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Business Recorder
3 days ago
- Business
- Business Recorder
CBAM, carbon trap, and impact of irrational gas policies
The EU's Carbon Border Adjustment Mechanism (CBAM) is now a pressing challenge for exporters worldwide. By pricing the carbon content of imports, CBAM ensures companies outside the EU face the same climate costs as European manufacturers under the EU Emissions Trading System (ETS). It is a key part of the EU's goal to be carbon neutral by 2050, preventing 'carbon leakage' ensuring that all carbon emissions - regardless of origin - are equally penalized. In its first phase (2023–2025), the CBAM targets high-carbon sectors such as iron, steel, cement, aluminum, and fertilizers. However, from 2030 onwards, textiles are expected to be included, posing serious implications for textile manufacturing countries. While textiles are not as energy-intensive as the sectors currently covered under CBAM, the policy could still undermine Pakistan's export competitiveness, given the dependency on textile export revenue. With the EU as Pakistan's largest export market and textiles as its major export, future market access will increasingly depend on the carbon footprint of Pakistani goods. Given the price-sensitivity and highly elastic nature of textiles, even marginal cost increases from carbon tariffs could lead to a noticeable drop in demand. For Pakistan, the risk of losing competitiveness is especially urgent due to three interrelated structural challenges in its industrial sector. First, industrial emissions in Pakistan have steadily risen over the past five decades, driven by a growing reliance on coal. This shift could make the country's manufacturing base increasingly carbon-intensive and less competitive in a climate-conscious global market. Second, Pakistan is a net importer of carbon emissions - an often overlooked aspect of its climate profile. The carbon embedded in imported raw materials and intermediate goods adds to the emissions footprint of its export value chains, inflating the overall carbon intensity of its final products. Third, recent energy reforms - such as the gas levy and the proposed CPP levy legislation under IMF conditionalities - appear designed to push industries away from cleaner, gas-based self-generation toward the more carbon-heavy national grid, risking an increase in emissions per unit of output. Together, these trends not only raise Pakistan's exposure to CBAM-related costs but also risk non-compliance with international climate obligations under the UNFCCC, the Paris Agreement, and Sustainable Development Goals (particularly SDG 7 on clean energy and SDG 13 on climate action). In an era where climate standards are becoming a precondition for access to global markets, Pakistan's energy trajectory - marked by rising emissions, imported carbon, and coal reliance - could undermine its export competitiveness and expose it to carbon and trade penalties if left unaddressed. Coal reliance and accelerating carbon emissions in Pakistan: Pakistan's emissions profile underscores the urgent challenge ahead. Coal power, which accounts for 40% of the country's energy mix, is a significant contributor to rising emissions. Despite its environmental costs, Pakistan remains heavily reliant on coal imports due to its low cost and CPEC-linked investments that have deepened this dependence. However, this reliance clashes with the global shift toward carbon accountability. Over the past five decades, carbon emissions from industrial processes in Pakistan have increased at an average annual rate of 5.3%, signaling not only sustained but accelerating carbon intensity in domestic production (see figure 1). Pakistan as a net importer of carbon: Importantly, Pakistan's carbon challenge extends beyond domestic emissions. As a net carbon importer, much of the emissions embedded in its exports come from imported raw materials and machinery, particularly from high-emission economies like China (figure 2). This outsourced carbon, combined with rising local emissions, could make Pakistan's supply chains carbon intensive - a situation that should be avoided at all costs. Since CBAM taxes emissions across the production process, Pakistan's status as a net carbon importer heightens the vulnerability of its exports. In contrast, regional competitors like Vietnam, China, and India are net carbon exporters (figure 3), shifting their emissions abroad. For instance, Zhang and Chen (2022) find that over 6% of China's exports contain carbon transferred to other Belt & Road Initiative countries, most of which are net carbon importers. Pakistan's growing reliance on Chinese inputs raises the embedded emissions in its textile exports - thereby potentially eroding Pakistan's price competitiveness in major markets. Policy paralysis: Recent IMF-backed energy reforms further compound this challenge. At the center is the CPP levy, which taxes gas supplied to industrial captive power plants (CPPs) and is set to rise incrementally to 20% by August 2026, over and above grid parity. Intended to shift industrial demand to the national grid, this policy has unintended climate consequences. By making gas costlier, it pushes manufacturers toward cheaper but dirtier fuels - primarily coal - undermining Pakistan's climate targets and increasing emissions per unit of output just as global buyers tighten carbon-related standards. While this levy may force some additional units to shift to the grid, its overall impact remains