Climate change is not only a physical threat, but it also affects the world’s economy. A major new study published in the journal Nature on March 25, 2026, puts a clear number on this impact. It finds that carbon dioxide (CO₂) emissions from the United States caused about $10.2 trillion in total economic damage worldwide between 1990 and 2020. This makes the U.S. the largest single contributor to climate-related economic loss over that period.
The study shows that emissions slow economic growth in many countries. Rising temperatures cut productivity, lower output, and hurt long-term economic performance around the globe.
Marshall Burke, the lead author of the study, remarked:
“If you warm people up a little bit, we see very clear historical evidence, you grow a little bit less quickly. If you accumulate those effects over 30 years, you just get a really large change by the end of 30 years. It’s like death by a thousand cuts. And you have people being harmed who did not cause the problem, and that feels just fundamentally unfair.”
The researchers focused on carbon dioxide, the most common greenhouse gas. They used data on how temperature affects economic activity and then linked that to how much CO₂ different countries have emitted since 1990. This method links climate science to real economic results, including slower growth, lower productivity, and smaller national outputs.
Counting the Dollars: $10 Trillion in U.S.-Linked Damage
One of the study’s central findings is striking. From 1990 to 2020, U.S. emissions likely caused around $10.2 trillion in global economic damage. This means that warming linked to U.S. emissions has reduced economic production across many countries. The study links these impacts to heat’s long-term effects on labor, agriculture, and overall economic growth.
The damage is not confined to other nations. Roughly 30% of that $10.2 trillion figure is estimated to have occurred within the United States itself. In other words, U.S. emissions have slowed economic growth at home as well as abroad. The remaining impacts are spread across the global economy.
The researchers found that U.S. emissions led to about $500 billion in damage in India and around $330 billion in Brazil during that time. These figures show how carbon released in one area can affect economies far away.
A New Framework for Loss and Damage
The Nature study introduces a new framework for assessing what scientists call “loss and damage.” This term refers to harms that cannot be prevented by reducing emissions or avoided through adaptation alone.
The study uses economic data and climate models. It tracks how temperature changes over the years impact economic output.
- To put the numbers into context: one tonne of CO₂ emitted in 1990 is estimated to have caused about $180 in global economic damages by 2020.
But that same tonne is projected to cause an additional $1,840 of cumulative damage by 2100, as warming continues and its effects compound over time. This highlights that past emissions still contribute to future economic harm.
The researchers highlight that these estimates focus on economic output, like goods and services. They do not account for all types of climate damage. They do not include costs from loss of life, health impacts, biodiversity collapse, cultural heritage losses, or many kinds of infrastructure damage. These excluded impacts could raise the true total cost of climate change even further.
The Social Cost of Carbon Revisited
This study is part of a broader scientific effort to understand the economic impacts of climate change. Climate and economic models show that rising temperatures are already slowing economic growth. If emissions stay high, this slowdown will get worse in the future.
Analyses by major international institutions and research groups project that climate change could reduce global GDP by a significant percentage by mid-century. This is compared to scenarios with strong mitigation, though exact figures vary by method.
The concept of estimating a “social cost of carbon” (SCC) — a monetary estimate of economic damage per tonne of CO₂ — has been used in policy analysis for years. It helps governments weigh trade-offs in climate policy. For example, they can decide how much to invest in emissions cuts versus adaptation.
However, traditional SCC estimates have been debated. They depend on assumptions about future growth, discount rates, and climate sensitivity. The Nature study advances this approach by tying economic outcomes directly to observed climate impacts.
Economists and climate scientists agree that warming impacts several areas. These include agricultural yields, labor productivity, energy demand, and health outcomes. These effects reduce economic output and increase costs for businesses and governments. The latest research makes these links more explicit by assigning dollar values to the historical impacts of emissions.
Equity and Global Responsibility
The research’s results also highlight important equity questions. Low-income countries often face bigger economic impacts compared to their emissions histories.
For example, nations with warmer climates and more fragile infrastructure may experience greater output losses due to temperature increases. These effects grow over time and can worsen existing development challenges.
At the same time, richer countries with higher historical emissions may take a larger share of responsibility for damage. The Nature study shows it is possible to calculate responsibility in monetary terms. However, turning those numbers into legal or financial obligations is still complex.
Remarkably, the paper also shows that climate damage can be linked to specific activities, individuals, and companies. Burning fossil fuels for long flights greatly adds to warming.
- Just one round-trip intercontinental flight each year for ten years can cause about $25,000 in global economic damage by 2100.
