Across both articles I explain in some detail how Net Zero has all the characteristics of a giant Ponzi scheme, profiting the banks and the financial class more generally, while handicapping the productive economy for no climate benefit. This can happen because we are deliberately denied any understanding of the whole, what is important is that each individual file, is filed correctly.

Worse, with the planned release of genetically modified corals by the Great Barrier Reef Marine Park Authority, we are moving to the intervention stage as I will explain in this week’s Substack.

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It has got me thinking again about the term ‘finance capitalism’ and how the entire carbon credit market is just a massive Ponzi scheme. Of course, this becomes even more obvious when we take some time out and think about how vast the Pacific Ocean is, and how, like the Taiga forests, it exhales carbon dioxide.

You can read more about ‘forest peat and carbon markets’ across at my blog: https://jennifermarohasy.com/2026/07/forests-peat-and-carbon-markets-canadian-wildfires-and-the-long-view/

And just yesterday I wrote a much shorter piece about how the oceans also exhale carbon dioxide with some year on year residual at this point in the natural cycle. Within that short article there is also a link to my preprint with Sydney Uni Professor Ivan Kennedy, that gives some numbers and some chemistry: https://jennifermarohasy.com/2026/08/the-oceans-seasonal-exhale-rethinking-the-keeling-curve/

The term ‘financial capitalism’ is used by another professor, Harvard Prof Michael Hudson, as a contrast to the notion of ‘industrial capitalism’.

In industrial capitalism the goal is to produce goods and raise living standards by investing in plant, machinery and infrastructure. Contrast this with finance capitalism where the priority becomes extracting economic rent — interest, capital gains, monopoly fees and asset-price inflation — while the productive base is gradually hollowed out.

Let me explain in some detail how neatly the entire Net Zero concept fits within the financial capitalism construct. Of course, Prof Hudson and others will avoid any mention of it, perhaps because they are frightened of the associated science and it has become such a moral issue. To think, that people have become so frightened of discussing weather and even mangrove carbon sequestration with me. But not you dear reader of this Substack.

In Prof Hudson’s recent interview with Glenn Diesen there was no mention of carbon credits. Though I would argue they go some way to explaining the parlous state of especially many European economies that he did talk about.

Glenn Diesen’s Substack

Michael Hudson: The West's Financial System on the Brink of Collapse

Prof. Michael Hudson, a world-renowned classical economist, discusses the history of finance and why the West's financial system is on the brink of collapse…

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14 days ago · 232 likes · 19 comments · Glenn Diesen

Hudson does draw a clear distinction between:

Earned income that comes from actually producing goods or services including wages, industrial profits, etcetera, versus economic rent that is unearned income extracted by control of a scarce asset, a legal privilege, or a financial claim.

Classic examples are land rent, monopoly privileges, interest on debt that exceeds the cost of creating credit, and capital gains from asset-price inflation, and surely also carbon credits, as I will argue here.

Carbon credits are a creation of policy and narrative; almost the ultimate Grimm storybook!

Governments and private standards bodies create an artificial scarcity: the right to claim that one tonne of emissions has been ‘offset’ or ‘neutralised.’ That right is then turned into a tradable financial instrument. Its value does not come from a physical commodity that is scarce in the ordinary sense; it comes from the regulatory permission and the continued belief that buying the credit discharges a climate obligation.

So, in Hudson’s terms:

· They function as a rentier claim — income (or cost-saving) derived from a legal/administrative privilege rather than from expanding the industrial base.

· The fees taken by verifiers, brokers, registries and banks are classic intermediary rents layered on top of that claim.

· Like other financialised rents, they raise the overhead cost structure of the real economy because companies must buy credits or face higher compliance costs while channeling money toward the FIRE sector and project developers rather than toward tangible capital formation.

Carbon credits, underpinned by Net Zero policies, have become part of the FIRE sector that stands for Finance, Insurance and Real Estate.

It is that sector of the economy that deals with banking, lending, investment funds, stock and bond markets, private equity, etcetera. (Finance); insurance products of all kinds (Insurance); and property ownership, development, renting, mortgages and related services (Real Estate).