marginal, as gas/RLNG consumption has already declined by 75% due to prohibitively high OGRA-notified prices. The long-term costs are steeper: elevated emissions, rising industrial energy costs, and greater exposure to carbon border taxes. With more trading partners adopting carbon accountability frameworks, Pakistan stands to lose billions in export revenues unless it aligns its industrial energy policy with global climate goals. While the IMF has recently proposed a domestic carbon levy for Pakistan, the detailed framework is yet to be developed. Potential violation of international conventions: The implications extend beyond trade and competitiveness. Increased coal use driven by distorted energy pricing risks violating Pakistan's international commitments. As a signatory to the United Nations Framework Convention on Climate Change (UNFCCC), and the Paris Agreement, Pakistan is obligated to reduce emissions by 20% by 2030 and transparently report its progress. Increased reliance on coal will spike carbon emissions, drawing international scrutiny and weakening Pakistan's credibility in climate negotiations. It also risks non-compliance with the EU's GSP+ scheme, where upcoming monitoring missions - such as the one expected in June - assess adherence to environmental commitments. More broadly, continued coal dependency clashes with the global shift toward Environmental, Social, and Governance (ESG) standards under WTO frameworks, increasing the risk of non-tariff barriers and reduced market access. It also undermines Pakistan's progress toward Sustainable Development Goals—particularly SDG 7 (Affordable and Clean Energy) and SDG 13 (Climate Action) - and threatens the country's broader 2030 development agenda. CHPs for industrial decarbonization: To avoid the rising costs of carbon non-compliance and trade penalties, Pakistan must urgently reorient its industrial energy strategy. The path forward lies in smartly integrating renewable energy with gas-based Combined Heat and Power (CHP) systems. CHP offers a low-carbon, flexible solution capable of stabilizing the intermittency of renewables like solar, while leveraging existing gas infrastructure. Additionally, CHP engines can be integrated with solar PV and battery energy storage systems (BESS), creating a practical and scalable route to decarbonize industrial energy use while reducing dependence on imported coal. These systems also extract maximum economic value from gas molecules by simultaneously generating electricity and useful heat. In this context, gas and RLNG emerge as essential bridge fuels - classified as cleaner technologies - that can complement renewables and enable the transition to a low-carbon industrial base. Aligning with this strategy not only supports compliance with CBAM but also helps uphold Pakistan's international climate commitments by lowering industrial emissions. When reforms backfire: However, while the need for decarbonization is clear, current policy measures are pulling in the opposite direction. The growing disconnect between Pakistan's energy reforms and its climate obligations must be urgently addressed to preserve the country's industrial future. The objective of the IMF-backed policy - aimed at maximizing grid usage to lower tariffs by increasing consumption and spreading fixed costs over a broader base - has failed to materialize. Instead, frequent outages and rising costs have pushed consumers toward solar and industries toward alternative fuels like RFO, coal, and biomass. What persists is an unreliable and unsustainable national grid, burdened with massive stranded costs. If these issues are not urgently resolved, they could lead to a permanent loss of industrial competitiveness and severe environmental consequences. Meanwhile, the combined circular debt of the gas and power sectors has already exceeded Rs 5 trillion (as of March 2025) - a figure that will only increase if reliance on the fragile grid continues, expensive RLNG is diverted to the household sector, and domestic oil and gas fields are shut down. Too often, policies are crafted in isolation, overlooking their long-term consequences on industrial vitality and export growth. Yet, in a landscape where fiscal reforms are essential, sacrificing sustainable revenue streams like exports is a risk Pakistan can no longer afford. Therefore, an open cost-benefit analysis is urgently needed for all policies that currently overlook social, environmental, and economic costs to end this policy disconnect before the consequences become irreversible. Copyright Business Recorder, 2025
Euronews
18-03-2025
- Business
- Euronews
World's most powerful underwater turbines are coming to French coast
A tidal farm featuring the world's most powerful underwater turbines is being built off the coast of Normandy after winning EU funding. The NH1 tidal project from Normandie Hydroliennes will use four turbines to turn the Raz Blanchard tidal flow - Europe's strongest tidal stream - into a source of renewable energy. It is one of dozens of decarbonisation projects that have received a total €4.8 billion in the EU's Innovation Fund's latest round of grants. This coffer for clean technologies is filled by revenues from the EU Emissions Trading System (ETS), which requires polluters to pay for their greenhouse gas emissions. 