Tera workers inspect plots where biochar-blended fertilizer is applied to boost soil health and trap carbon. Credit: Chemtai Kirui/IPS

By Chemtai Kirui
KISUMU, Kenya, Jul 22 2025 (IPS)

In June 2025, Kenyan climate-tech firm Tera became the first African project developer to have its carbon removal initiative independently validated and registered under Riverse, a European standard for engineered climate solutions.

The validation confirms that Tera’s project design and digital monitoring framework meet Riverse’s strict scientific criteria—making it eligible to issue carbon credits once verified.

The project is now listed on Riverse’s public-facing Rainbow Registry, which provides transparent documentation of validated projects and will track credits through issuance and retirement.

Tera collects bagasse—the dry, fibrous material left after sugarcane is crushed—from mills around Kisumu, Kenya’s third-largest city in the Lake Victoria basin, known for its sugarcane farms and factories.

At its pilot facility, the sugarcane waste is fed into a pyrolysis unit, a specialized machine that heats the material in the absence of oxygen to produce biochar, a porous, carbon-rich substance.

When applied to soil, biochar helps the ground retain water and nutrients, boosting crop health while locking carbon in place so it cannot escape back into the atmosphere as carbon dioxide (CO₂), according to Dr. Eng. Erick Kiplangat Ronoh, a biosystems and environmental engineering expert at Kenya’s Jomo Kenyatta University of Agriculture and Technology.

“Unlike ordinary plant waste that decomposes and releases carbon, biochar stabilizes it in a form that can remain in soils for extended periods,” Ronoh said.

It is often described as turning agricultural residues into a ‘sponge’ that improves water retention, soil fertility, and long-term carbon storage.

Tera blends biochar into organic fertilizer sold to farmers across the region, aiming to improve harvests and restore degraded soils while creating the basis for carbon credit generation.

“We are bringing the soil back to life,” said Rob Palmer, Tera’s CEO. “Biochar improves yields, reduces dependence on inorganic fertilizers, and boosts drought resilience. But for us to scale up, we needed to prove the science—which is what validation under Riverse provides.”

Palmer described the validation as “a crucial step,” enabled by Tera’s tracking system, which monitors every stage from bagasse collection to biochar application.

Tera did not work alone. To ensure carbon savings are measurable and verifiable, it partnered with another Kenyan company, CYNK—a technology firm that builds digital systems for environmental data tracking—to design a custom Measurement, Reporting, and Verification (MRV) system that tracks and documents carbon removal data at every stage.

CYNK’s system uses internet-of-things (IoT) sensors and real-time dashboards to create an auditable, tamper-resistant record of the entire process—from weighing biomass to monitoring pyrolysis temperatures and mapping where biochar is applied.

“That level of detail is essential for full traceability,” said Kelvin Gitahi, CYNK’s head of technology.

Gitahi said traditional carbon credit systems often relied on paperwork and spreadsheets to prove the credits they claimed, making auditing difficult.

“Registries typically want evidence of what you produced and where it was applied,” he said. “Historically, it meant assembling files manually. That lack of automation made trust hard to build.”

By contrast, CYNK’s automated system converts sensor readings and spatial data into quantifiable carbon removal estimates, minimizing human error and enabling independent audits.

“It’s designed to be tamper-proof,” Gitahi said. “From the weighbridge measuring truckloads of bagasse to the exact kilos of biochar applied, everything is logged automatically.”

It’s evidence-based and traceable—“so there’s no cooking the books,” as he put it.

Such rigorous monitoring is essential under Article 6 of the Paris Agreement, which requires transparent, robust MRV to prevent double-counting in international carbon markets.

Riverse, one of 13 global standards endorsed by ICROA, the voluntary carbon market’s main accreditation body, said Tera is the first project it has certified that can scientifically demonstrate its biochar will keep carbon stable for many years.

“Tera had to meet twelve criteria,” said Samara Vantil, Riverse’s certification operations lead. “That included demonstrating full traceability, using only waste biomass, and proving the project was financially additional.”