Bill Gates’ emissions stand out due to his frequent air travel and high energy use. These personal and business choices significantly contribute to his overall impact. Saudi Aramco, a top fossil fuel producer, has caused an estimated $3 trillion in climate-related economic damage worldwide since 1991.
Tail Risks and Future Costs
The researchers also point toward the future. It finds that future damages from past emissions are much larger than the losses already accrued.
Since CO₂ remains in the atmosphere for centuries, its warming effects — and the economic damages linked to them — will persist well beyond 2020. This “tail risk” means that the total cost of historical emissions could rise sharply over the rest of this century.
Climate risk is increasingly integrated into economic planning and finance. Governments, businesses, and international institutions are incorporating climate scenarios into investment decisions and risk models.
This includes assessing how rising temperatures may affect infrastructure costs, insurance markets, supply chains, and national budgets. Without strong mitigation and adaptation measures, these economic pressures are expected to grow.
A Shared Reality, Quantified
The Nature study offers a clear and data-based way to think about the economic harms of climate change. Emissions from the United States since 1990 have caused over $10 trillion in global economic damage. This includes harm in the U.S., India, and Brazil.
These findings do not assign legal liability. However, they provide a meaningful picture of how climate change affects the global economy in terms of the social costs of carbon. They show that the costs of climate impacts are measurable and significant.
As the world continues to adapt and respond to climate change, understanding these economic links will be crucial for policymakers, businesses, and communities.
The post $10 Trillion in Carbon Cost? How U.S. Emissions Hit the Global Economy appeared first on Carbon Credits.
What auditors actually test, where projects actually fail, and the contract clauses that protect you before signature.
The meeting happens about fourteen months after the contract was signed. Your assurance provider has reached the nature-based investment line in your Scope 3 file, and the partner across the table has exactly two questions. How do you know the reductions happened? And how do you know they would not have happened anyway?
The first question is MRV: measurement, reporting, and verification. The second is additionality. Between them, they decide whether your nature-based investment counts, in your inventory, in your disclosure, and in front of your board. Everything else in the project documentation is supporting material for these two answers.
This article walks through what each question actually tests, where projects most commonly fail, what digital MRV has changed (and what it has not), and the contract clauses that protect you. The goal is to give you the diligence framework before you sign, because after the credit issues is the wrong time to discover the answers were weak.
What MRV actually verifies
MRV is the machinery that turns a field intervention into a defensible number. Measurement covers the data: biomass surveys, soil sampling, remote sensing, activity records from participating farms. Reporting covers the translation of that data into claimed reductions under a recognised methodology. Verification covers the independent check: an accredited third party tests the reporting against the methodology and the evidence.
The methodologies live in registries. Verra’s Verified Carbon Standard and the Gold Standard are the two largest for nature-based projects, and each publishes the methodology documents, monitoring requirements, and verification protocols that a project must follow. The ICVCM Assessment Framework now sits above the registries, assessing whole methodologies against the Core Carbon Principles and granting the CCP label to those that pass.
For a buyer, the practical questions are concrete. What is the monitoring frequency, and is it specified in the project design document or left vague? Who is the verifier, how were they selected, and how often do they rotate? What raw data do you, the buyer, get access to, and in what format? A project that answers these in writing is a different procurement than one that answers them in a sales call.
What additionality actually proves
Additionality asks whether the intervention caused the reduction, or whether the reduction would have happened anyway. The test is a counterfactual: what would this landscape, this farm, this forest have done without the project’s money?
Three forms matter in practice. Financial additionality asks whether the project needed the carbon revenue to proceed. Regulatory additionality asks whether the activity was already required by law. Common-practice additionality asks whether the activity is already standard in the region, in which case paying for it buys you nothing the world was not getting for free.
The reason additionality dominates audit conversations is recent history. Research published in 2023, including the Science paper examined at length in our piece on conventional offsets and boardroom credibility, found that a large share of REDD+ credits failed the counterfactual test because baselines were inflated. The market response was a wave of methodology revisions at Verra and the arrival of independent ratings agencies whose entire business is re-testing additionality claims. The Carbon Credit Quality Initiative publishes transparent scoring of methodologies on exactly this dimension, and it is free to consult before you sign anything.
Where projects most commonly fail the test
Five failure modes account for most of the wreckage.
- Inflated baselines. The counterfactual assumes more deforestation, more degradation, or lower yields than the evidence supports. The claimed reduction is the gap between reality and the baseline, so an inflated baseline manufactures reductions from nothing.
