- Bruce Rich
- Environmental Forum
- September/October 2024
- 21
The evidence grows that some approaches to reduce GHG emissions are even counterproductive in that they create the impression that something is being achieved when next to nothing is actually happening to reduce emissions. We now have credible feedback on the effectiveness of 138 of the biggest international banks—accounting for some 40 percent of global banking assets—in changing their lending practices to achieve ‘net zero’ GHG emissions by 2050. This effort, known as the “United Nations Net Zero Banking Alliance (NZBA),” emerged in late 2021 from the “Glasgow Financial Alliance for Net Zero (GFANZ) at the Glasgow Scotland 26th Conference of the Parties to the United Nations Climate Convention.
In April, 2024, esearchers from MIT, the Columbia University Business School, and the European Central Bank evaluated the results of the NZBA in a paper that received widespread attention in the financial press. The conclusions are devastating: green rhetoric notwithstanding, the 138 international net-zero banks in aggregate have not reduced lending “to the sectors they target for decarbonization, nor do they increase financing for renewables projects.” Moreover, “we find no evidence of reduced financed emissions through engagement.” NZBA borrowers “are not more likely to set decarbonization targets or reduce their verified emissions” than borrowers from banks with no climate commitments.
Other scandals continue to emerge from the proliferation of fraudulent carbon offsets. An enormous offset fraud has come to light involving as much as $5 billion in a German government program allowing oil companies to meet GHG emission reductions in transportation by paying for carbon offsetting projects in China. The oil companies met their required reductions without paying a cent: they collected an extra fee added to the bill for gas purchases at German filling stations and passed it on to the Chinese offset schemes, known as UERs, “upstream emission reduction” projects.
Investigations by the major German TV network ZDF, and Germany’s leading business newspaper, the Handelsblatt, revealed that as many as 40 of the 60 UER projects may be worthless. The Handelsblatt reported last year that at least 27 projects are rife with “massive irregularities” and “even clear fraud.” Satellite images revealed that 13 UER projects don’t even physically exist.
These UER offsets undermined the domestic German biofuel industry since oil companies use the UERs instead of buying biofuel. Fraud allegations involve two German offset auditing firms tasked with independently certifying the UERs. When a ZDF journalist visited one of the projects the German firms claimed to have inspected, she found an abandoned chicken farm. This carbon offset scheme cum chicken coop ruin received 80 million euros, paid out of the pockets of German motorists. The German parliament issued a statement that “the evidence suggests we are dealing with a fraud system. The independent certifiers and validators on site obviously play a crucial role in this.”
