An ambitious plan to re-engineer the carbon market could play havoc with net zero goals and raises questions about human rights
By SourceMaterial and Anton Delgado
The wedding was just ending when the motorbike chase began.
Rangers had arrested Meng Sotear, a 62-year-old rice and cashew farmer, ordered her aboard a motorbike and raced towards their headquarters 10 kilometres down a dirt road in one of Cambodia’s remotest valleys. Calling an abrupt end to the festivities, local chief Huang Pou and some 40 other wedding guests leapt aboard their own machines and raced to intercept.
The resulting confrontation, which took place in 2021 and saw Meng freed by her neighbours, was just one of a series of clashes between villagers and rangers at the Southern Cardamom reserve, home to one of the world’s flagship carbon offsetting projects.
Wildlife Alliance, a US non-profit group, sells credits generated by protecting forests there to companies including Air France, Gucci and Deliveroo, who then claim to have cancelled out carbon emissions. On a recent trip to Southern Cardamom, SourceMaterial heard allegations of human rights infringements, while independent analysis suggests the project’s offsetting claims are significantly overstated.
Now a plan forged in Singapore aims to transform carbon credits like Southern Cardamom’s from a voluntary tool used by corporations to burnish their green image into a means for helping nations meet their 2015 Paris Agreement’s targets on global warming.
Counting these carbon credits towards emissions cuts risks glossing over potential human rights abuses—and will give a misleading impression of how close the world is to meeting its goal of limiting warming to 1.5 degrees, says Eftimiya Salo, director of carbon markets at Carbonaide, a carbon technology company.
It’s a “blueprint for disaster” that threatens to “make climate change even worse”, she said.
Offsetting schemes can play an important role in funding conservation, and some Southern Cardamom residents told SourceMaterial and its partners, Southeast Asia Globe and Süddeutsche Zeitung, that they support the project’s aims despite complaints about the rangers.
In a statement, Wildlife Alliance said the project “is preserving the forest and promoting local livelihoods”, as well as “supporting the respect and protection of human rights”. It said 3,957 local families are benefiting from the project through increased access to clean water, roads, toilets and education.
“I wish they’d stop burning our things.”
In Chi Phat, a village in the southern Cardamom Mountains, Sen Voleak, a fisherman’s wife whose family shares a two-room fishing shack lit by a single bulb wired to a car battery, said the heavy-handed tactics of Wildlife Alliance’s rangers are making it hard to survive.
“It’s difficult enough for us to make a living,” she said. “I wish they’d stop burning our things.”
Two become one
A thousand kilometres south of Chi Phat at Singapore’s five-star Shangri-La hotel, where rooms start at $262 a night, cocktails at $17 and a shot of 50-year-old Guyanese rum costs $800, Mikkel Larsen is setting out his vision for global carbon trading.
Larsen is the chief executive officer of Climate Impact X, the carbon exchange created by Singapore’s state wealth fund, its stock exchange, and two banks. The 48-year-old Danish vegan, who doesn’t own a car and has 17 personalised “sustainability development goals” as a “road-map” for life, wants to unify the global offsetting market—with Singapore at its heart.
For nearly two decades, governments in the European Union have required polluters who exceed emissions limits to buy certificates from less polluting businesses in a system known as ‘cap and trade’. Meanwhile, a voluntary carbon market has emerged in the private sector, where companies can buy credits like the ones generated by Wildlife Alliance in Cambodia to show investors and consumers that they are reducing their impact on the climate.
Five years from now, these two markets will have become one, Larsen told international lawyers gathered at the Shangri-La on 29 August. Singapore has already begun its merger of regulated and voluntary markets, allowing companies to use voluntary offsets to pay carbon taxes.
All this is designed to turn Singapore into a trading hub for carbon credits. It’s a “blueprint for an international market”, Larsen said.
Singapore’s efforts are motivated more by profit and power than concern for the climate, says Axel Michaelowa, head of international climate policy at the University of Zurich.
“It’s clear that the demand side for credits that come through the Singaporean hub is not environmentally driven,” he said. “They’ve been warned on this but they don’t care.”
