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Nike’s carbon credits expose flaws in industry ins. mechanism: Decades-old Nike carbon credits have emerged as a significant component of the American Carbon Registry’s (ACR) buffer pool — a repertoire of backup credits that serve as an ins. mechanism to protect against potential losses in carbon projects, Bloomberg reports. This caused concern as Nike’s project has long been criticized for not meeting the industry standard of “additionality.”
Background: Nike’s Air series used sulfur hexafluoride to create exceptionally strong shoe cushions, but it was discovered that the greenhouse gas is 24.3k times more powerful than CO2. To eliminate it, the company invested heavily in alternatives, eliminating all greenhouse gasses from its cushions and converting the reductions into carbon credits. Around 8 mn credits were awarded to Nike by ACR, equivalent to a large coal plant’s annual emissions. While the project initially gained little attention, over 1.2 mn Nike credits resurfaced this year, coinciding with efforts to rectify the carbon market’s long standing issues.
What is “additionality”? This is a principle that says that for a project’s credits to be valid, the reported emissions reductions must have occurred because of the “promise” of credits sales, not due to other factors like regulatory pressure or cheaper alternatives. Without achieving “additionality,” there is no guarantee that the purchased credits have caused any change in emissions.
Why Nike’s credits are under fire: The credits risk being “unworthy” because they do not satisfy the principle of additionality, with Nike officials confirming they were mainly motivated by future regulations rather than carbon payments, according to Bloomberg. The credits also accounted for 19% of ACR’s ins. pool, more than twice as much as any other project, raising risks for the mechanism.
But ACR insists the credits are alright: The registry insisted that Nike’s credits are credible, adding that the shoemaker cleared the required thresholds of “proving their climate-friendly activity wasn’t required by law or undertaken to increase profits,” Bloomberg reports. Similar to other registries, ACR’s rely on “threshold” evaluation rather than a case-by-case analysis, which many experts have criticized.
How essential are the buffer pools? Carbon credits are designed to counteract the long-term impact of fossil fuel emissions. However, many offset projects store CO2 in ecosystems vulnerable to disasters, such as hurricanes and wildfires, raising concerns about their permanence and sudden events. To address this, registries utilize those buffer pools, where a portion of project credits is set aside to mitigate potential losses due to natural disasters like wildfires. In that sense, Nike’s project — now part of ACR’s buffer pool — is safeguarding other carbon projects. Experts question the inclusion of non-additional projects in such a critical role.
Nike’s not the only one: The ACR buffer pool also includes credits from Brazilian renewable energy projects, which have also been criticized for questionable additionality. While these projects may have met technical requirements, their primary motivation appears to be financial gain rather than climate impact. The Kariba project in Zimbabwe, one of the world’s largest offset projects, also overestimated its climate benefits and may require a substantial portion of Verra’s buffer pool to compensate.
