In Carbon Market, Corporations Buy Guilt, Not Change

Mar 2 , 2025
By Ahmed T. Abdulkadir

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Carbon markets have often been hailed as the foundation of global climate initiatives. They allow states and companies to buy credits to offset their greenhouse gas emissions. Polluters can continue their business operations while supposedly neutralising their environmental footprint by funding projects that reduce or remove carbon elsewhere. Theoretically, this approach incentivises cleaner practices and channels money into worthwhile environmental efforts.

However, carbon markets can also exempt heavy emitters and may, in the long run, do little to address the root causes of climate change. Instead, these markets can deepen global inequalities, especially when projects shift the burden to communities least responsible for the crisis.

More than 70 jurisdictions worldwide have adopted either carbon taxes or emissions trading programs. This fits comfortably within a broader neoliberal mindset that assigns a market value to pollution and relies on market forces to fix urgent problems. However, evidence increasingly shows that these schemes do not deliver meaningful reductions — not always. In 2023, for instance, research found that over 90pc of Verra-certified rainforest credits did not represent authentic cuts.

Corporations such as Shell and Disney used these credits to claim carbon-neutral even as they continued polluting. In another case, California’s forest offset program was found to have issued 29 million tons of “phantom reductions” to preserve forests that were never actually threatened, uncovering a troubling gap between the claims and reality of many offset projects.

A core criticism is that carbon markets often rely on predictive modeling instead of verifiable data. Many offsets come from reforestation or soil carbon programs that temporarily lock carbon away. When forests go up in flames or are cleared for farmland, the stored carbon is released into the atmosphere, erasing the presumed benefit. Meanwhile, high-tech solutions like Direct Air Capture currently eliminate less than 0.01pc of global emissions each year, unveiling how marginal their impact can be.

Ultimately, the system allows major emitters to keep running as usual, turning carbon credits into a financial product rather than a serious tool to confront global warming.

These markets worsen injustice by letting affluent countries and companies exploit ecological resources in poorer regions, contributing little to global emissions. In many of these areas, offset projects lead to displacement and the loss of traditional lands. In Tanzania, more than 110,000 Maasai people face eviction from the Ngorongoro Conservation Area, partly to make room for safari tourism and carbon offsets. In Kenya, the Ogiek people have encountered threats of expulsion from the Mau Forest.

Blue Carbon, a company based in the United Arab Emirates (UAE), has been linked to some of these endeavours.

The Southern Cardamom Reducing Emissions from Deforestation & Forest Degradation+ (REDD+) Project in Cambodia, operating under the United Nations (UN), has restricted the Chong people from accessing their ancestral land. Wind farms in La Guajira, Colombia, have been built on sites sacred to the Wayuu community.

A study four years ago showed that more than 70pc of carbon offset initiatives harmed indigenous communities. Supporters of these projects often argue that people should be relocated to preserve biodiversity, but critics reject this logic. They see indigenous people living sustainably for generations as not the threat; commercial ventures are. Some see treating local populations as impediments while letting corporations claim green credentials as a moral failure.

Financial manipulation is another concern.

Because carbon credits are traded like ordinary commodities, investors can speculate on price movements, which often remain below the 40 to 80 dollars a ton range that analysts believe is necessary to trigger real change. With prices so low, big emitters find it cheaper to buy credits than to reduce emissions through cleaner technology. Although some argue that revenues can be recycled into public goods, Africa’s estimated two percent to five percent annual GDP loss from climate impacts shows this funding has not kept up with the economic damage.

Wealthy countries usually set the parameters for carbon markets, leaving poorer countries disadvantaged, trading away their natural resources for uncertain returns.

Critics assert the real solution lies in reducing fossil fuel extraction at its source, boosting renewable energy, and transferring technology to needy countries. Instead of commodifying ecosystems, policy should address the more profound inequalities that enable climate change. By letting corporations pay to keep operating as usual, carbon markets may only offer the illusion of progress. If the world is serious about preventing further damage, it should address the structural imbalances and market-driven rationales at the heart of the crisis, rather than trusting a system that allows polluters to buy their way out of responsibility.

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PUBLISHED ON Mar 02, 2025 [ VOL 25 , NO 1296]

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