Each year, more than 20 data points are reviewed to confirm ongoing compliance.

Validation under Riverse generally takes two to three months, with projects subject to annual audits for at least five years and periodic reassessment to remain listed.

Riverse also operates a public platform disclosing project-level data—from feedstock sourcing to credit issuance—in an effort to address transparency concerns in the voluntary carbon market (VCM), where companies and organizations purchase credits to offset emissions outside regulated compliance schemes.

Such scrutiny is seen as vital as Europe looks to source more carbon removals from Africa

A recent European Union proposal includes possible allowances for member states to use “high-quality international credits” to offset hard-to-abate emissions starting in the mid-2030s. If adopted, it could significantly boost demand for rigorously verified projects like Tera’s, which remain rare on the continent.

“Kenya is an emerging hotspot for carbon removal in Africa,” said Ludovic Chatoux, co-founder and CEO of Riverse. “Its renewable electricity mix, reliable feedstock supply, and supportive policies make it attractive for engineered carbon removal.”

That policy environment includes Kenya’s Carbon Credit Trading and Benefit Sharing Bill, which establishes a body to manage carbon trading and benefit-sharing, and the Climate Change Act, which provides a legal framework for carbon markets.

The Climate Change (Carbon Markets) Regulations, 2024, further detail the mechanics of registration, certification, and the creation of a National Carbon Registry.

Diagram showing how the DMRV system developed by Kenyan firm CYNK tracks Tera’s biochar production from bagasse to farm application.

Chatoux said Riverse is also assessing projects in Nigeria and Ghana, reflecting what he called a “bullish outlook” for the region.

He added that Riverse’s goal is to channel financing into projects that demonstrably remove or avoid CO₂, arguing that greater transparency is needed to counter greenwashing in the voluntary market.

Globally, engineered carbon removal credits—such as biochar or direct air capture—command significantly higher prices than most nature-based offsets.

Data from tracking platforms CDR.fyi and Puro.earth show that in 2024, engineered removals averaged around USD 320 per tonne, with biochar trading at roughly USD 140 by mid-2025.

By contrast, even high-quality forestry credits typically fetched USD 8 to USD 15.

This price gap reflects the greater durability and auditability of engineered removals,” said Dr. Ronoh.

Unlike trees, which can lose stored carbon to fires, pests, or logging, biochar locks carbon in soils and is designed to keep it stable for hundreds to thousands of years.

Still, he cautioned that although biochar is widely regarded as a promising climate solution, its benefits depend on strict quality controls and sustainable production.

“If the biomass is contaminated, it can introduce heavy metals or toxins into the soil,” Dr. Ronoh said. “And if it’s applied in excess or made without standardized methods, biochar can harm soil structure and nutrient uptake.”

Despite global efforts to cut greenhouse gas emissions, atmospheric concentrations continue to rise—especially carbon dioxide, the primary driver of human-induced climate change.

According to the World Meteorological Organization, CO₂ levels are now more than 50% above pre-industrial concentrations, setting yet another record high. This has heightened calls for permanent carbon removal to complement emissions cuts.

Agricultural carbon removal strategies, once considered marginal in climate policy, are gaining recognition as essential complements to emissions reductions, especially in sectors that are hard to decarbonize.

This shift is underscored in the Intergovernmental Panel on Climate Change (IPCC) AR6 Working Group III report (2022) and analysis by Carbon Direct, which emphasize that achieving the 1.5°C target will require not only deep emissions cuts but also large-scale deployment of carbon dioxide removal (CDR), including land-based approaches like biochar.

In Kenya and the wider region, there is growing momentum to help farmers both adapt to climate change through climate-smart practices and mitigate it through carbon farming techniques.

Peter Wachira, regional advisor for carbon projects at Vi Agroforestry—a nonprofit that promotes sustainable land use through initiatives like the Kenya Agricultural Carbon Project (KACP)—said these approaches offer significant climate and economic benefits.

