Control carbon offsetting to prevent fraud, says Carney

CARBON offsetting is at risk of money laundering and fraud, a new task force headed by Mark Carney has said, as it lays out measures to regulate the market.

Mr Carney, the former governor of the Bank of England and an adviser to Boris Johnson on climate change, has set up a private-sector task force to establish a “credible” market for carbon offsets, which have been dismissed by critics as “greenwashing”.

Businesses and consumers can pay to offset polluting activities such as flights with projects that suck up greenhouse gases, such as tree planting, but the market is largely informal and overseen by a variety of different bodies.

The first report from Mr Carney’s task force warns that there is large scope for money laundering, as prices are not regulated. It also warns there has been evidence of fraud, as carbon credits are sold multiple times for the same project.

It calls for the development of regulations that match international banking standards.

The establishment of the task force comes after an investigation by The Daily Telegraph earlier this year raised concerns over the validity of offsetting projects around the world. The investigation found deforestation in one offsetting project in Madagascar that was intended to protect the trees to sequester carbon.

Mr Carney said there was a need for significantly more carbon offsets if the world was to limit global warming to 1.5C. While offsets should not be used as an alternative to lowering greenhouse gas emissions, he said the market “pre

sents an enormous green investment opportunity”.

Carbon offsetting markets have tended to be concentrated in developing countries, where there is significant scope for forestry projects and incentives to switch to renewable energy.

There are growing calls for a domestic carbon offsetting market in the UK, which could provide tens of millions in annual funding for nature projects.