Mitsubishi wants to be the world’s largest dealer of carbon removal credits. Keep in mind, the company has a hand in many of the most polluting industries — from car production to natural gas, coal, petrochemicals, and plastics. Carbon credits have become a popular way for companies to keep polluting while claiming to fight climate change.
This week the company announced a joint venture to establish what it says is the world’s largest portfolio of decarbonisation credits. The credits represent tons of carbon dioxide taken from the atmosphere by a range of still controversial approaches to dealing with climate change.
Carbon credits have become a popular way for companies to keep polluting while claiming to fight climate change
The new project, called NextGen, is establishing a new market for carbon offset credits. Mitsubishi and its venture partner, a project developer called South Pole, plan to connect other companies with carbon removal projects so they can buy credits to offset some of their greenhouse gas emissions. The plan is similar to an initiative Stripe, Alphabet, Meta, Shopify, and McKinsey launched last year.
NextGen has secured commitments from companies to purchase approximately 200,000 metric tons of carbon removal credits. This is only equivalent to eliminating pollution from a coal-fired power plant for half a year. But as an emerging market, those 200,000 metric tons already account for a quarter of these types of decarbonization purchases to date.
It’s also a huge investment — likely tens of millions of dollars — in emerging technologies that are still very expensive. Mitsubishi says it is targeting an average price of $200 per ton, but the going rate for the credits could be three times that or more. Buyers signed so far include Boston Consulting Group, banking companies UBS and LGT, insurance giant Swiss RE, and shipping giant Mitsui OSK Lines.
So far, they’re buying loans from three different types of projects, each of which has been controversial. Occidental Petroleum is leading one project, a plant it’s building in Texas to filter carbon dioxide from the surrounding air. The company has already used this venture to sell what it calls “net zero oil.” To produce zero oil, Occidental releases the carbon captured in an oil field to flush out hard-to-reach reserves.
All of these measures are still unproven as solutions to climate change
The second project aims to capture carbon dioxide from the production of ethanol, a biofuel typically made from corn, in the Midwestern United States. The $5.1 billion project has already sparked an outcry over a proposed carbon dioxide pipeline that would pass through the US corn belt. Once up and running in 2024, the project should have the capacity to capture and store up to 18 million tons of carbon dioxide annually. However, research published last year suggests that ethanol production in the United States has been more harmful to the climate than gasoline due to agricultural emissions.
A recent project in Finland produces carbon credits from the production of biochar, a type of charcoal that can be made by heating agricultural and forest waste. About a decade ago, environmental groups warned that there wasn’t enough evidence yet to show that using biochar as a soil improver could meaningfully address climate change. Since then, a growing body of research suggests that the use of biochar in agriculture has the potential to lock carbon dioxide away in the soil (although to what extent it is difficult to measure). But some researchers caution that there has not been enough study on how the manufacture and widespread distribution of biochar contributes to air pollution.
All of these measures are still unproven as solutions to climate change. Mitsubishi’s initiative follows decades of failures in carbon credit markets similar to more old-school, nature-based compensation schemes such as tree planting. The most important way to prevent climate change from getting worse is to stop producing greenhouse gas emissions from fossil fuels in the first place, something any carbon offset or sequestration scheme fails to achieve.