Carbon Markets Are in Limbo. That’s Not Stopping This Firm.

First, the little-known Emirati company set its sights on a forest the size of Maine. Then, another one that was big as South Carolina. After that, it focused on a chunk of land the size of Puerto Rico.

As the oil-rich emirate of Dubai prepared to host this year’s United Nations-sponsored climate summit, the company, named Blue Carbon and founded by a prince, was accumulating proposed deals on huge swaths of land across the developing world. It sought to position itself as a force for a purported solution to global warming: carbon credits.

Carbon credits are potentially one of the most important — but also most controversial — tools to speed up efforts to reduce global emissions of heat-trapping gases. The idea is simple: each credit is worth one ton of carbon dioxide emissions that was sequestered or avoided.

In theory, the carbon trade could increase the ambition of industrialized nations by letting them reduce emissions in other countries while figuring out how to do it home. It could also direct funds to developing countries that badly need them to grow their economies sustainably.

But counting greenhouse gas emissions is a complex endeavor.

Many conservationists worry the carbon market could be abused by countries looking to lower emissions without abandoning fossil fuels. Others hope the trade would channel money the developing world needs to keep forests standing and build renewable energy plants.

Blue Carbon is pushing into the business despite unresolved issues of how the market for credits like these should best be structured.

Within the span of a year, Blue Carbon announced agreements with nations in Africa, Asia and the Caribbean to develop huge conservation projects. Their goal was expansive, namely to stop forested land from being cut down and to plant forests in already-logged tracts, and then sell credits based off the expected emissions reductions from those projects to nations that are looking to reduce their carbon footprints.

One ton of carbon stored in trees equals one carbon credit that can be bought and sold.

But what government officials portrayed as a once in a lifetime opportunity for their nations was seen by many conservationists as an uncertain bet to curb carbon emissions with the potential to strip scores of local communities of their land rights.

Carbon markets are still largely unregulated. While they provide a way to marshal money to protect forests, much of the worry over deals like Blue Carbon’s comes down to how little companies have to publicly divulge.

“We need all the financial levers we can get” to protect forests, said Zoe Quiroz-Cullen, a director at Fauna & Flora, an international wildlife nonprofit. But, she added, “I’m not seeing the level of detail that we would expect and for this number of announcements at this kind of scale.”

Most carbon-market activity until now happened between companies seeking to satisfy their voluntary pledges to curb greenhouse gas emissions.

But the trades Blue Carbon wants to broker have much higher stakes. They take advantage of a system created in the landmark Paris climate accord nearly a decade ago that allows nations to trade emission reductions that would count toward the buyer’s own pledge to reach carbon neutrality.

Though countries and companies are starting to make deals, the rules that govern the trade remain unwritten. Negotiators at the recently concluded COP28 summit in Dubai failed once again to agree on a framework for regulating the trades, largely over questions of how they would report the emissions reductions of their projects.

“We want and need countries and their partners to be very clear and transparent about what it is they’re doing,” said Alexia Kelly, who was a lead negotiator for the United States on emissions trading and markets provisions of the Paris Agreement. “But absent any kind of agreed rules, that may or may not be occurring.”

The terms of Blue Carbon’s proposed deals were not released publicly. Its draft contract with Liberia’s government, reviewed by the Times, shows the company wouldn’t buy any land, but instead secure the right to sell carbon credits from areas that are currently occupied by communities, private farms and reserves.

President Emmerson Mnangagwa of Zimbabwe touted an agreement in September that could give control of almost a fifth of the country’s territory to Blue Carbon. At a recent ceremony he said that the deal would close the country’s “financing gap to the tune of $200 million.”

Requests for information on the agreements went unanswered by Blue Carbon and the office of its founder, Sheikh Ahmed Dalmook Al Maktoum, as well as four of the five African nations with deals.

Reaching an agreement to regulate country-to-country trades has taken on increased urgency. Around 100 such deals have been announced since 2021, according to data from MSCI, a firm that researches carbon markets.

The United Arab Emirates announced nearly a half-billion dollars in commitments to carbon-credit deals at a recent climate summit in Kenya, and the country is counting on paying for emissions reductions in other countries to partly offset its own.

“The whole point was to use carbon trades, credits and markets to ease the energy transition both by reducing carbon emissions and by ensuring financial flows to poorer countries,” said Rachel Kyte, a veteran climate diplomat and chairwoman of a group trying to make carbon markets more transparent. “But that process has to have integrity and transparency, and right now it doesn’t.”

When Loretta Alethea Pope Kai, chairwoman of National Civil Society Council of Liberia, an umbrella group of advocacy organizations, saw the draft contract between her government and Blue Carbon in August, she said she committed herself to blocking it.

For years, Ms. Pope Kai had worked with community leaders to help pass a law that protects the land rights of communities as well as their right to be consulted about projects that affect them. “We said, ‘Halt the negotiation,’ because we need more consultation,” she recalled in an interview. “The deal was a bad deal.”

The draft document, which hasn’t been signed by Liberian authorities, was dated July and said Blue Carbon would get 70 percent of the proceeds — tax free for a decade — from the sale of any carbon credits related to the land. The government would get the remaining 30 percent, plus a 10 percent royalty over the value of each credit, half of which would go to local communities.

Environmentalists complained that local communities and the government were getting too little. A commonly used protocol by Plan Vivo, a nonprofit based in Britain, says communities should get at least 60 percent of the revenue from carbon credit sales.

Wilson Tarpeh, the chief executive officer of Liberia’s Environmental Protection Agency, said the government never intended for the deal to go forward before rules were in place.

“We are also very new to this issue, that’s why we are taking our time to make sure that the rules are put in,” he said in an interview. “But carbon is a major asset and we want to make money out of it.”

The governments of Zambia, Zimbabwe, Tanzania and Kenya, which signed memorandums of understanding to negotiate deals over tens of thousands of square miles with Blue Carbon, did not respond to questions regarding the status of the deals. Kenya’s president, William Ruto, told reporters at the climate summit in Dubai that his country had “not sold one inch” of its land as part of any carbon-market deal.

Neither carbon markets nor their credibility crisis is new.

The price for carbon credits in the voluntary market has repeatedly collapsed after academic and media investigations into large-scale projects found they overstated the amount of emissions they were supposed to offset and had negative effects on local communities.

Any abuse in the carbon trade between nations would have bigger consequences. Emission reductions pledged by countries are the base of calculations on how well the world is doing in the struggle against climate change, such as the recent United Nations Emissions Gap Report.

Ms. Kelly, the former U.S. negotiator, argued that while agreed-upon rules would help guard against the risk of abuse in the carbon market, the Paris Agreement was designed to give nations freedom to enact it as they saw fit. But, she said, it relies on nations acting in good faith, which so far most are.

“We don’t want them to wait,” she said, referring to the rules still under consideration. “It’s a climate emergency and we need people to act.”

Despite the frenetic deal making in the months ahead leading up to COP28, Blue Carbon did not have a discernible presence at the climate summit in Dubai. While negotiators there sparred over the carbon market’s future, the company did, however, announce new agreements with Dominica and the Bahamas. No terms were made public.