“By adopting sustainable techniques such as composting, agroforestry, and agricultural waste recycling, farmers can sequester carbon, improve food security, and raise household incomes,” Wachira said.

But he cautioned that carbon credit schemes must be designed to serve those doing the work.

“The carbon market must first and foremost improve farmers’ livelihoods,” he said. “And we cannot forget—emissions reductions must remain the responsibility of the Global North. Communities here are paying the price for a crisis they didn’t create.”

Kenya’s carbon market debates have also evolved—from initial resistance over fears of enabling continued pollution to ongoing discussions about ensuring transparency, robust credit verification, and equitable benefit-sharing with local communities.

Gitahi said Kenya has demonstrated it can deliver the kind of credible, transparent systems the world is demanding.

“Kenya is offering what the global market needs. It’s proof that projects here can be validated to global standards,” he said. “Our digital transparency shows the strength of local technological capacity, the local expertise, and how communities are willing to engage and give feedback.”

He added that it is rare to see all these players—from governments creating policies to communities shaping projects and investors showing trust—working together.

“It just shows Kenya is now ready for this,” he said.

For Tera, the challenge is now building on that readiness and scaling its model across the continent.

“There’s not a rulebook for America and a different rulebook for Africa,” said Palmer. “What we have proven is that an African carbon project can meet the same global standards. Now that we have a way to prove our model works—that it’s not limited by feedstock, site, or demand—we just need the capital to scale it.”

IPS UN Bureau Report

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“The darker side of green” – plantation at Bukaleba, Uganda. Credit: Kristen Lyons

By Kristen Lyons
BRISBANE, Dec 8 2014 (IPS)

Norwegians know something of life in a climate change world. Migratory birds arrive earlier in spring, trees come into leaf before previously expected, and palsa mires (wetlands) are being lost as permafrost thaws.

Norwegians are currently waiting while geologists try to predict if, and when, Mount Mannen might collapse, destroying homes in its path, after torrential rain in the region.

Kristen Lyons

According to the Intergovernmental Panel on Climate Change (IPCC), this will be just the beginning for Norway – and the rest of the world – unless urgent and immediate action is taken to substantially reduce greenhouse gas emissions.

While reducing our dependence on the dirty fossil fuel industries is widely lauded as representing the fastest and most effective strategy to reduce our global emissions, much of the world’s attention – including that of many governments and industry – has been captured by the promise of carbon trade markets.

There are hopes that pricing and selling carbon just might be the magic bullet to solve the crisis, while at the same time generating lucrative returns for investors.

Carbon markets are being established on the assumption that if the ‘right’ price is placed on carbon, private companies and their financial backers will be driven to invest in so-called ‘green’ projects that capture and store carbon, thereby reducing greenhouse gas emissions in the world’s atmosphere.“Expecting some of the poorest of the poor to carry the social and ecological burdens of monoculture plantation forestry projects for carbon offset is both socially unjust, and ecologically just does not add up”

Carbon markets are championed by those who believe that carbon emissions taking place in one part of the world can be offset by their capture or sequestration in another. Plantation forestry is a key sector in the carbon market, with many projects established in some of the poorest parts of the world, based on the assumption that they will confer benefits to the environment and the local people.

But does all the hype about carbon markets really stack up?

Research on the Norwegian company Green Resources – engaged in plantation forestry and carbon offset on the African continent – raises many questions about who benefits from the carbon market projects. In-depth research over two years in Uganda, where Green Resources has licence to over 11,000 hectares of land, demonstrates how local communities are the losers of such projects.

A recent report, The Darker Side of Green: Plantation Forestry and Carbon Violence in Uganda,  published by the Oakland Institute, contributes to the critical conversation about the role of carbon markets in addressing climate change.

The report identifies profound adverse livelihood impacts associated with Green Resources’ activities, including loss of land and heightened food insecurity, as well as destruction of sites of cultural significance. It also demonstrates the failure of Green Resources to engage in meaningful community engagement with affected villages, so as to deliver positive community development outcomes.

