MIGA’s new insurance for voluntary carbon offsets risks propping up junk assets, say campaigners

4 October 2023

The Multilateral Investment Guarantee Agency (MIGA), the World Bank’s risk insurance arm, has proposed new political insurance for voluntary carbon offset schemes, according to reporting by website Climate Home in June. Climate Home noted, “The agency’s foray into the carbon market comes as several developing nations are moving to regulate or restrict the trade of credits generated within their borders.”

US-based Oakland Institute criticised the move, noting in an article in late July that MIGA’s efforts to protect the voluntary carbon market, which is often used by private companies – including fossil fuel and other polluting industries – to fulfil their net-zero pledges, “blatantly ignores recent research exposing the market’s rampant integrity issues, greenwashing claims, and ‘junk’ carbon offsets that do nothing to genuinely reduce emissions.” It noted, “A study by the European Commission, for instance, revealed that 85 percent of offset projects under the UN’s Clean Development Mechanism [CDM]…from 2013 to 2020 failed to uphold environmental integrity and reduce emissions,” adding that issues related to offsets and land grabbing and forced displacement of local populations have also been recurrent.

The World Bank has a long history of supporting carbon offsets, including via hosting a number of trust funds linked to the CDM (see Inside the Institutions, The role of the World Bank in carbon trading markets).