Mitsubishi wants to be the world’s biggest dealer of carbon removal credits. Keep in mind that the company has its hand in many of the most polluting industries out there — from producing cars to natural gas, coal, petrochemicals and plastics. And carbon credits have become a popular way for corporations to keep on polluting while claiming to fight climate change.
This week, the company announced a joint venture to set up what it says is the world’s biggest portfolio of carbon removal credits. The credits represent tons of carbon dioxide taken out of the atmosphere through a range of still contentious tactics for dealing with climate change.
Carbon credits have become a popular way for corporations to keep on polluting while claiming to fight climate change
The new venture, called NextGen, establishes a new marketplace for carbon offset credits. Mitsubishi and its partner on the venture, a project developer called South Pole, plan to connect other companies with carbon removal projects so that they can purchase credits to offset some of their greenhouse gas emissions. The plan is similar to an initiative launched by Stripe, Alphabet, Meta, Shopify, and McKinsey last year.
NextGen secured commitments from companies to purchase roughly 200,000 metric tons worth of carbon removal credits. That’s only equivalent to canceling out the pollution from a single coal power plant for half a year. But as a nascent market, those 200,000 metric tons already represent a quarter of these kinds of carbon removal purchases to date.
It’s also a huge investment — likely in the tens of millions of dollars — in emerging technologies that are still prohibitively expensive. Mitsubishi says it’s targeting an average price of $200 per ton, but the going rate for credits can be three times that or more. Buyers that have signed on so far include Boston Consulting Group, banking companies UBS and LGT, insurance giant Swiss RE, and shipping giant Mitsui O.S.K. Lines.
So far, they’re buying credits from three different kinds of projects, and each of them has been controversial. Occidental Petroleum leads one project, a plant it’s building in Texas that filters CO2 out of the ambient air. The company has already used that project to sell what it calls “net-zero oil.” To make net-zero oil, Occidental shoots the captured carbon into an oil field to push out hard-to-reach reserves.
All these measures are still pretty unproven as solutions to climate change
A second project aims to capture CO2 from the production of ethanol, a biofuel usually made with corn, in the midwestern US. That $5.1 billion project has already sparked protest over the proposed carbon dioxide pipeline that would run across the US corn belt. Once it’s up and running in 2024, the project is supposed to have the capacity to capture and store up to 18 million tons of CO2 a year. And yet, research published last year suggests that ethanol production in the US has been even more damaging to the climate than gasoline because of agricultural emissions.
The last project based in Finland churns out carbon credits from producing biochar, a type of charcoal that can be made by heating up agricultural and forestry waste. About a decade ago, environmental groups warned that there wasn’t enough evidence yet to show that using biochar as a soil enhancer could meaningfully address climate change. Since then, a growing body of research suggests that using biochar in agriculture has the potential to lock CO2 away in soil (although to what extent could be difficult to measure). But some researchers caution that there hasn’t been enough study into how making and disbursing biochar widely could contribute to air pollution.
All these measures are still pretty unproven as solutions to climate change. And Mitsubishi’s initiative follows decades of failures in similar carbon credit markets for more old-school, nature-based offset schemes like tree planting. The single most important way to keep climate change from getting worse is to stop producing greenhouse gas emissions from fossil fuels in the first place, and that’s something that any plan to offset or capture carbon fails to do.