In January, an investigation by SourceMaterial, the Guardian and Die Zeit revealed that as many as 94 per cent of the forest offsets most commonly used in carbon markets do almost nothing to mitigate climate change. Of the 11 projects that launched Singapore’s carbon exchange this summer, eight face questions about their effectiveness and eight have been criticised for their treatment of local people.
Larsen told SourceMaterial that Climate Impact X has a process for evaluating the quality of credits before they are admitted to its exchange. He said that the debate about merging compulsory and voluntary markets should be kept separate from a discussion about the effectiveness of traded credits “as they are independent subject matters”.
“They’ve been warned but they don’t care.”
“The reality is some countries do not have available solutions that allow them to take steps to fully decarbonise,” Larsen said. “Access to cross-border solutions allows these countries to engage others for practical solutions.”
Singapore’s government is in talks with 14 countries to buy their carbon credits and count them towards its treaty commitments to cut emissions.
A draft agreement from one of those negotiations leaked to SourceMaterial suggests Singapore will purchase credits issued by any of seven major registries including the Global Carbon Council, set up by Qatar to offset last year’s World Cup. Last year SourceMaterial revealed that GCC credits are nearly all of a type rejected by most registries because they do little to prevent global warming.
If the draft becomes policy, Singapore will also buy credits approved by the world’s largest registry, Verra—a move that would transform the US-based non-profit company from a self-appointed certifier in a voluntary market to a de facto regulator of international emissions agreements, says Zurich University’s Michaelowa.
“Verra now will be part of the compliance ecosystem,” he said. “Nobody will be able to criticise Verra anymore for selling flimsy stuff because it’s government-approved.”
Following SourceMaterial’s joint investigation in January raising doubts about the ineffectiveness of almost all of Verra’s forest conservation credits, its chief executive resigned. A series of other studies have found similar results and the carbon market has since shrunk by an estimated 75 per cent.
In June Verra announced that it was suspending credits from Southern Cardamom after a letter from Human Rights Watch and that it would investigate the allegations.
The letter accused Wildlife Alliance of failing to secure proper consent for the project among locals, something the organisation denied in a statement to SourceMaterial.
The suspension sent shockwaves through the global carbon market. Trafigura, the world’s biggest oil trader which set up a carbon offsets desk in 2021, complained that it was stranded with millions of Southern Cardamom credits it couldn’t sell.
Wildlife Alliance said in a statement that the Southern Cardamom project “is a responsible and effective conservation initiative that benefits both the environment and the local community”. Any review by Verra should be “comprehensive” and should also include positive impacts of the project on communities and the forest, it said.
A Singaporean government spokesperson told SourceMaterial that the administration hasn’t yet made a final decision on which credits it will accept and “is committed to upholding high environment integrity standards”.
‘I live in a forest’
Meng Sotear, whose arrest sparked the motorbike chase, was tending her rice farm when the armed rangers appeared.
Like many Cardamom Mountains residents, Meng had always used traditional farming techniques, planting one area for two or three years until the soil deteriorated and then moving to a new plot, returning two or three years later when the old one had recovered.
The plantation where Meng was arrested was communal and used by many families in the village. Meng told SourceMaterial it had been part of her planting cycle for 20 years and no one had told her not to farm there. But after the attempted arrest, rangers destroyed it. Now she is left with only one plot, behind her house, and worries the rangers will return.
Younger farmers said that whenever they see Wildlife Alliance rangers, they run (“they’re like tigers”). Many, like Meng, have stopped rotating their plots out of fear and confusion, and say their crops have suffered as a result.
“I live in a forest. Of course my house is made of wood.”
Sok Sal, 34, a farmer in the nearby village of Toap Khley, says rangers destroyed his farm but he fled before they could arrest him. Wildlife Alliance says locals are allowed to farm certain areas of the forest, but none of the people SourceMaterial interviewed during a four-day trip to the reserve could identify the boundaries.
“They know,” said Wildlife Alliance ranger Thorn Bun Tharoth, pointing to a map of the permitted areas—though when pressed he admitted that most villagers do not have access to it.
And while some residents confess to using locally felled trees to build their homes, they question how else they are supposed to survive.