'Being selected by the Innovation Fund is a major recognition of our work and the impact that our technological system, the innovative Proteus AR3000 horizontal axis turbine, can have on decarbonisation and the energy mix,' says Katia Gautier, director of Normandie Hydroliennes (NH). NH1 will be located 3km west off the coast of Cap de la Hague, and is due to start supplying electricity by 2028. The Channel sea current of Raz Blanchard is one of the most powerful in the world, NH states. With a development potential of around 5 to 6 gigawatts (GW), it could produce 15 to 18 terawatt hours (TWh), supplying electricity to 8 million people. Currently under construction in the port town of Cherbourg, the underwater turbines will have a rotor diameter of 24 metres and a capacity of 3 megawatts (MW) each. This 12MW foursome will supply 34 GWh of energy a year - enough to meet the needs of 15,000 local residents. There are other benefits for locals too. 80 per cent of the construction value of the project will be produced in France, where NH promises it will create some 400 direct and indirect jobs. The reminder will come from Europe, in order to guarantee energy sovereignty. Gautier says the €31.3 million grant will enable the company to take 'decisive steps' in realising the project. 'We look forward to working with our partners to make the NH1 tidal turbine pilot farm a success, a reference project and thus contribute to a more sustainable energy future,' she adds. Future projects will deploy as many as 85 turbines a year, the Innovation Fund notes, multiplying job creation to boost France's blue economy. Installed at a depth of at least 38 metres, NH stresses that its pilot farm will pose no danger to navigation or maritime safety, and will operate with respect for marine life. Field studies show a return of fish and marine megafauna to existing project sites, it points out. The MeyGen project off the coast of Scotland, for example, suggests that turbine foundations and connection cables can be 'settlement spaces' for species. According to other studies, the sound pressure levels of tidal turbines are significantly lower than the disturbance thresholds of marine megafauna. The project is expected to save 57,878 tonnes of CO2 equivalent in greenhouse gas emissions. In total, 85 clean tech projects in 18 countries secured funding from the Innovation Fund last October, in sectors ranging from energy storage to net-zero transport and buildings. 'The Fund is once again demonstrating how the EU ETS is a great tool in reducing emissions, and funding the projects we need to build a climate-neutral and competitive Europe,' commented Wopke Hoekstra, EU Commissioner for Climate, Net Zero and Clean Growth. Whales are not just big, they're a big deal for healthy oceans. Whale poo is responsible for moving tonnes of nutrients from deep water up to the surface. Now new research shows that whales also move vast quantities of nitrogen thousands of kilometres in their urine - a process scientists have dubbed 'the great whale pee funnel'. These tons of nitrogen support the health of tropical ecosystems and fish, especially in areas where nitrogen is otherwise in limited supply. In some places, like Hawaii, the input of nutrients from whales is bigger than from local sources. In 2010, scientists revealed that whales, feeding at depth and pooing at the surface, provide a critical resource for plankton growth and ocean productivity. A new University of Vermont-led study shows that whales also carry huge quantities of nutrients horizontally, across whole ocean basins, from rich, cold waters where they feed to warm shores near the equator where they mate and give birth. Much of this is in the form of urine, though sloughed skin, dead whale carcasses, calf faeces, and placentas also contribute. "These coastal areas often have clear waters, a sign of low nitrogen, and many have coral reef ecosystems," says Joe Roman, a biologist at the University of Vermont, who co-led the new research. "The movement of nitrogen and other nutrients can be important to the growth of phytoplankton, or microscopic algae, and provide food for sharks and other fish and many invertebrates." The study, published in March in the journal Nature Communications, calculates that in oceans across the globe, great whales - including right whales, gray whales, and humpbacks - transport around 4,000 tonnes of nitrogen each year to low-nutrient coastal areas in the tropics and subtropics. They also bring more than 45,000 tonnes of biomass. Before the era of human whaling decimated populations, scientists believe these long-distance inputs may have been three or more times larger. One major example of this process can be seen in the thousands of humpback whales that travel from a vast feeding area in the Gulf of Alaska to a more restricted area in Hawaii where they breed each year. There, in the Hawaiian Islands Humpback Whale National Marine Sanctuary, the input of nutrients - tons of pee, skin, dead bodies and poo - from whales is roughly double what is transported by local sources, the team of scientists estimate. "We call it the 'great whale conveyor belt'," Roman says, "or it can also be thought of as a funnel because whales feed over large areas, but they need to be in a relatively confined space to find a mate, breed, and give birth.' This means that nutrients spread out over the vast ocean get concentrated in much smaller coastal and coral ecosystems, "like collecting leaves to make compost for your garden," Roman says. In the summer, adult whales feed at high latitudes (like Alaska, Iceland, and Antarctica), putting on tonnes of fat. According to recent research, North Pacific humpback whales gain about 14 kilos per day in