EMISSIONS INSIGHTS BLOG
The concept of emissions management progressed from the realm of the environmentalist through society to the business board room. The progressive organizations are shifting away from traditional business to adopt sustainability.
Carbon Offsets Fraud
Carbon Offsets Ripe for Fraud?
As soon as you place a dollar value on something, the risk for widespread fraud springs up almost overnight. This is a sad conclusion that customs agents and law enforcement officers are coming to as trading of carbon offsets begins to take center stage.
One of the primary ways of dealing with climate change caused by excess carbon emissions is to place a value on emissions and force emitters to purchase allowances or “offsets”. This kind of arrangement is likely to come into sharp focus as the United States is currently working on its own version of a “cap and trade” scheme, which will force companies to have to barter and trade their allowances within a market.
It has been estimated that the black market for trading carbon offsets is in excess of $100 billion and is only set to increase as governments adopt those cap and trade principles. Whenever a market exists, corruption is inevitable and there are some organized activists seeking to capitalize upon the emerging carbon offset market, taking particular advantage of a huge gap in the knowledge and education base, especially in underdeveloped countries.
Climate legislators are seeking to introduce financial incentives for hundreds of countries around the world with the aim of protecting vast tracts of forests. As trees store carbon, but release it if they are harvested, a significant value could be placed to halt deforestation.
Carbon Will Become a Chosen Commodity of the Future
Remote administrations could trade carbon offsets with users to considerable potential benefit. This is a ripe area for those who would seek to exploit the lack of knowledge or understanding of the landowners, who could be persuaded to sell their rights to the carbon, which would in turn be manipulated further on the black market.
It seems likely that carbon will be the “chosen commodity” of the future and it is likely that any legislation currently in place within the European Union, or under consideration in the United States, will need to be modified as time goes by and the realities of the real world are set against the principles of sustainability.
Potential of Fraud and Manipulation in Carbon Trading
Environmentalists may not be able to see the bigger picture as, although financial incentives may be a powerful motivator when it comes to reducing greenhouse gas emissions at source, governments may be forced to become far more involved economically than is healthy. Regulators may find themselves busy trying to moderate or regulate the market forces as those forces are being unfairly inflated by issues such as fraud.
Indeed, such is the potential for manipulation and fraud that several government agencies, including the British Treasury, have preemptively reduced any imposed “value” tax rates for carbon trading to zero, marking a considerable reduction in potential revenues. Further fraud is anticipated as a black-market emerges for permits and the underground economy works out ways to manipulate this juiciest of markets.
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Verisae helps measure, manage and reduce equipment and energy costs including the related business and environmental impacts of carbon emissions. The Sustainability Resource Planning (“SRP”) software platform improves operational efficiency, protects brand integrity and helps ensure regulatory compliance for distributed enterprises across many industries. Verisae delivers a broad range of sustainability solutions to dozens of clients globally with thousands of daily users including an extended network of third-party suppliers. Verisae’s integrated sustainability platform actively tracks millions of assets across thousands of sites worldwide.
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