- Unaccounted leakage. The project protects one forest and the logging moves to the next valley. The methodology is supposed to net this out; weak projects estimate it optimistically.
- Thin permanence protection. Nature-based carbon can reverse: fire, pest, drought, or a change of landowner. Buffer pools and insurance mechanisms exist for this, but their adequacy varies enormously between projects.
- Attribution and double counting. In supply chain settings, the same reduction can be claimed by the supplier, the buyer, and a credit purchaser unless contracts prevent it. Our Insetting vs Offsetting piece covers the inventory rules; the point here is that the auditor will ask who else is counting this tonne.
- Stale monitoring. Data collected at validation and never refreshed. The IPCC AR6 Working Group III land-sector chapter documents how quickly carbon stocks respond to disturbance; a three-year-old measurement is a historical artifact, not a current claim.
What digital MRV changes, and what it does not
Digital MRV is the genuine improvement in the field. Satellite remote sensing, including the free archives at NASA Earthdata, allows biomass and land-cover change to be monitored continuously rather than at multi-year verification intervals. Soil carbon models calibrated with physical sampling reduce the cost of agricultural measurement. The practical effect is more frequent data at lower cost, which compresses the window in which a problem can hide.
What digital MRV does not change is judgment. Baselines are still human decisions about counterfactuals. Additionality is still an argument, not a measurement. Research groups such as the Oxford Smith School have been clear on this point: better sensors improve the M in MRV, but the integrity questions live in the assumptions, and assumptions need governance, not gadgets.
For a buyer, the test is simple. Ask the provider what is measured by instrument, what is estimated by model, and what is assumed by methodology. A provider who can answer that question crisply understands their own evidence chain. A provider who cannot is selling you their confidence rather than their data.
What to require in your contract
The diligence above converts into five contract clauses.
- Monitoring cadence and buyer data access, specified by dataset and frequency.
- Verifier independence, named accreditation, and rotation terms.
- Baseline revision triggers, so the counterfactual updates when the methodology or the evidence changes.
- Reversal liability and buffer adequacy, with the mechanism named and sized.
- Documentation handover in audit-ready form, so the evidence file your assurance provider needs already exists.
None of these clauses is exotic. All of them are absent from weak contracts, and their absence is the most reliable early signal that the MRV and additionality answers will be weak too.
If you are evaluating a nature-based investment and want the MRV and additionality stress-tested before signature rather than after, the carbon and sustainability experts at Carbon Credit Capital can run that review against any project on your shortlist, and design nature-based supply chain investments where the evidence chain is built audit-first. Schedule a consultation.
Sources and further reading
- ICVCM: Core Carbon Principles Assessment Framework
- Verra: Verified Carbon Standard
- Gold Standard for the Global Goals
- Carbon Credit Quality Initiative: Methodology quality scores
- University of Oxford Smith School: Sustainable finance research
- IPCC AR6 Working Group III, Chapter 7: AFOLU
- NASA Earthdata satellite remote sensing archive
EU Directive: Empowering Consumers for the Green Transition (ECGT)
The EU Directive, Empowering Consumers for the Green Transition (ECGT), takes effect on September 27, 2026.(1) The goal of ECGT is to protect consumers by ensuring that environmental claims are fair, understandable, and reliable. This regulation does create a new compliance requirement for businesses, but it also provides sustainability and marketing teams with important guidance that helps create consistency in sustainability communications.
Key takeaways
- ECGT takes effect September 27, 2026, and prohibits claims that a product or service has a neutral, reduced, or positive environmental impact based on offsetting alone.
- Named example phrases the regulation prohibits include climate neutral, CO2 neutral certified, carbon positive, climate net zero, climate compensated, reduced climate impact, and limited CO2 footprint.
- ECGT does not want to deter investment in carbon credits. It wants companies to communicate the real benefits of the projects they support instead.
- SBTi’s guidance recommends framing carbon credits as taking responsibility for ongoing emissions, not as making a product or company neutral.
- Voluntary carbon projects deliver real climate progress: reducing super-pollutants, protecting and restoring ecosystems, and supporting communities.
Regarding carbon credits specifically, voluntary carbon projects deliver important climate progress and environmental benefits that provide many talking points for companies. They reduce climate super-pollutants by removing industrial emissions like methane, N2O, HFCs and others. They protect and restore valuable ecosystems and carbon sinks like forests, mangroves and grasslands. They help communities by reducing local pollution, creating employment opportunities, improving access to healthcare, and more.
