by Chris Lang
REDD-Monitor, August 21, 2025
ActionAid USA has published a report titled, Caution Required: Protecting Communities from Carbon Markets. The report highlights the dangers of carbon markets, for the climate and for local communities affected by carbon projects. The report notes the different motivations between buyers and sellers of carbon credits:
“Buyers – typically corporations or governments – are generally looking to purchase credits because they are aiming for carbon offsets under pressure to reduce emissions that they are not able or willing to do at the moment. On the other hand, sellers – often poorer global south governments or local communities – are generally not motivated by supposed climate benefits, but rather by the need for revenue.”
ActionAid USA argues that sellers of carbon credits should be protected from the harmful impacts of carbon projects, and alternative forms of revenue must be provided, “ideally direct climate finance in the form of public, grant-based funding.”
The report looks at case studies from Kenya and Liberia. In Kenya, the Northern Rangelands Trust’s Northern Kenya Grassland Carbon Project, and the Wildlife Works’ Kasigau REDD Project. In Liberia, ActionAid USA focusses mainly on Blue Carbon LLC, the United Arab Emirates company that signed a deal for 10% of the country.
Blue Carbon LLC signed a series of massive deals with several countries in Africa, as well as Pakistan and Papua New Guinea in the lead up to COP28 in Dubai. Since COP28, the company went remarkably quiet. Blue Carbon’s website has now disappeared.
The report includes a section explaining why carbon markets are a false solution to the climate crisis. ActionAid USA writes that,
“On the climate front, carbon markets and offsets have failed to actually reduce emissions after decades of trying. In short, they do not work. And even if they could provide some climate benefits (which, again, as a rule, they do not), the idea that that benefit would somehow make ongoing emissions elsewhere acceptable, as the world careens towards nearly three degrees of warming, is indefensible.”
The report refers to some of the studies that have exposed the failures of carbon offset projects to reduce emissions.
ActionAid USA goes through the familiar list of the causes of these failures. Some projects are outright fraudulent. Others are badly designed and ineffective. There’s the risk of reversals, for example when carbon projects are wiped out by wildfires — which is increasingly likely as the climate gets hotter. Counterfactual baselines are easily manipulated to inflate the number of carbon credits generated. Other carbon projects are not “additional” and the climate benefit would have happened regardless of the sale of carbon credits. And then there’s leakage, where an area of forest may be protected, but forest destruction increases elsewhere.
It’s worth reminding ourselves of what Larry Lohmann wrote nine years ago: “The problem is not ‘bad baselines’ but the concept of counterfactual baselines itself.”
The problems underlying carbon markets cannot be addressed by improved methodologies, better measurement, or somehow correcting “non-additionality”. The problems are structural and unavoidable.
There is another problem, as ActionAid USA points out. Even if carbon projects do reduce emissions in one place, the sale of carbon credits allows the buyer to continue polluting. We cannot afford those continued emissions, greenwashed with offsets or not: “The world is now well past the point where any ongoing emissions that can be reduced or halted must be as soon as possible. Everything that can be done to reduce emissions must be done, as quickly as possible.”
A new risk involves Article 6 of the Paris Agreement. Negotiators have not yet agreed on who will be liable for failed carbon credit projects traded under the Paris Agreement Crediting Mechanism.
Will the company or country that bought the carbon credits liable for the extra emissions? Or will the country selling the carbon credits be liable? Or the communities where the carbon project was established?
ActionAid USA writes that, “While this remains unsettled internationally with pushback against host countries bearing this burden, they should be proactive to avoid being left holding the bag. This should be a key consideration when host countries establish legal frameworks and negotiate contracts related to carbon credit sales.”
ActionAid USA’s report ends with a series of “key suggestions” for governments and communities considering carbon markets. The suggestions are posted here in full.
Ensure tenure rights to land are preserved: This is possibly the most critical demand, as land grabs are a serious risk to communities. Communities should not agree, under any circumstances, to give up land tenure to outside parties. Agreements on the climate action — such as stopping deforestation, ecosystem restoration, and so on — will be needed, but ceding ownership or control of the land to an outside entity, as was done in many of the Blue Carbon deals, is unacceptable. The risks to food security and land rights are simply too great.
Ensure transparency in negotiations and meaningful community consultations over any major agreements: Many of the most damaging carbon deals have occurred without meaningful input and often without community knowledge. Negotiations should be transparent and inclusive, with meaningful and widespread consultations with the community held from the outset. Ideally, projects would also be rooted in plans developed by the communities already, reflecting the community’s needs and objectives related to climate action.
Do not accept liability for failed carbon projects: In the event of reversals — meaning carbon is released into the atmosphere and the credit failed on the climate goals (for example, due to deforestation, forest fires, droughts, etc.) — or some other kind of failure for a climate credit that has already been sold, the question then becomes who is liable for that failure and how the emissions are counted. Host communities should not accept any liability for reversals or other failures that result in the credits being declared worthless, or “junk”. Host liability could leave communities with a very expensive bill for a reversal that is completely out of their control.
Avoid “Middle Men” as much as possible: Outside companies or entities that end up selling the carbon credits to customers often take a massive cut of any profits and often are not even based in the country in question. The financial benefits from these projects should be kept as close to the community as possible, which will generally mean avoiding any company seeking to sell on behalf of the community.
Accessible and effective grievance mechanisms must be in place: The mechanism needs to be able hold both individual bad actors and the project as a whole accountable; these are essential.
No offsets: Any carbon credits sold should be bought as “contributions” to climate action, rather than being bought to offset ongoing emissions, and allowing the planet’s biggest polluters to falsely claim that they are “carbon neutral”. Realistically, this will likely reduce interest in buying carbon credits considerably, as most buyers are not operating under altruistic motives. However, the notion that climate action through a market mechanism renders emissions elsewhere acceptable or acceptable is deeply flawed and should be called out.