Yet this REDD [Reducing Emissions from Deforestation and Forest Degradation] type project (referring to any project that involves forestry carbon credits), and the audit mechanisms to which it must comply, fail to detect and/or challenge the impacts of Green Resources’ activities.

Nor do they detect the extent to which environmental problems – including land clearing for animal grazing and crop cultivation – may simply be relocated from inside licence areas to other, often ecologically sensitive landscapes.

Importantly too, carbon market audits fail to consider the carbon capture enabled by local agro-ecological and organic farming systems, on which most subsistence and peasant farmers rely.

We are faced with a number of options in reducing global greenhouse gas emissions, something we all know is urgently needed. Despite the promise by many that the magic of climate markets will solve the current climate crisis, the findings presented in the report discard this fairy dust, shining a light on the structural violence and inequities on which carbon markets are built.

Expecting some of the poorest of the poor to carry the social and ecological burdens of monoculture plantation forestry projects for carbon offset is both socially unjust, and ecologically just does not add up. (END/IPS COLUMNIST SERVICE)

(Edited by Phil Harris)

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

Excerpt:

The World Bank’s job is to fight poverty. Key to lifting people out of poverty is access to reliable modern energy. It makes sense.

Kids do better in school when they can study at night. Microbusiness owners earn more if they can keep their shops open after sundown. And when women and children don’t have to gather wood for cooking they’re healthier and have more time for other activities.The programme seems to be more about erecting scaffolding around the crumbling CDM than about getting renewable energy to impoverished families.

What doesn’t make sense is using a failed scheme — like carbon trading — to pay for it.

Carbon trading was developed as a way for industry to comply with laws limiting their greenhouse gas emissions more cheaply. Companies that can’t or won’t meet carbon caps can purchase surplus allowances from others that have kept pollution below legal limits.

The U.N. established an international system called the Clean Development Mechanism (CDM) to make it even cheaper for businesses in rich countries to meet carbon regulations by paying for clean energy projects in developing nations. Purchasing these offsets through the CDM was promoted as a new way to provide financing to poorer countries.

But the poorest countries most in need of climate and development money generally don’t benefit from the CDM.

First, they often don’t have large industrial or fossil fuel-based energy sectors that generate significant volumes of carbon pollution. Also, it takes enormous time and effort to verify project plans, register with the CDM, and validate that emissions have been cut, making it impractical for investors to finance small projects that only generate a low number of carbon credits.

That was the case even before the CDM “essentially collapsed,” in the words of a U.N.-commissioned report on its future. Weak emissions targets and the economic downturn in wealthy nations had resulted in a 99-percent decline in the price paid for offsets between 2008 and 2013.

There was also evidence that the scheme’s largest projects actually increased greenhouse gas emissions. Add on the tax scandals, fraud, Interpol investigations, and human rights violations, and the scheme had fallen into disarray.

Ci-Dev to the rescue?

Given this record of failure, it’s odd that the World Bank is spending scarce donor resources to convince the world’s poorest countries to buy into the CDM. But that’s exactly what the Bank’s Carbon Initiative for Development (Ci-Dev) proposes to do.

Ci-Dev was launched in 2013 to increase energy access in “least developed” (LDCs) and African countries by funding projects that use clean and efficient technologies through “emission reduction-based performance payments” — in other words, by purchasing carbon credits from them.

But the programme seems to be more about erecting scaffolding around the crumbling CDM than about getting renewable energy to impoverished families.

The Bank lists the following as the initiative’s goals: extending the scope of the CDM in poor countries; demonstrating that carbon credit sales are part of a successful business model; developing “suppressed demand” accounting for LDCs to inflate their emissions baselines to earn more credits; and influencing future carbon market mechanisms so that LDCs get a greater share of the financing.

The Ci-Dev has one programme — the readiness fund — to build countries’ capacities to engage with the carbon market and to experiment with new methods for fast-tracking small-scale CDM projects. It channels millions of dollars into helping create offsets for which there are few buyers.