You can’t eat any of it, and it was not traditionally associated with swamp land.

The underlying ‘asset’ by which I mean the claimed sequestration or avoided emission, is always diffuse, hard to verify, and in many cases would have occurred anyway.

They must therefore belong to the same family of unearned income that Prof Hudson argues has come to dominate Western economies at the expense of industrial production.

In short: carbon credits are a modern, climate-branded expression of the shift from industrial capitalism to finance capitalism — a new rentier instrument whose value depends on the story remaining intact. A story I am determined to shatter.

If the core premise of Net Zero policies is mythical as I have contested for some time, the whole structure falls. It will probably fall anyway, but I would like to see this hastened and explained. In fact, I would like some accountability, some honest discussion about all of this.

Mangroves grow almost like weeds in estuaries and tidal creeks like Weyba Creek. They are locking carbon into their woody biomass and the dark, waterlogged soils beneath them with every tidal cycle. That natural sequestration is real, efficient, and has been happening for millennia — globally, intact mangrove systems alone can sequester on the order of tens of millions of tonnes of carbon each year. Yet only a tiny fraction of this background biological work has been packaged into the carbon-credit markets.

As of 2026, the existing portfolio of blue-carbon projects, is I understand, about 80 projects covering about two million hectares. It is credited with generating around 20 million tonnes of CO2-equivalent reductions or removals annually; most of it from mangroves. Yes mangroves!

At the premium prices these ‘boutique’ credits currently fetch — typically US$25–35 per tonne, and sometimes higher — that volume has already translated into cumulative sales on the order of one to two billion US dollars. The financial architecture built around counting and verifying this free labour — complete with developers, verifiers, brokers, registries and bank intermediaries — treats a process that would occur anyway as a scarce, tradable commodity whose value depends entirely on continued belief in the larger Net Zero story. In that sense the mangroves’ unpaid work has become another prop in a global confidence scheme that looks increasingly like a Ponzi.

A classic Ponzi scheme pays earlier participants with money taken from later ones. It has no genuine underlying profit sufficient to meet the promised returns. It survives only as long as new capital keeps arriving and the accounting remains opaque. Complexity and poor record-keeping are not bugs; they are features that delay scrutiny. When inflows slow or the story is examined, the structure collapses.

Pyramid schemes add a recruitment hierarchy: income comes mainly from bringing in new members. Exit schemes (or rug-pulls) simply extract capital and disappear before the failure is obvious. All three share dependence on continuous belief, opacity, and the absence of a real, scalable underlying asset.

Carbon credits fit this pattern.

The ‘return’ offered to buyers of carbon credits is a claim of neutrality or progress toward Net Zero. That claim has value only while regulators, investors, and the public accept the underlying story. The credits themselves are generated by projects whose additionality, permanence, and leakage are frequently overstated. Verification protocols are intricate. Registries, baselines, and buffer pools create layers of accounting that almost no outsider can audit in real time. Banks, brokers, and verifiers take fees at every step.

Demand must keep growing. More companies must adopt Net Zero targets. More governments must tighten rules. More projects must be invented and certified. When that expansion slows — or when the physical premise is more widely questioned — the market has no independent source of value large enough to sustain itself.

This is why my new Theory of Climate Resilience, specifically Plank #6, is going to be so important. It explains that the recent year on year rise in atmospheric carbon dioxide is a natural residual from more ocean exhaling relative to inhaling, and the vast Taiga forests show the same dynamics because they are now so mature with much peat that can and will burn.

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Professor Hudson is scathing about the Thatcher–Reagan era. He sees their privatisation of public assets as a decisive shift that handed monopoly or near-monopoly privileges to private finance and the FIRE sector.

What had been public infrastructure providing services at cost, or regulated for public benefit, was turned into rent-extracting private claims. The result, in his view, was higher overhead costs for the rest of the economy and the progressive hollowing-out of industrial capacity in favour of financial extraction.

