In a recent post "The 2025 Race to the Bottom" NEBA discussed the misguided pursuit of 'fast and cheap' environmental offsets. As we increasingly see today, there are some in government and industry attempting to redefine what is a now a 30-year-old U.S. mitigation banking industry, and a formal Mitigation Rule from 2008 - in an effort to create 'fast and cheap' credits. From that view, it's worth asking 'what's in a credit' and 'why does that matter?'
Let's examine those questions by looking at the recent plight of the voluntary carbon credit market.
According to Reuters News, the demand for voluntary carbon offset credits has now stalled following widespread doubts that the credits served to reduce emissions.
“The Integrity Council for the Voluntary Carbon Market (ICVCM), an independent governance body, has sought to address integrity concerns by launching Core Carbon Principle (CCP) standards and is assessing the validity of projects.
The ICVCM said eight renewable power methodologies, which cover around 236 million unretired, or unused carbon credits making up 32% of the market, had failed to meet the requirements of its standard on additionality grounds,” reports Reuters. Project additionality – the need for measurable environmental ‘uplift’ in creating projects intended for mitigation purposes – is considered a core concept of environmental offset.
The ICVCM said eight renewable power methodologies, which cover around 236 million unretired, or unused carbon credits making up 32% of the market, had failed to meet the requirements of its standard on additionality grounds,” reports Reuters.
Imagine the Environmental Banking Industry needing its own integrity council to parse 'bad mitigation bank credits' from 'good mitigation bank credits'. Such measures may become necessary if some of the new so-called 'mitigation banking' projects being proposed by non-profits, government and others. which offer no additionality and drastically overstate their environmental offsets, reach the market.
According to 2024 Research by the University of Colorado Law Review “The Voluntary Carbon Market: Market Failures and Policy Implications” the voluntary carbon markets are plagued among other things, by incentives for all involved to overstate offset claims.
Along with demand for voluntary carbon credits The New York Times notes that pricing for voluntary carbon credits has dropped precipitously over the past couple years, not because the cost of removing carbon from the atmosphere has decreased, but rather because buyers have lost faith that what they are buying has produced any real carbon offset.
Imagine all the decades of good work that would be sacrificed if buyers were to lose trust in the basic integrity of mitigation banking credits. Our industry has proven on thousands of projects across the U.S. that environmental mitigation produces real, tangible, lasting offsets and a wide host of environmental benefits.
In May, the Biden Administration rolled out a broad set of federal guidelines around the use of carbon offsets in what seems a last attempt to rescue flagging confidence in voluntary carbon credits.
Mitigation Banking and mitigation banking credits created under Section 404 of the Clean Water Act provide long-proven examples of creating high-quality ecological offsets for resources damaged unavoidably by development. Environmental Banking projects assure environmental restoration and in-perpetuity protection for species, wetlands and other waters across the U.S. – at a landscape and watershed scale.
The risk of 'fast and cheap' credits and the 'race to the bottom' is real and threatens our important environmental industry. Join us to fight back!
Race To The Bottom
In the coming year, the National Environmental Banking Association will address head-on these new challenges being brought on our environment and our industry. In upcoming posts, we'll read the cautionary story of how the voluntary carbon market destroyed itself, we'll profile a number of highly-unusual 'mitigation banking projects', and we'll continue to advocate for high-quality environmental mitigation in the Halls of Congress and beyond - as the Trusted Voice of the Mitigation Banking Industry.
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