the spring, summer, and fall. They need this energy for their epic ocean journeys. Gray whales travel over 11,000 kilometres between feeding grounds off Russia and breeding areas along Baja California. Humpback whales in the Southern Hemisphere migrate more than 8,000 kilometres from foraging areas near Antarctica to mating sites off Costa Rica. Once in their breeding spots, whales urinate vast amounts of nitrogen-rich urea. One study in Iceland suggests that fin whales produce nearly 1,000 litres of urine per day when they are feeding. For comparison, humans produce less than two litres of urine daily. "Because of their size, whales are able to do things that no other animal does. They're living life on a different scale," says Andrew Pershing, one of ten co-authors of the new study and an oceanographer at the nonprofit organisation Climate Central. "Nutrients are coming in from outside - and not from a river, but by these migrating animals,' he adds. 'We don't think of animals other than humans having an impact on a planetary scale, but the whales really do." Before industrial whaling began in the 19th century, the nutrient inputs would have "been much bigger and this effect would've been much bigger," says Pershing. In the Southern Ocean, blue whale populations are still greatly reduced after intense hunting in the 20th century. The study highlights the importance of pushing conservation efforts to boost populations around the globe. "Animals form the circulatory system of the planet,' Roman says, 'and whales are the extreme example."
Gulf Insider
08-03-2025
- Business
- Gulf Insider
New EU Carbon Market Set To Hammer Households And Small Businesses
The European Union's (EU) new emissions trading system, expected to take effect in 2027, is set to hike prices for home heating and transportation, research firm BloombergNEF says in a new report. The new EU Emissions Trading System for buildings, road transport, and small industry, dubbed ETS2, is scheduled to become fully operational in 2027. ETS2 will cover and address the carbon dioxide (CO2) emissions from fuel combustion in buildings, road transport, and additional sectors, mainly small industry not covered by the existing Emissions Trading System – EU ETS. 'So far, emission reductions in those sectors have been insufficient to put the EU on a firm path towards its 2050 climate neutrality goal. The carbon price set by the ETS2 will provide a market incentive for investments in building renovations and low-emissions mobility,' the European Commission says. Although it will be a 'cap and trade' system like the existing EU ETS, the ETS2 will cover emissions upstream. This means that it will be fuel suppliers, rather than end consumers such as households or car users, that will be required to monitor and report their emissions. User may not pay directly, but fuel suppliers are likely to pass on the higher costs due to the carbon emissions trading. Two years after the 2027 launch, the price of CO2 could jump to as much as $161 (149 euros) per metric ton in 2029, according to BloombergNEF's analysis. This would be more than double the current price of CO2 under the existing EU ETS trading system for emissions from industry and power plants. Click here to read more.. .
Euronews
21-02-2025
- Business
- Euronews
EU must not slow climate action on hopes of future carbon removals, top climate advisor warns
The promise of future technological fixes could deter urgent action to immediately cut greenhouse gas emissions, the chair of the European Scientific Advisory Board on Climate Change (ESABCC) Ottmar Edenhofer has warned. As the climate emergency grows ever more acute, and emissions reduction targets agreed in Paris a decade ago slip out of reach, carbon capture and storage (CCS) is back on the policy agenda in Brussels. 'We recommend a progressive integration of permanent removals in the [emissions trading system] ETS,' Edenhofer said while briefing reporters ahead of the publication of a weighty report into the potential and risks of carbon removals in EU climate action. The ETS, the EU's central climate policy tool, where companies must buy allowances for every tonne of carbon dioxide they pump into the atmosphere, has been credited with driving a switch from coal-fired to renewable electricity generation. If removals were integrated into the cap-and-trade scheme, polluters could theoretically reduce this bill by investing in CCS. But including removals – which could also involve other offsetting strategies such as tree planting – should only be done under very strict conditions. 'And the first condition is this is only acceptable when we can prevent mitigation deterrence,' Edenhofer said. The board's report recommends separate targets for natural and technological carbon removal methods, with strict certification and monitoring. 