The initiative has a second programme — the carbon fund — to pay for carbon credits that are eventually produced but don’t sell on the market.

The Bank says it is prioritising support for community and household-level technologies like biogas, rooftop solar, and micro-hydro power. But it will also fund projects in “underrepresented” sectors such as waste management.

Because there’s no clear definition of what types of technologies it can and can’t fund, the Ci-Dev could end up financing electricity from natural gas and other controversial sources of “lower carbon” power.

A better approach

Regardless of technology, it’s irresponsible of the World Bank to spend development dollars on building carbon trading infrastructure in low-income countries for offset projects that have diminishing demand, and whose financial success is linked to a failing international market.

A better approach would be to directly build governance, operational, and financing capacity in the least developed countries for renewable energy infrastructure, alongside providing grant and concessional financing for distributed solar, wind, and small-scale hydropower projects.

The private sector can play a critical role, but the most important businesses to engage are small and medium-sized enterprises that provide mini- and off-grid services to the rural poor.

The paltry climate finance and development assistance being provided by wealthy countries should be spent on what people actually need. Women, children, and small business owners desperately need reliable energy that’s affordable and clean.

It’s a shame that the World Bank is wasting so much time, money, and energy on constructing a market that has little worth and attracts few investors.

Janet Redman is the director of the Climate Policy Program at the Institute for Policy Studies.

Cutting trees in Nicaragua. Deforestation is inherent to the predatory economy, whether for the exploitation of the timber itself, the soil beneath the trees, or resources in the subsoil. Credit: Germán Miranda/IPS

By Katelyn Fossett
WASHINGTON, May 7 2013 (IPS)

More than two dozen environmental organisations are urging California Governor Jerry Brown to disregard recommendations from a United Nations task force to include so-called forest “offsets” in the state’s new emissions-trading scheme.

The offsets would serve as a mechanism by which emissions-producing companies in California could continue to pollute if they compensate foreign governments for the protection of their own forests."The carbon market is just proving to be extremely complicated, and not benefiting people at all." -- Bill Barclay of Rainforest Action Network

But critics say the consequences of such a policy would have repercussions that extend far beyond the environment.

“Independent investigations into the promotion of international forest offsets have raised serious concerns related to human rights violations and there is major opposition from indigenous peoples and local communities in both Chiapas, Mexico and in Acre, Brazil,” the groups said in an open letter sent this weekend.

Environmental groups say the move would simply shift the pollution from one country to another, rather than addressing the root causes of deforestation and climate pollution. The scheme would also create another set of economic and social problems for the communities in the regions paid to preserve their forests.

“Offsets are problematic in a number of ways,” Jeff Conant, director of the International Forests Programme at the U.S. office of Friends of the Earth, an activist network, told IPS. “First, they don’t actually reduce emissions. They just misplace emissions.”

The recommendations to include the offsets in new climate change-related legislation in California (known as AB-32) came from the REDD Offset Working Group (ROW), formed to implement a collaborative effort designed by the United Nations called REDD (which stands for Reduced Emissions from Deforestation and Forest Degradation).

As described by the U.N., REDD is “a mechanism to create an incentive for developing countries to protect, better manage and wisely use their forest resources, contributing to the global fight against climate change.”

Although California’s AB-32 already has a domestic offset exchange programme, the move to expand it globally prompted a vehement response last week from groups in Mexico worried about the possibility of “land-grabbing”.

The REDD programme “allows Northern polluters to purchase forest carbon offset credits from the global South,” the 15 groups, from Chiapas, Mexico, wrote in late April.

“This Agreement is underpinned by the logic of capitalist accumulation: it enables the purchase of carbon credits that will legally allow the continuation of the predatory and consumerist model.”

The response recommends instead that the “consumerist countries of the North … implement urgent mechanisms to reduce greenhouse gas emissions without substitutions or offsets, and with a focus on the reduction goals of their own countries”.