The Science Based Targets Initiative (SBTi), a global leader in business climate action, concludes that alongside aggressive decarbonization, we should also use high quality carbon credits to take responsibility for our ongoing emissions. SBTi recognizes that carbon credits are important “to help limit temperature overshoot, mitigate transition risks, and support climate solutions.”(2)
ECGT language on carbon offsetting says that they do not want to deter investment in carbon credits. They just want companies to focus on communicating the benefits of the projects they support and avoid claims beyond the scope of carbon credits, which is good for everyone, companies and consumers alike.
The regulation reinforces that carbon credits do not change the sustainability of your products, so carbon credit buyers should not suggest that their products are more sustainable because of carbon credits. Instead, companies need to promote their climate contributions as a way to compensate or take responsibility for their carbon emissions by supporting projects that do great things like reducing global carbon emissions, reducing pollution, preventing deforestation, restoring forests, and more.
ECGT language related to carbon offsetting
The regulation is particularly focused on prohibiting claims, based on offsetting greenhouse gas emissions, that a product or service has a neutral, reduced, or positive impact on the environment in terms of greenhouse gas emissions. These claims are prohibited in all circumstances because they mislead consumers into believing the claim relates to the product itself, or to how it was made and supplied, or into thinking that using the product carries no environmental impact at all.
Named examples of prohibited claims include:
- climate neutral
- CO2 neutral certified
- carbon positive
- climate net zero
- climate compensated
- reduced climate impact
- limited CO2 footprint
These claims are only allowed when they rest on a product’s actual lifecycle impact, not on offsetting emissions outside that product’s value chain, since the two are not equivalent. This prohibition does not stop companies from advertising their investments in environmental initiatives, including carbon credit projects, as long as they present that information in a way that is not misleading and that meets the other requirements of Union law.(1)
SBTi also provides guidance on climate contribution language in its Corporate Net Zero Standard Version 2.0 Draft for Second Public Consultation, November 2025. While the SBTi language is fairly technical, it has a good framework for crafting a climate contribution message.
SBTi Language for Carbon Credits(3)
- Take responsibility for ongoing emissions by delivering mitigation impact contributions
- Carbon credits certify the mitigation outcomes of projects that reduce, avoid, or remove carbon emissions
- Activities that reduce emissions from emission sources not located within the company’s value chain
- Activities that conserve, protect, and enhance natural carbon sinks
- Activities that capture and store carbon in storage pools
SBTi’s draft standard also walks through sample claim language for this kind of contribution. In general, the samples move from a simple percentage statement, to naming a specific verified tonnage tied to that percentage, to a fuller statement that breaks the tonnage into reductions versus removals. Across all three, the framing stays consistent: a company took responsibility for a defined share of its ongoing emissions over a set period, by funding a specific, verified amount of mitigation, achieved through emission reductions or removals.(3)
FAQ: ECGT and Carbon Credit Claims
When does the ECGT directive take effect?
The rules apply across the EU from September 27, 2026, after member states transposed the directive into national law by March 27, 2026.
Does ECGT ban carbon offsetting?
No. It bans specific marketing claims that a product or service is environmentally neutral, reduced impact, or positive based on offsetting. Advertising investment in carbon credit projects themselves is still allowed if it is not misleading.
What phrases does ECGT specifically prohibit?
Named examples include climate neutral, CO2 neutral certified, carbon positive, climate net zero, climate compensated, reduced climate impact, and limited CO2 footprint, when those claims are based on offsetting rather than a product’s actual lifecycle impact.
How should a company describe its carbon credit purchases instead?
SBTi’s guidance recommends stating the specific verified tonnage of emissions reductions or removals funded and describing that as taking responsibility for a defined share of ongoing emissions, rather than claiming the company or product is neutral.
Does this rule apply to company level sustainability claims too?
ECGT is focused on claims about specific products and services in consumer marketing. Broader company level sustainability communication is a separate matter still governed by other existing rules.
While ECGT does add a new compliance burden for businesses, it helps create consistency in sustainability messaging that is important to building confidence in voluntary carbon projects and scaling the industry to help us achieve progress on global carbon emissions.
Disclaimer: Terrapass does not provide legal or regulatory advice. Any interpretation of regulation must be approved by your legal representative.
References:
(1) https://eur-lex.europa.eu/eli/dir/2024/825/oj
(2) https://files.sciencebasedtargets.org/production/files/Corporate-Net-Zero-Standard-version-2.pdf
(3) https://files.sciencebasedtargets.org/production/files/CNZS-V2-Second-Consultation-Draft.pdf
The post The EU’s New Green Claims Rules and Carbon Credits appeared first on Terrapass.
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