'Once a robust certification framework is in place, integrating permanent removals into the EU Emissions Trading System will help balance reductions and removals in a cost-effective way,' Edenhofer said. Carbon Management Strategy CCS involves sequestering carbon dioxide, for example from factory chimneys, then purifying, compressing and transporting it to permanent storage sites, typically in depleted gas fields offshore. Critics argue that after more than two decades of development – largely by the petroleum industry, with substantial public funding – this energy-intensive process has yet to be proven at anything like the scale needed to make a meaningful contribution to arresting global temperature rise. Still, the European Commission published a year ago an Industrial Carbon Management Strategy that envisages a multi-billion-euro market-based system to capture and transport huge volumes of CO2 around Europe for use by industry or permanent storage. The EU executive estimates that Europe must be locking away 280 million tonnes annually by 2040, rising a decade later to 450 MT (about a sixth of the EU's total emissions today), if it is to reach its target of net-zero emissions by mid-century. Let the market decide Edenhofer suggested that the market could be allowed to test the credibility of expansive claims of the potential to scale up and bring down the cost of carbon dioxide removal (CDR) technologies. Another climate action policy suggested in the advisory panel's report is 'extended emitter responsibility' – that is, making polluters pay for the removal from the atmosphere of any CO2 they produce. Oil and gas firms could be allowed to enter into a contract associated with a future commitment to carbon removals, posting collateral with a secure intermediary that would only be paid back if the removal is successfully delivered, Edenhofer suggested while discussing various concepts explored by the ESABCC. 'Such a contract would be an important proof of concept,' he said. '[If] this contract would not be accepted in the market, this would reveal that most of the cost reduction expectations are probably too optimistic.' 'And this would also reveal some information about the realistic expectations about the future costs,' he said. Before any of that, petroleum producers face a concrete test of their commitment to CCS in 2030, by which date they are legally required to put in place storage facilities capable of absorbing 50 million tonnes of CO2 a year. For comparison, by far the largest and most advanced CCS project in Europe to date, outside the EU in petroleum-rich Norway, was nearly a decade in development and has an estimated initial injection capacity of just 1.5 MT. The ESABCC report on carbon removals follows another last month in which the advisory board called for urgent action and an end to fossil fuel subsidies to prevent the 2030 target of a 55% emissions cut from slipping out of reach.
Euronews
13-02-2025
- Business
- Euronews
Could a carbon credit-backed digital currency help us fight climate change?
Imagine if you could save the planet every time you spend money. A Swiss-South African start-up has launched Toco, a digital currency which is backed by carbon credits. The currency can be used to pay for goods or transfer them to another account. Users can 'retire' their Tocos to permanently lock away the corresponding carbon certificates to offset their own carbon emissions. Its developers say it is already accepted at some 50 shops and cafes in Switzerland and Denmark. Carbon credits represent the removal or reduction of one metric ton of carbon dioxide from the atmosphere, with every toco representing that. For example, one Toco is currently about €26. 'We designed this initiative so that it can be a transactional currency so that we can use it on a day-to-day basis,' Paul Rowett, co-founder of Toco, told Euronews Next. 'We specifically chose that route so we could create consistent demand in the carbon markets so that the magic of an individual going and paying for their lunch in Toco and creating demand for decarbonisation is quite a magical concept,' Rowett added. He believes the novel monetary system is a solution for climate change that doesn't compromise economic growth. 'The problem that causes climate change is inherently built into our economic system as economies grow,' Rowett said. 'Carbon emissions are built into our economic system and we don't pay for them. It's free to emit. And economic growth in our capitalist world is fundamentally important,' Rowett added. When users purchase Toco with traditional currency, the Carbon Reserve, a non-profit foundation chaired by the currency's founders and based in Switzerland, uses these funds to buy carbon removal certificates from projects like forests, renewable energy, or direct air capture from existing carbon markets. These certificates act like receipts to prove that carbon dioxide has been removed from the atmosphere. 'Those assets then form the underlying value that backs up the currency in circulation,' Rowett said. What is carbon trading? The idea of linking money to carbon removal might sound strange, but it is an institutionalised practice that dates back to 1997 when the United Nations Framework Convention on Climate Change (UNFCCC) adopted carbon credits. In 2005, the EU set up the world's first and largest carbon market, covering about 40 per cent of the EU's greenhouse gas emissions, the EU Emissions Trading System (EU ETS). Globally, companies have drawn criticism for using carbon credits to offset oil and gas extraction emissions, rather than transitioning away from fossil fuels. Electric automaker Tesla generated $2.8 billion (€2.6 billion) from carbon credit sales in 2024, according to its annual financial report. While carbon credits have existed as a concept for decades, the idea driving the Toco project is not yet mainstream, though some experts have expressed a belief that it could work in theory. '[Carbon credits] have to my knowledge never been seriously – that is, in official policies of large organisations or governments – thought about as a 'currency', although both I and some other scholars speculated about a decade ago that it could, in theory, come to this,' Steffen Dalsgaard, the centre manager of the Center for Climate IT who has researched carbon economies at the IT University of Copenhagen, told Euronews Next in an email. '[Carbon emissions] could be a new 'standard of value' for money like the gold standard used to be,' he added. How does Toco work? Toco says it incentivises carbon removal efforts by making them a part of the currency ecosystem. 