'Independent' auditors overvalue credits of carbon projects, study finds | Hacker News Reader

'Independent' auditors overvalue credits of carbon projects, study finds

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42 pointsPaulHoule18 comments

Carbon credits are one of the biggest scams in our attempts to "clean up". In the same spirit as some industries putting the "recyclable" symbol on everything end everything. "We planted a tree". No you didn't, you paid someone to tell you they planted a tree for you and you don't want to look any close than that.

Companies can keep doing what they do and pay off someone else on the other side of the world for the promise that this third party will do something to compensate for what the company is doing. This is never truly auditable and enforceable, and it doesn't need to be, the point is to have a compliance tick-box that you did your best to clean up your act.

They're just saddling someone else with that "debt", and much like with actual debt, usually it all ends up in a bankruptcy where none of that is ever recovered. Except it's worse with carbon credits where creative accounting is allowed from the start.

About a decade ago I was at a climate conference at MIT, and talked with someone who said she'd gone to visit several certified carbon projects that turned out to not exist at all.

Maybe such cases. And it couldn't be easier. No one really cares about the actual carbon. Everyone just wants a piece of paper for as cheap as possible.

Exactly this. And the incentive it creates is very perverted. It would be much easier to just tax CO2 at the source, instead of this corruption prone system of carbon credits where you need to audit thousands of places instead of only one: the oil pipe.

I personally know of one that raised close to $100 million in financing, sold $50 million in "credits" to Microsoft, and the entire company turned out to be dumping concrete into the ocean to "sequester" the carbon.

The founders still blame "woke" scientists for outing their scheme and doubting their "science." Of course, neither founders have any prior scientific or engineering experience. It's maddening talking them. I've met never anyone who is both anti-science but calls themselves scientists. Huh?

EDIT: I should add that they have pivoted to AI, as you of course expected.

It's kind of weird to see this being published here now. Hacker News probably largely doesn't pay attention to the NBA, but there's a scandal right now whereby Steve Ballmer seems to have used a carbon credit company called Aspiration that was a pure scam and performed no actual offsetting of carbon usage in order to circumvent the salary cap, making investments into the hundreds of millions of dollars into this otherwise sell-nothing, do-nothing company so they could then give out do-nothing endorsement contracts to basketball players that didn't actually endorse them.

Makes me wonder how many other companies if not entire industries largely exist for money laundering and don't otherwise actually do anything.

Spent some years being a (financial) auditor and the ESG stuff always seemed particularly sketchy. The type of operations where you start with the answer and figure out a way to get the facts to fit

The article was good and goes into more detail than I expected it would about the particular perverse incentives in this case. But in general, isn't this a problem with all forms of commercial auditing?

Without a truly adversarial process (like, say, the US IRS), where there's a party that is actively incentivized to _find_ problems rather than to _not get caught overlooking_ problems, it is never going to drive quality beyond the bare minimum plausible deniability level.

It was always a scam, independent or not. And bluntly that is why the big banks were interested in it.

Just like the oil car that goes back and forth between the USA and Canada and somehow makes an investor money (duty drawback or “shuttle trade”).

Carbon credits are a good transition idea on paper but they are so easy to game one can’t stop wonder if they work at all.

My favourite remains digesters being heated by burning non green methane to produce green methane which will be more valuable thanks to the carbon credit. But big oil tells us it’s renewable, pinky swear.

Check out Sam Lavigne's project where he assigns a carbon credit to climate protest events https://lav.io/projects/offset/

Carbon credits are nothing but a scam. Their prices are completely made-up since we don’t have the technology to remove carbon and therefore don’t have the faintest idea what the actual cost should be. It’s nothing but a way of hamstringing our industry to make us poorer.

We do have the technology to remove carbon from the air. It's just not economically feasible. But the rest is true.

Well... is it really? Just because someone can pump out some kind of product that someone will buy doesn't mean it's actually worth any externalized cost whatsoever.

It's one thing of we're talking food production and housing. Completely different if we're talking McDonald's happy meal toys.

Like, does the same argument apply to noise pollution? Are we alright installing a factory next to the symphony hall so long as the factory "owns" their land?

I think as our technology and understanding of the world grows we ought to change with it.

But who decides what is "worth" it and what isn't?

Driving around in an electric car "generates" carbon credits while biking or staying at home doesn't. None of these activities remove carbon from the atmosphere. It's just completely willy-nilly politics.

> Their prices are completely made-up since we don’t have the technology to remove carbon

All prices are made-up. We pay in currency which lacks intrinsic value, and simultaneously multiplying or dividing all the numbers by ten wouldn't effectively change anything.

Moreover, we aren't really "pricing carbon" in the first place; we're placing a Pigouvian tax on polluting. It's not as if someone will pay (or be paid) to take the carbon off the producer's hands. In fact, as you highlight, there is no consumer who could do so.

Moreover, "technology to remove carbon" is completely irrelevant to setting the level. Determining the right level is the same kind of optimization problem as price discovery, but it's neither based on supply-and-demand for the carbon itself, nor on compensating anyone for dealing with the carbon. It's based on figuring out what keeps the economy going while moving the world towards net zero.

(Although we do have such "technology" — for example, the trees that people are planting to get these credits. The credit is paid for an action that demonstrably removes CO2 from the air, and is scaled according to the expected removal and how much would be charged for polluting that much.)

> All prices are made-up.

Nope. Most prices are in large part dictated by market forces. Including the price of money.

> in large part dictated by market forces.

Yes. As long as currency exists, that's making it up. Because there's no intrinsic reason for the notes to be worth what they are. Which is to say, market forces can drive a ratio like, say, (GDP / M2) according to current level of trust in government or the level of economic activity etc., but when we measure the numerator and denominator in "US dollars"[0], there's no intrinsic reason for that unit to be the size that it is.

A simpler way to see this is to note that we could just as easily measure both in "US cents". Or in "Lincolns" (a unit equal to 5 USD)[0]. Or whatever, as long as we're consistent.

We just don't.

[0] I'm Canadian actually; this is an attempt to make the post more relatable to a larger number of HN readers.

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