Switzerland’s recent purchase of carbon credits from Thailand in the first-ever bilateral offsets trading under the Paris Agreement has sparked concerns about the integrity of the emissions reductions claimed, Climate Home reported last week.
The deal involves the exchange of carbon credits with Thailand, where electric buses replaced petrol-fueled ones in Bangkok through a bilateral partnership.
While hailed as a milestone in climate action, civil society groups, particularly an umbrella group for Swiss charities called Alliance Sud, argue that the shift to electric buses in Bangkok would have occurred regardless of the deal with Switzerland.
This raises questions about the credibility of the emissions reductions attributed to the offsetting scheme.
Switzerland intends to use the purchased carbon credits to fulfill its emissions reduction goals under the Paris Agreement.
If the concerns about the quality of the offsets are valid, this could mean that Switzerland is obtaining a license to pollute without contributing to genuine climate action, Climate Home said.
The controversy also highlights the lack of centralized oversight for the carbon credits traded under the Paris Agreement mechanism.
Efforts to introduce tighter controls at the COP28 climate conference in December failed, leaving doubts about the regulation of such transactions.
The offsetting project in Thailand is part of a broader agreement between Switzerland and Thailand, with private operators, coordinated by Swiss carbon finance consultancy South Pole, implementing the initiative.
However, South Pole has faced controversy over the past year leading to it exiting one of world’s largest carbon offset projects in Zimbabwe due to quality concerns.
Alliance Sud questions the additionality of the project, asserting that economic justifications fail to consider the long-term benefits of direct investment from Thai renewable energy company Energy Absolute.
The group claims that the targeted transport operator had already been running electric buses in Bangkok before the offsetting scheme began.
However, other experts disagree with Alliance Sud’s analysis and argue that the purchase of credits was essential for the economic viability of the project.
In a comment made to Climate Home, Mischa Classen, an independent consultant and former director of the Klik Foundation, said, “From my knowledge, Thailand has no policy intervention that would support private bus operators to switch to electric, which is the main additionality argument in this project.”
Furthermore, a spokesperson for the Swiss Federal Office of the Environment (FOEN) confirmed that only offsets generating additional emissions cuts would be approved, which is the case with the e-bus project in Bangkok in the view of the FOEN, as well as the Thai authority.
Despite these concerns, Switzerland remains active in pursuing bilateral carbon credits trading under Article 6.2 of the Paris Agreement.
The deal with Thailand is adding to positive momentum for other countries interested in such transactions, Classen said, emphasizing the importance of well-designed agreements and political efforts to establish carbon market regulations.
The controversy, however, underscores the need for transparent and effective oversight of international offsetting initiatives.