Carbon markets are in limbo. That doesn't stop this company.


First, the little-known Emirati company set its sights on a forest the size of Maine. Then another one that was as big as South Carolina. After that, he focused on a piece of land the size of Puerto Rico.

As the oil-rich emirate of Dubai prepared to host this year's United Nations-sponsored climate summit, the company, called Blue Carbon and founded by a prince, was racking up deal proposals on huge tracts of land across the developing world. He sought to position himself as a force for a supposed solution to global warming: carbon credits.

Carbon credits are potentially one of the most important, but also most controversial, tools to accelerate efforts to reduce global emissions of heat-trapping gases. The idea is simple: each credit is equivalent to one ton of carbon dioxide emissions that were sequestered or avoided.

In theory, carbon trading could boost the ambition of industrialized nations by allowing them to reduce emissions in other countries while they figure out how to do it at home. It could also direct funds to developing countries that urgently need them to grow their economies sustainably.

But counting greenhouse gas emissions is a complex task.

Many conservationists worry that countries seeking to reduce emissions without abandoning fossil fuels could abuse the carbon market. Others hope the trade will channel the money the developing world needs to keep forests standing and build renewable energy plants.

Blue Carbon is entering the business despite unresolved issues about how the market for credits like these should best be structured.

Within the span of a year, Blue Carbon announced agreements with nations in Africa, Asia and the Caribbean to develop huge conservation projects. Its goal was broad: stop the clearing of forest land and plant forests in already cleared areas, and then sell credits based on the emissions reductions expected from those projects to nations seeking to reduce their carbon footprints.

One ton of carbon stored in trees is equivalent to one carbon credit that can be bought and sold.

But what government officials described as a once-in-a-lifetime opportunity for their nations was seen by many conservationists as an uncertain bid to curb carbon emissions with the potential to strip dozens of local communities of their land rights.

Carbon markets are still largely unregulated. While they provide a way to raise money to protect forests, much of the concern about deals like Blue Carbon's comes down to how little companies have to publicly disclose.

“We need all the financial levers we can get” to protect forests, said Zoe Quiroz-Cullen, director of Fauna & Flora, an international wildlife nonprofit. But she added: “I don't see the level of detail that we would expect for this number of ads at this kind of scale.”

Until now, most of the carbon market activity has occurred among companies seeking to fulfill their voluntary pledges to curb greenhouse gas emissions.

But the operations that Blue Carbon wants to negotiate have much more at stake. They take advantage of a system created in the landmark Paris climate agreement nearly a decade ago that allows nations to trade emissions reductions that would count toward the buyer's commitment to achieving carbon neutrality.

Although countries and companies are beginning to close deals, the rules governing trade remain unwritten. negotiators in the Recently concluded COP28 summit in Dubai They once again failed to agree on a framework to regulate the trades, largely over questions of how they would report emissions reductions from their projects.

“We want and need countries and their partners to be very clear and transparent about what they are doing,” said Alexia Kelly, who was a top U.S. negotiator on emissions trading and the markets provisions of the Paris Agreement. . “But in the absence of any kind of agreed-upon rules, that may or may not be happening.”

The terms of Blue Carbon's proposed deals were not made public. Its draft contract with the Liberian government, reviewed by the Times, shows that the company would not buy any land, but would instead secure the right to sell carbon credits from areas currently occupied by communities, private farms and reserves.

President Emmerson Mnangagwa of Zimbabwe touted a deal in September that could give him control of nearly one fifth of the country's territory to Blue Carbon. In a recent ceremony He said the deal would close the country's “financing gap to the tune of $200 million.”

Blue Carbon and the office of its founder Sheikh Ahmed Dalmook Al Maktoum, as well as four of the five African nations with agreements, did not respond to requests for information about the agreements.

Reaching an agreement to regulate trade between countries has become increasingly urgent. Since 2021, around 100 agreements of this type have been announced, according to data from MSCI, a company that researches carbon markets.

The United Arab Emirates announced nearly $500 million in commitments to carbon credit deals at a recent climate summit in Kenya, and the country is counting on paying for emissions reductions in other countries to partly offset its own.

“The goal was to use carbon trading, credits and markets to facilitate the energy transition, reducing carbon emissions and ensuring financial flows to poorer countries,” said Rachel Kyte, a veteran climate diplomat and president of a group which tries to make carbon emissions more efficient. more transparent markets. “But that process has to have integrity and transparency, and right now it doesn't.”

When Loretta Alethea Pope Kai, president of Liberia's National Civil Society Council, an umbrella group for advocacy organizations, saw the draft contract between her government and Blue Carbon in August, she said she vowed to block it.

For years, Ms. Pope Kai had worked with community leaders to help pass a law that protects the communities' land rights, as well as their right to be consulted on projects that affect them. “We said, 'Stop the negotiation' because we need more consultations,” she recalled in an interview. “The deal was a bad deal.”

The draft document, which has not been signed by Liberian authorities, was dated July and said Blue Carbon would get 70 percent of the profits (tax-free for a decade) from the sale of any carbon credits related to the earth. The government would get the remaining 30 percent, plus a 10 percent royalty on the value of each loan, half of which would go to local communities.

Environmentalists complained that local communities and the government were getting too little. TO commonly used protocol Plan Vivo, a British-based nonprofit, says communities should get at least 60 percent of revenue from carbon credit sales.

Wilson Tarpeh, executive director of Liberia's Environmental Protection Agency, said the government never intended for the deal to happen before the rules were in place.

“We're also very new to this issue, so we're taking our time to make sure the rules are set,” he said in an interview. “But carbon is an important asset and we want to make money from it.”

The governments of Zambia, Zimbabwe, Tanzania and Kenya, which signed memorandums of understanding to negotiate agreements over tens of thousands of square kilometers with Blue Carbon, did not respond to questions about the status of the agreements. Kenyan President William Ruto told reporters at the climate summit in Dubai that his country had “not sold an inch” of his land as part of any carbon market deal.

Neither carbon markets nor their credibility crisis are new.

The price of carbon credits in the voluntary market has repeatedly collapsed after academic and media investigations into large-scale projects found they exaggerated the amount of emissions they were supposed to offset and had negative effects on local communities.

Any abuse in carbon trading between nations would have major consequences. The emissions reductions promised by countries are the basis for calculations about how well the world is doing in the fight against climate change, such as the recent United Nations Emissions Gap Report.

Kelly, a former US negotiator, argued that while agreed rules would help protect against the risk of abuse in the carbon market, the Paris Agreement was designed to give nations the freedom to enact it as they see fit. But it, she said, depends on nations acting in good faith, as most do until now.

“We don't want them to wait,” he said, referring to rules still being considered. “It's a climate emergency and we need people to act.”

Despite frenetic deals in the months leading up to COP28, Blue Carbon had no discernible presence at the Dubai climate summit. As negotiators argued over the future of the carbon market, the company announced new agreements with Dominica and the Bahamas. The terms were not made public.

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