‘Gaming, corruption, error’

“In Chiapas, you have customary titles and [land] rights that haven’t been fully resolved,” Bill Barclay, climate policy advisor at Rainforest Action Network, and advocacy group based here, told IPS.

“It’s a very complicated situation, and when you bring in someone who might come in and impose that and do it quickly and cheaply, it elevates social conflict.”

These critics are also wary of the potential pitfalls that could accompany payments to countries with little oversight and government accountability.

“Once you involve international entities – especially the most impoverished states in the hemisphere – you’re getting to a state … with a lot of gaming, corruption, fraud and error,” Jeff Conant says.

Activists say these problems shine a light on the broader complications that tend to lurk in a system as complicated as emissions trading or “carbon markets”.

“This is about the most complicated way you could come up with to try to bring money into the market to reduce emissions and generate innovations,” Conant says.

“There’s an ideology that says that allowing the markets to fix the climate problem is the most efficient way to go… Unfortunately, [the market] does not work in the favour of the most marginalised communities that are on the front lines.”

In fact, carbon offsets have critics even among pro-market economists. The new letter references the findings of a 2011 report that examined REDD from a “market perspective”, using the authors’ “experience in derivatives trading and systems architecture”.

Known as the Munden Report, it found that “using carbon markets to finance REDD… is likely to be a drain of resources, both in terms of money and time, away from the very serious problems REDD seeks to address.”

The letter from environmental groups also comes just as new reports have emerged on collapsing carbon prices in Europe, where the world’s first and most established carbon market is floundering.

Although the European system decided not to rely on forest offsets, many are still suggesting that the collapse of the E.U. carbon prices could have ripple effects for similar markets worldwide, particularly as advocates push for interlinking these systems down the road.

Both the price collapse in Europe and the social consequences of an international carbon offset exchange have bolstered support for the more direct carbon tax. Although this has been the preferred mechanism by environmental groups, it continues to be thought politically unviable in the U.S., at least for the time being.

“I think there is going to be a greater shift to carbon fees and away from carbon markets,” Barclay of the Rainforest Action Network told IPS.

“The carbon market is just proving to be extremely complicated, and not benefiting people at all. There’s just too much gaming and speculation, and it’s been too poorly regulated.”

Carbon credits can be used to protect forestlands. About 80 percent of Guyana’s forests, some 15 million hectares, have remained untouched over time. Credit: Desmond Brown/IPS

By Carey L. Biron
WASHINGTON, Apr 10 2013 (IPS)

Nascent carbon emissions-trading exchanges in several countries are increasingly looking at options to interlink with one another, which advocates say would offer investors long-term stability, increase revenues for the development of renewable energy and strengthen corporate support for climate policy.

Yet critics warn that so-called cap-and-trade systems are inefficient and create incentives for polluting industries to continue with business as usual. They also warn that the new systems in the United States are dependent on mechanisms that adversely impact on poor and indigenous communities in developing countries.The law is supposed to be creating incentives for innovations, whereas cap and trade merely allows the fossil fuel industry to keep polluting at historical levels.

“I’ve been incredibly struck at the recent groundswell of interest by countries – including China and Korea – looking to develop carbon markets,” Harinder Sidhu, an Australian civil servant, said Wednesday at a panel discussion here.

“It’s very apparent that the pace is picking up in terms of both interest and action on the part of countries thinking about how to develop carbon markets. This really moves the conversation away from how acting on climate change creates costs to how doing so creates opportunity and economic benefit.”

Carbon trading allows countries to meet emissions reduction mandates under the Kyoto Protocol, which came into force in 2005, offering a certain number of tradable emissions-related “allowances” to polluting companies or governments. Further, as representatives try to negotiate a post-Kyoto agreement, many suggest that such exchanges will likely play a key role.

In part, the idea is controversial because it allows certain countries to maintain high pollution levels while shifting the burden for greater cuts to other countries. Yet proponents point out that revenues from these markets are being ploughed back into research on renewable energy, increased electricity transmission inefficiency and, in some cases, low-income housing.

