replace coal-fired power in Asia and protecting storm-battered countries globally. The U.S. has for years struggled to meet its climate finance pledges. But the pay-to-pollute model only works if the new climate projects meaningfully reduce greenhouse gases and would not have been built otherwise. Numerous studies and investigations have found that these carbon markets are littered with projects that do little to address climate change. Amid these concerns, carbon markets have seen a sharp drop in value. Demand for carbon credits shrank from nearly $2 billion in 2022 to about $700 million in 2023, according to Ecosystem Marketplace, a nonprofit initiative focused on environmental finance. Supporters, including the Biden administration, are coalescing around broad guardrails to increase the markets’ transparency and efficacy. Big picture: Even with such efforts underway, critics warn that the ability to buy pollution credits, even effective ones, may discourage polluters from directly reducing their own carbon emissions — an action scientists say is needed to stave off the worst of climate change. “As long as it’s being used as permission to pollute, it’s not actually contributing to climate mitigation,” Danny Cullenward, an energy policy expert at the University of Pennsylvania, told Chelsea and Sara.
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