Carbon Scam: Summit Carbon Solutions Sells Fictitious Credits
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May 9, 2023; 6:00 AM PST
Summit Carbon Solutions has entered into an agreement with NextGen to sell Carbon Dioxide Removal (CDR) credits, even though its Midwest Carbon Express has yet to begin construction. Summit’s plans face strong opposition from landowners, including farmers and Indigenous groups.
This advance purchase is part of NextGen’s ambition to scale up the CDR market as carbon credits tied to forestry projects face a deep legitimacy crisis.
Having failed to secure land for the pipeline with landowner consent, Summit is trying to forcibly obtain land through eminent domain — though the pipeline serves no public interest.
After bringing lawsuits against landowners and counties in Iowa, Summit has sued more than 80 landowners in South Dakota to force them to cede their land for the project.
Oakland, CA — On April 26, 2023, Summit Carbon Solutions, along with two other carbon removal companies, announced a “landmark” deal for the pre-sale of 193,000 tons of Carbon Dioxide Removal (CDR) credits to NextGen — a joint venture between Swiss firm South Pole and the Japanese Mitsubishi Corporation.
The credits sold, however, are spurious because they do not represent actual emissions reductions. Summit has yet to receive government approval to begin construction of the US$5.1 billion carbon capture and storage (CCS) Midwest Carbon Express. As detailed in a 2022 Oakland Institute report, the project faces tough opposition from a broad coalition of Indigenous groups, farmers, and environmentalists, who oppose a dangerous false climate solution that threatens their lives, land, and water sources. This makes it uncertain that the pipeline will ever be built, making the credits sold worthless.
Led by agribusiness baron Bruce Rastetter, the 2,000-mile pipeline would capture carbon from ethanol biorefineries across Iowa, Minnesota, Nebraska, and South Dakota, before injecting and storing it underground in North Dakota. Like Summit, NextGen is propped up by wealthy financial backers who stand to make large gains from the venture. These include banking firms LGT and UBS, insurance company Swiss Re, the Boston Consulting Group, and shipping company Mitsui O.S.K. Lines.
“Powerful interests, responsible for the climate crisis, are now pushing carbon markets as the solution. Yet there is widespread evidence that carbon markets are a massive failure that delay effective climate action and merely serve the fossil fuel industry,” said Anuradha Mittal, Executive Director of the Oakland Institute.
Recent research shows that the US$2 billion voluntary carbon market is structurally flawed. A vast majority of credits from forestry projects do not constitute genuine carbon reductions. South Pole — the climate consultancy firm behind NextGen — is implicated in such schemes. A January 2023 investigation by Follow the Money unveiled how the company sold worthless carbon credits from its flagship forest project in Zimbabwe to hundreds of companies, including Gucci and Volkswagen.
In the meantime, the Midwest Carbon Express faces huge obstacles before it can start construction. Having failed to persuade enough landowners to cede their land, Summit has resorted to eminent domain and legal action. In April 2023, the company filed over 80 lawsuits against South Dakota landowners, having previously sued landowners in Iowa and counties that passed ordinances to impose conditions and safeguards around the pipeline.
78 percent of Iowans reject the use of eminent domain for carbon pipelines. Despite this widespread opposition, legislative efforts to prevent the use of eminent domain have been defeated so far, likely the result of Summit’s lobbying efforts and political connections. The Iowa Utilities Board (IUB) and the South Dakota Public Utilities Commission will hold hearings in the fall of 2023 to determine the granting of permits and eminent domain.
Billions of taxpayer dollars have already been spent on CCS — hailed as a climate solution. The technology, however, has failed to significantly reduce CO2 emissions or proven to be feasible or economic at scale. CCS is a dangerous delaying tactic, allowing the oil, gas, and ethanol industries to continue emitting carbon while making record-breaking profits. Several of Summit’s investors have deep ties to these industries. In the US, a majority of carbon capture is used for enhanced oil recovery (EOR) — a process by which captured carbon is injected into depleted underground oil reservoirs to boost oil production in wells. By financing carbon sequestration projects, NextGen actually promotes extractive industries.
Carbon Dioxide Removal (CDR) credits have been limited so far due to a lack of supply. Now that billions are being poured into carbon capture by the Biden administration, it will allow a rapid expansion of credits from CCS projects. NextGen’s advance purchase — part of a larger scheme to buy one million carbon removal credits from various projects by 2025 — aims to create a market for these credits, which will be available to buyers for a target price of US$200 per ton.
Given the legitimacy crisis that the voluntary carbon market faces due to environmental harms, human rights abuses, and widespread fraud tied to forest credits, the agreement between NextGen and Summit represents a potential dangerous pivot from forestry-based credits to carbon removal credits.
“The deal between NextGen and Summit is deceitful. It generates worthless credits and breathes new life into carbon markets. These markets are designed to enrich the same interests responsible for the climate crisis and allow them to continue polluting. By subsidizing CCS projects, the US government is in effect complicit. There is no time to waste — the Biden administration must put an end to false solutions and take real action to transition away from fossil energy,” concluded Mittal.