They also suggest that the cost differentials between markets could motivate business interests to push politicians to institute uniform carbon markets – a key consideration in the new discussion over linking various emissions exchanges.

State action

Sidhu was in Washington to talk about Australia’s carbon market, which began operating last year and is planned to be fully operational within the next three years. In August, Australian officials arrived at an initial agreement to link their market with that of the European Union, which since 2005 has operated the world’s first and largest emissions exchange, the E.U. Emissions Trading System (ETS).

The United States, which is not a party to the Kyoto Protocol, already has a nine-state carbon market operating in the country’s northeast. For the past six years, the Regional Greenhouse Gas Initiative (RGGI) has operated as an emissions exchange aimed at capping greenhouse gases from within the power sector.

Now, the world’s second-largest carbon market is starting to function in the western U.S. state of California, covering around 85 percent of the state’s emissions. By itself California is the world’s ninth-largest economy, and the value of its cap-and-trade programme is forecast to top two billion dollars by the end of this year.

This week, California and the Canadian province of Quebec arrived at an agreement to link their carbon markets. In recent years, California officials have held similar discussions with E.U. and Australian counterparts.

Advocates say such moves are highlighting the increasingly important climate actions being taken by sub-national governments, even as Washington politicians have remained unable to pass comprehensive legislation limiting greenhouse gases.

“While it’s easy to get depressed about the national-level discussion on action on climate change here in the U.S., we’re seeing some incredible progress being made at the state level,” Tom Perriello, president of the Center for American Progress Action Fund, a Washington think tank, told an audience Wednesday.

“In 2009, the U.S. committed to reducing its emissions by 17 percent below 2005 levels, and there had been ample reason to believe that we couldn’t reach that level without national legislation. Now, however, this appears to be within reach, and state action is a cornerstone of that progress thus far.”

Forests impact

Experts here suggest that linking the world’s two largest carbon markets is unlikely in the near future, largely for political reasons. Yet there is also a significant difference of opinion between the U.S and E.U. that may stymie future attempts at interlinking these markets: the use of forest “offset credits”.

Under a mechanism commonly known as REDD – an international tool set up after the signing of the Kyoto Protocol and which stands for “Reducing emissions from deforestation and forest degradation” – entities in developed countries are able to purchase or trade credits to offset their greenhouse gas emissions in return for agreements from developing countries to protect forestlands.

While both the E.U. trading scheme and the Kyoto Protocol have expressed scepticism about the efficacy of forest credits, the U.S.’s RGGI has decided to use this approach. Further, some groups are now reportedly pushing California to incorporate REDD offsets in its new carbon market, while related agreements have already been struck with communities in Mexico and Brazil.

“One of the primary concerns about REDD is that it encloses forests from access to local communities,” Jeff Conant, an international forests campaigner with Friends of the Earth U.S., an advocacy group, told IPS.

“In numerous cases it has been shown to exacerbate social conflict and to increase incentives for the displacement of indigenous communities from the forests they use or live in. A major concern for California is that state authorities here have no way to deal with these types of injustices, and all just to provide cheap offsets for markets.”

Indeed, Conant says the cap-and-trade system in general is flawed, and that California’s system in particular appears to have already been significantly watered down.

“The state gave away 90 percent of its allowances in the first year, and over half of mandated emissions reductions will be produced by offsets, which are notoriously prone to gaming and displace rather than actually reducing emissions,” he notes.

“After you take these factors into account, they could make up more than 100 percent of the reductions in California – meaning that the cap and trade will result in zero emissions reductions in the state. The law is supposed to be creating incentives for innovations, whereas cap and trade merely allows the fossil fuel industry to keep polluting at historical levels.”

Conant says this is a “roundabout” way of putting money into these technologies. More effective, he suggests, would be to impose a carbon fee on polluting industries, and to use that money to directly stimulate clean energy investment.