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Many companies advertise climate neutrality. This is often made possible by purchasing CO2 credits from other regions of the world. But the example of a company from Saxony shows the problems with certificate trading.
The label on the plastic bottle read: “Climate neutral” in large letters. “Lichtenauer Mineralwasser” has been advertising this since the beginning of 2021. The company explains on its homepage that it would achieve this self-imposed goal with so-called CO2 compensation, among other things, since it could not reduce its carbon dioxide emissions to zero on its own. Like the mineral water company from Saxony, many German companies advertise climate neutrality or something similar. But is that also true?
To compensate, Lichtenauer buys CO2 certificates that come from a rainforest area in Peru. The idea behind it: Deforestation should be prevented in the forest. The trees protected in this way then continue to bind carbon dioxide. One certificate represents one ton of CO2, which is supposedly not released into the atmosphere. This not only helps the climate, claims Lichtenauer, but also the local population.
A rainforest in Peru is intended to compensate for Saxony’s CO2 emissions.
The ARD magazine FAKT conducted research in Peru and two editors were in the country in South America in mid-November 2023. The CO2 compensation project from which Lichtenauer obtained his certificates is located around two hours by plane east of Lima, in the Peruvian state of Madre de Dios. There have been problems with illegal gold prospectors there for decades.
La Pampa is the name of the large area in which they are active. Where there was dense jungle 30 years ago, there is hardly a tree left. A lunar landscape with contaminated water due to the use of mercury. The police and military in Peru repeatedly try to destroy the gold miners’ illegal facilities. For years – but without long-term success.
Certificates for uncut rainforest
La Pampa was apparently part of the calculation for the expected future deforestation in the area of the CO2 project from which Lichtenauer had purchased certificates. The CO2 project area borders directly on the reference area and consists of over 400 smaller areas. These are plots of land owned by Brazil nut farmers who are contractually obliged to maintain the forest. The comparison between the project area and the reference area is important for calculating the CO2 certificates.
The project has existed for almost ten years. It was developed by the Peruvian company Bosques Amazonicos (BAM). It concludes contracts with Brazil nut farmers and sells the CO2 certificates. There is a largely intact forest in the project area. But the question is: Was there really a risk of deforestation as large as was predicted?
Big problem with illegal gold mining
Before a project can be certified, a similar reference area is used to calculate how deforestation will develop in the future without the compensation project. Simon Counsell – an international expert on CO2 projects in rainforests – wrote a study for Foodwatch on the project that Lichtenauer refers to with its climate neutrality. His conclusion: “In doing so, they have created a very high level of deforestation.”
Because: How many CO2 certificates can be issued depends on the reference area. This is the basis for the expected forest damage and is crucial for the number of CO2 certificates. The more deforestation occurs in the project’s reference area, the more certificates are possible – based on the project area.
There is an extreme problem with illegal gold mining in La Pampa and the surrounding region. “Also commercial logging, farmer settlement and an extremely high rate of deforestation over two decades before the offset project began,” says Counsell. He compared the areas using satellite images and aerial photographs and estimates that many times more CO2 certificates were generated. The calculation is inflationary and a million dollar business.
The operator has been criticized for a long time
The project operator BAM has been criticized for a long time, says Jutta Kill, who advises organizations in Germany and South America as an expert on CO2 compensation. She also assumes that so-called phantom credits were created on a massive scale, which are worthless from a climate perspective. “To this day, the project operator uses this reference area, which has been stated in the project documents from the beginning and is demonstrably inadequate. This means that for almost ten years, credits have been sold and generated here that are based on a reference area that is really not comparable.”
BAM does not answer whether too many certificates were created. The company explains that its project was created according to a strict methodology: “…validated and verified several times by various auditors and Verra.” Verra, a non-profit organization and one of the largest certifiers of carbon projects based in the US, has been under pressure for months.
At the beginning of 2023, media such as the English “The Guardian” and the German weekly magazine “Die Zeit” reported that Verra was said to have issued worthless certificates for many years. This caused Verra to experience turmoil. Chief David Antonioli resigned in May. Verra says up FACT-Request that the project was properly certified at the time of registration and that the number of CO2 certificates generated was not excessive.
At the end of November 2023, Verra finally announced a new methodology for protecting forests. The aim is to enable project supporters to voluntarily convert their projects to the new methodology. However, more details will only be available in the coming months.
The structure and volume of transactions
But who actually plays a role in these transactions? In Lichtenauer’s case, Bosques Amazonicos is the organizer. BAM engages the certifier Verra from the USA. ClimatePartner in Munich acted as an intermediary for the certificate business. The buyer was then the mineral water manufacturer – among others.
The FACTResearch now shows the volume of the business publicly for the first time. According to BAM, ClimatePartner has purchased almost 2.7 million certificates. Between 2019 and 2022, ClimatePartner confirms. A lucrative business, say those from FACT surveyed experts agreed.
Lichtenauer refuses an interview about the alleged climate neutrality despite multiple requests and refers in writing to ClimatePartner. The Munich-based company explains in writing: “The Lichtenauer company also works with us as part of its climate protection strategy. The company does a lot more than just invest in climate protection projects. Since 2018, we have been continuously calculating the CO2 footprint of the Lichtenauer mineral springs, as a basis, to identify reduction potential and derive measures from it.”
Expert: “That’s fatal”
ClimatePartner promotes transparency on its website. At the beginning of 2023, the company gave up the “climate neutral” label and replaced it with “ClimatePartner certified” or “financial climate contribution”. According to ClimatePartner, the fact that water bottles from Lichtenauer still said “climate neutral” at the end of November 2023 is due to the fact that packaging that was already printed in this way was still in circulation until it was sold off. “We don’t think it makes sense to destroy all of these products and packaging.”
The network of organizers, certifiers and intermediaries works because – according to biologist Jutta Kill – they all benefit from it: “All of these profiteers ultimately enrich themselves with credits that have no basis in real emissions reductions. This means that the profit does not come at the expense of costs only for the local population, but – ultimately – also at the expense of the climate, because phantom credits are largely traded here.”
The expert sees another danger with these compensations: “It makes us believe that there is a net zero on paper, so we can continue to consume crude oil, natural gas and coal. In reality, this zero exists, but in the atmosphere “Not. That’s fatal.”