From credit issuers to project developers and corporate buyers, every party in the carbon credit system benefits from lax standards. This creates a market where most credits likely represent no actual, additional emissions reduction.
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Citing a Harvard Business School study of 1,800 companies, Sir Ronald Cohen reveals the staggering scale of negative externalities. A third of these firms (600) cause environmental damage equivalent to a quarter or more of their profits, while 250 create more damage than they make in profit, highlighting the financial materiality of impact.
While innovative, conservation programs that pay communities to protect forests have a critical vulnerability: their incentive structure can be easily outbid. If logging companies offer more profitable terms for land rights, there is little to stop communities from abandoning the conservation agreement, highlighting the model's economic fragility.
A randomized trial in Surat, India established a pollution market for industrial plants. Contrary to assumptions that such systems are too complex for developing countries, the program reduced emissions by 20-30% while also lowering compliance costs for firms, providing a successful proof of concept.
The long queues for connecting projects to the power grid are misleadingly large. They are often inflated by multiple speculative applications for the same project. The real, viable projects are backed by investment-grade tenants, while many others are merely "PowerPoints" that will never actually be built.
The model of pressuring tech companies to go green doesn't apply to major industrial emitters like oil and steel. For them, the cost of eliminating emissions can be several times their annual profit, a cost no shareholder base would voluntarily accept.
The delay in adopting biosolutions is not just a business problem; it's a massive missed opportunity for the planet. The CEO quantifies the cost of regulatory inaction, stating that deploying only existing technologies—without any new innovation—could cut global CO2 emissions by 8%.
Setting rigid global warming limits (e.g., 2°C) creates a finite carbon budget. Since most future emissions will come from developing countries, these caps effectively tell poorer nations they must cut projected emissions by up to 90%, forcing them to choose between development and global climate goals.
Instead of focusing on marginal emissions cuts, companies should leverage their unique capabilities to solve hard problems. This means acting as early buyers for new green technologies or investing in R&D within their supply chains, creating new markets for the entire industry.
The popular idea that regenerative agriculture can reverse global warming by sequestering carbon in soil is mostly a fantasy. Measuring and verifying soil carbon is difficult, its permanence is questionable, and it's being used by corporate polluters to "offset" emissions through flawed carbon markets, distracting from real, proven solutions.
By creating the world's highest industrial electricity prices, the UK's Net Zero strategy doesn't eliminate emissions but merely offshores manufacturing to countries with laxer standards. This de-industrializes Britain, reduces national prosperity, and may even increase total global carbon output.