That wave of privatisation and financial deregulation ran through the 1980s and into the early 1990s. The Kyoto Protocol was negotiated in 1997. Its flexible mechanisms — emissions trading, the Clean Development Mechanism, Joint Implementation — created the first large-scale international framework for turning ‘avoided’ or ‘reduced’ emissions into tradable instruments.

So, the carbon-market architecture was born in the same broad neoliberal climate that had celebrated privatisation and market solutions.

The intellectual continuity is clearer than the personnel continuity. The same free-market turn that favoured privatising state assets also favoured ‘market-based instruments’ for environmental problems. Economists who disliked command-and-control regulation argued that putting a price on carbon and letting private actors trade permits would be more efficient.

Cap-and-trade and offset systems were sold as the clever, non-bureaucratic way to handle an externality. In that sense, the creation of carbon credits can be seen as an extension of the same logic: take something previously outside (or only loosely inside) the market — in this case the atmospheric commons or the claimed climate benefit of a project — and turn it into a private, tradable claim from which financial intermediaries can extract fees and rents.

Kyoto was conceived, by the same neo conservative network as a next stage for capturing profit. Of course, it was marketed as the solution endorsed by climate scientists, European governments, environmental organisations, and apparently directed by the UN process. That is all a mask, just like the wolf dressed up as grandma in that most famous of Grimm storybooks. And so, it is often misguidedly associated with the left of politics.

Many of the original architects apparently saw themselves as solving a collective-action problem, not as designing a rentier asset class. The United States under Clinton signed but never ratified; the Bush administration later rejected it. The people who pushed the hardest for privatisation in the 1980s were not, in the main, the same individuals drafting the Kyoto mechanisms a decade later but rather the same machinery of state. And how I despise them.

What did happen, is that once the legal and institutional machinery for carbon credits existed, the financial sector moved in exactly as Hudson would predict. Banks, funds, verifiers and brokers layered fees on top of the new instruments. Complexity and opacity grew. The value of the credits became dependent on continued political and narrative support rather than on a transparent physical commodity. In that later evolution the carbon-credit system acquired the Ponzi-like characteristics — dependence on perpetual new demand, poor accounting, and a foundational claim that is impossible to verify at scale.

This is not a pure criminal Ponzi in the narrow legal sense, but certainly in the moral sense which is perhaps why they try so hard to marginalise people like me who see through the rouse.

For sure, there is no explicit promise that later buyers will pay earlier ones a financial return. It is a policy-engineered confidence market that exhibits the same structural vulnerabilities: perpetual need for new demand, extreme complexity, and a foundational claim that does not survive closer inspection. Pyramid-like intermediary chains and occasional exit behaviour by individual project developers complete the resemblance.

The South Pacific Ocean does not care about any of this. It will continue to inhale and exhale according to temperature, chemistry, and the solubility of calcium carbonate, as I explain across at my most recent blog post that you can read here.

And mangroves will keep sequestering carbon whether or not bankers add a single tonne to their spreadsheets. Surface waters will keep exchanging tens of gigatonnes of carbon with the atmosphere every year. Human-scale credit projects remain negligible against those fluxes. And all of that is even before we add in the vast Taiga forests.

Just because it is complicated, does mean it is not real. For sure, the book I am writing will begin to combine the economics with actual biology and some chemistry. In the end, we need to have some understanding of all of this the biology, and the chemistry as well as the economics.

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I will attach my first letter to Frydenberg as an appendix; it was the first of three letters I sent towards the end of 2017. These were as attachments to text messages. You will not find any of these letters on the public record, because at the time Frydenberg insisted that I only communicate with him by phone and/or text message. He insisted nothing be sent by email to his official ministerial address.

Credit to Josh Frydenberg, he did more than any other government minister in terms of making temperature data available, specifically temperatures measured from automatic weather stations and also mercury thermometers in the same screen at Mildura airport from November 1,1996 until January 31, 2015. Then again, at the time, popular 2GB radio host Alan Jones was threatening to run a campaign against him.

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