'You could fundamentally change the economic system because your underlying value is no longer, essentially debt, which fiat currency is based on. And it's now something that we depend on, our world literally depends on,' Rowett said. Toco says the Carbon Reserve purchases 'high-quality' carbon removal certificates from voluntary carbon markets and holds them as assets, similar to how central banks historically held gold to back their currencies. 'It's an asset-backed currency and the asset that backs the currency is carbon mitigation certificates [which prove] that carbon has been removed,' he added. But who verifies that the carbon removal actually happens? Unlike the compliance market like the EU ETS, where companies are legally bound to pay for their emissions, the voluntary carbon market is where companies and individuals choose to offset their emissions by buying credits from environmental projects, often to meet corporate social responsibility goals. In the voluntary market, under which Toco operates, independent organisations such as Verra and Gold Standard issue serialised certificates of carbon removal or emissions reduction projects. Potential hazard Toco says it uses a permissioned blockchain to maintain a permanent registry of assets held by the Carbon Reserve. Its centralised blockchain also allows for transparency in tracking transactions, unlike some cryptocurrencies where ownership is harder to trace. 'In the design of this initiative, we've taken the positives of blockchain and discarded some of the things that we don't agree with, such as the anonymous movement of money. We don't believe in that because we believe that any kind of value transfer needs to come with security,' Rowett said. Yet some experts remain sceptical about using financial markets to protect the environment. 'I would urge caution both to investors and public policymakers. These coins are not the answer to our prayers to contain climate change,' Emilios Avgouleas, a researcher specialising in international financial markets and blockchain technology and the chair in international banking law and finance at the University of Edinburgh, told Euronews Next. 'They just multiply financialisation of a common good instrument like the carbon certificates, adding volatility to both markets,' he added. Avgouleas says both blockchain token and carbon certificate markets are volatile and connecting those can pose a 'double hazard' of destabilising both markets. 'Most tokenisation projects create serious links between the token and the underlying asset. Any adverse price impact on the token market is immediately transmitted to the market of the underlying asset, which in this case is the carbon certificate,' Avgouleas said. Toco says its system is safe as it requires users to verify their identity. Its central bank equivalent, the Carbon Reserve, is regulated by the Swiss Financial Market Supervisory Authority (FINMA). However, the evaluation of its underlying asset, carbon credits, is complicated, experts say. Can climate be 'treated like an account'? 'Critique has been levelled against carbon credits and markets numerous times and their promises of 'robust' verification mechanisms frequently fall short simply because the whole idea that the climate can be treated like an account in this way is fraught,' Dalsgaard said. 'In the case of forests, a piece of forested land can only be valuable as a carbon credit if it was under threat of deforestation. It is about avoiding that deforestation and saving the sequestered carbon which has value, not the forest in itself, which is already there,' he added. Dalsgaard says there are a lot of uncertainties about the trustworthiness of how valuable specific carbon credits are, citing an investigation by the German Oeko Institute that found fewer than 16 per cent of the carbon credits issued to investigated projects actually reduced carbon emissions. 'Companies like Verra claim that their methods guarantee that these savings are additional, but how do you prove that? It relies on presenting a number of credible counter-factual scenarios of what might happen in the absence of the issuance of credits, but how can you ever prove that something counterfactual really would have happened?' Dalsgaard added. Experts also cited the history of fraud in the crypto industry and called for more scrutiny. 'There should be an auditing process or mechanism to verify that the underlying instrument or asset in stock [with the digital token issuer] and back the exchange rate of the token. If it's not, obviously the token is worthless,' Avgouleas said. 'I hope these tokens will produce white papers that provide honest disclosures or statements to investors, which is not always the case'. Toco says it has about 1,000 users in Switzerland and Denmark and plans to expand in Europe to help fight climate change. 'Let's say every European person, working person, 190 million people bought one cup of coffee a day using Toco. That would translate into $50 billion (€48.5 billion) of demand for carbon mitigation assets in the current carbon markets,' said Rowett.