“I live in a forest,” said Ourn Vorng, 31. “Of course my house is made of wood.”
Farmers like Ourn say their traditional livelihood, based on small plantations and limited logging to build homes, has little impact on the forest. Meanwhile big companies are clear-cutting thousands of hectares—but Wildlife Alliance targets them rather than confront Cambodia’s powerful tycoons, they say.
Wildlife Alliance did protest loudly in 2022 over threats to permit industrial logging at Phnom Tamao, another of its nature reserves, just outside the capital, Phnom Penh. But the government ignored its entreaties and the clear-cutting went ahead, halted only after a public outcry when swathes of the reserve had already been destroyed.
So far companies have used offsets worth around $60 million from Southern Cardamom and Wildlife Alliance is planning to replicate the model across Cambodia. Even without the threat of industrial logging, there are concerns about whether its offsets are effective.
An analysis by Renoster, a ratings agency for carbon projects, showed 1,466 hectares of nature reserve had been deforested in the conservation area between 2015 and 2020, where Wildlife Alliance had said there had been none, and found that the project overstated the carbon it removed from the atmosphere by about 300 per cent.
Wildlife Alliance said in a sponsored article for the Phnom Penh Post that a large portion of revenue from its carbon credit sales “is used to finance benefits for local communities as well as environmental conservation” .
Wildlife Alliance was founded by Suwanna Gauntlett, a US pharmaceuticals heiress who attributes her interest in conservation to seeing a jaguar tortured by Brazilian poachers and now lives in Phnom Penh. The organisation came to Southern Cardamom in 2002, initially to protect endangered species like sun bears and pangolins, before moving into carbon offsetting in 2018.
To set up the nature reserve that now hosts the offsetting project, Wildlife Alliance in 2004 persuaded families there to abandon their homes and move to a new settlement, Sovanna Baitong, about 10 kilometres away.
Nearly two decades later, some say that despite a well sunk by Wildlife Alliance at one end of the village they don’t have easy access to clean water, while others claim they have still not received the land titles that the organisation promised them in return for relocating.
“We feel as if we’re living on a boat in the middle of a lake,” said Leang Yoeurn, 37, who fears losing her land. “We feel it can be taken from us at any time.”
Wildlife Alliance has also installed grievance boxes in the villages for residents to express complaints—although one local, Ven Vorn, said he hadn’t bothered as he didn’t think anyone would listen.
The allegations from Southern Cardamom are not unique. Cambodian news site CamboJA reported recently that further north, in another part of the Cardamoms, Wildlife Alliance rangers had burned down the homes of impoverished farmers.
Wildlife Alliance said in a statement that it “strongly refutes” the “unsubstantiated” CamboJA report and that the Southern Cardamom project “is a prime example of how conservation and community development are going hand in hand”.
In its statement to SourceMaterial, the organisation said that since 2012 local authorities have issued 4,999 land titles in the project zone, 629 of them in Sovanna Baitong, and expects another 7,249 titles to be issued by January 2024.
Wildlife Alliance also listed benefits it had provided residents with, including 94 solar-powered wells and two schools.
Amid plans by Singapore and its allies for a seismic shift in the way carbon credits are used, the controversy around Southern Cardamom resonates beyond the remote valleys of Western Cambodia.
Despite a recent dip in prices, Barclays estimates the carbon market will be worth $250 billion by 2030 and pressure from governments to use offsets to meet their treaty obligations is mounting.
Insiders at last year’s COP27 climate summit say the US and Canada joined Singapore in lobbying heavily to include voluntary credits in an inter-government carbon market, and the proposals are set to spark a key debate at COP28 in Dubai this November.
But bringing credits from Southern Cardamom and hundreds of similar projects worldwide into international climate pacts could seriously undermine efforts to keep global warming to within 1.5 degrees, said Salo of Carbonaide.
“These low-quality credits will put us off track of reaching the Paris Agreement targets,” she said.
With assistance from Andrew Haffner.
Some Cambodian names have been changed. This story was produced with support from Internews’s Earth Journalism Network.
Headline picture: Anton Delgado, Southeast Asia Globe