Assessing Carbon Project Credibility and Complexity

Nature-based carbon markets have experienced a series of major setbacks that have undermined scientific credibility, & these same issues risk spilling into biodiversity markets. In our new paper in Nature Sustainability (led by Tom Swinfield & I), we outline our vision for truly scientifically-credible nature-based credit markets: https://rdcu.be/dP6P6. TLDR: in our view the key is to only sell credits *after they have been proven demonstrably additional using robust statistical techniques* for impact evaluation, so we know each credit represents real, additional gains. This could transform these markets. Imagine how investment might upscale if investors were truly confident that every 'unit' of carbon was on average real. Society has made huge policy commitments to upscale carbon & biodv offsetting. But, carbon credit markets have suffered serious hits to their credibility & nascent biodv markets risk inheriting shortcomings. Impact evaluations have shown that these markets have systematically underdelivered additionality. So: leverage the new generation of techniques for robust impact evaluation (comparing outcomes at project site with statistically-near identical counterfactual) to only sell nature-based credits after they’ve been shown to have delivered additional gains. This requires using trusted primary observations to track the impact of your project & counterfactuals (land cover for carbon), which is also relevant to some, but not all, biodiversity offsetting & biodiversity credit methods. This overcomes a systemic problem in credit markets, which is project proponents proposing own counterfactual, which opens up opportunities for gaming Currently, too much weight is placed on ex-ante forecasts of impact/additionality & these methods for forecasting are replete with perverse incentives We have methods to do this: eg what 4C: Cambridge Centre for Carbon Credits are operationalising – you can track additionality of the nature-based credit in near real time, with a transparent & statistically-derived counterfactual   IMO credit markets are at a crossroads. Either we can keep trying small improvements on flawed assessment processes; or fundamentally reform markets so we can be confident credits they deliver are robust. Whilst science has made big progress on additionality, we still haven’t established accepted methods for leakage, or impermanence. So to maintain scientific credibility, we also need to take the *lower bound estimate whenever there is uncertainty* These reforms could fundamentally change markets, incentivising investors/project devs to find sites most likely to deliver additionality, no leakage & permanence, in hope of beating the counterfactual & generating windfall gains This paper focuses on making credits credible, but there’s not space to talk about making them equitable and just, which we’re actively working on too. Wonderful collab between academics & investors Siddarth Shrikanth Joe W Bull Anil Madhavapeddy

I've now done research into #carbonmarkets, #carboncredits and #offsetting for almost 20 years. The evidence keeps piling up that carbon offsetting is ineffective, often misleading, and counter-productive, enabling business-as-usual to continue. Here is another report that has come out recently - published by an academic team based at Berkeley. This is the report in a nutshell: REDD+ plays a crucial role in voluntary carbon markets, aimed at reducing emissions from deforestation and forest degradation. However, since its inception, this scheme has faced intense scrutiny for the effectiveness and integrity of its carbon crediting schemes. The report has revealed key concerns: - Over-Crediting: There's a significant gap between claimed climate benefits and actual outcomes, leading to questions about the real impact of these projects on carbon reduction efforts. In short: more carbon credits are being issued than carbon is sequestrated. - Many challenges in finding and verifying accurate methods to quantify real emission reductions. This is a complex science, yet often the methodologies used are simplistic. - Leakage: Projects must tackle unintended consequences where reductions in one area might lead to increases elsewhere. The report finds that leakage is frequently underestimated. Durability & sustainability of carbon stocks: Ensuring that the conserved or enhanced forests remain intact over the long term is essential for their credibility. Yet, durability is frequently overestimated (think frequent forest fires). Community rights and well-being: The effectiveness of REDD+ hinges on adequately protecting the rights and livelihoods of indigenous and local forest communities, ensuring they benefit from conservation efforts. Yet, there is often only lip service paid to such rights. Many communities are negatively affected. Hence, the report issues an urgent call for enhanced strategies to make REDD+ more transparent, accurate, and fair. Engaging in open dialogue among stakeholders is crucial to refining carbon crediting mechanisms, ensuring they genuinely contribute to combating climate change while supporting biodiversity and local communities. Many carbon offsetting projects fail on these fronts. https://lnkd.in/ebAe9cTJ Full report here: https://lnkd.in/e978kGJq

𝗖𝗮𝗿𝗯𝗼𝗻 𝗖𝗿𝗲𝗱𝗶𝘁𝗶𝗻𝗴 𝗧𝗼𝘄𝗮𝗿𝗱𝘀 𝗧𝗿𝗮𝗻𝘀𝗳𝗼𝗿𝗺𝗮𝘁𝗶𝘃𝗲 𝗖𝗹𝗶𝗺𝗮𝘁𝗲 𝗙𝗶𝗻𝗮𝗻𝗰𝗲 I’ve gone through the The World Bank’s report, “Carbon Crediting - A Results-based Approach to Mobilizing Additional Climate Financing” and it is one of the most structured explanations I’ve seen of how carbon crediting is evolving. 🌍💰 This is not another carbon market primer. It reframes carbon crediting as a results-based financing instrument one that can operate at project, programmatic, jurisdictional, policy, sectoral and even economy-wide levels. In a world where developing countries face trillion-dollar climate financing gaps, this document positions carbon crediting as a bridge between climate ambition and implementation. 𝗪𝗵𝗮𝘁 𝗰𝗮𝗻 𝘄𝗲 𝗹𝗲𝗮𝗿𝗻? ▪️ Carbon crediting is no longer limited to isolated projects it can support policy reform, subsidy removal, and sector-wide transitions. ▪️ Integrity is multi-dimensional: environmental, social, financial and governance integrity all matter. ▪️ Baseline setting and additionality are not technical footnotes they are central to credibility. ▪️ Results-based climate finance (RBCF) and carbon markets serve different but complementary roles. ▪️ Scale requires government leadership especially for jurisdictional and policy crediting approaches. 𝗪𝗵𝗼 𝗯𝗲𝗻𝗲𝗳𝗶𝘁𝘀? -Policymakers in developing countries seeking innovative, debt-neutral financing. -Climate finance practitioners structuring results-based instruments. -MDBs and development partners aligning Article 6 and RBCF strategies. -Corporates and investors assessing high-integrity credit supply. From a planetary boundaries perspective, this report reinforces a simple truth: Carbon crediting is powerful only if it drives systemic change not just transactional offsets. Used well, it can mobilise capital for forests, energy transition, subsidy reform, and clean technologies. Used poorly, it risks undermining trust. The future of carbon crediting lies in scale, integrity, and alignment with national development priorities. #ClimateFinance #CarbonCrediting #Article6 #ResultsBasedFinance #SustainableDevelopment #planetaryhealth #planetaryboundaries #sustainability #ClimateAction #carbonfootprint #NetZero #ClimateEmergency #SDG #ESG #GHG #netzero

Did you know that weak measurement and verification systems can undermine the credibility of entire sustainability and climate programs? Recent analysis by Senken of more than 2,300 carbon projects found that in some categories, fewer than 16% of issued carbon credits corresponded to real emission reductions, highlighting the risks of inadequate monitoring and verification systems. At the same time, global climate finance and carbon markets depend on rigorous Measurement, Reporting, and Verification (MRV) processes; because one verified carbon credit represents one tonne of greenhouse gas emissions reduced or removed, a unit that governments, investors, and institutions rely on to track real progress. These numbers reinforce a simple but critical lesson: credibility in sustainability is built on systems, not promises. In practice, this means investing in robust monitoring frameworks, conducting independent compliance audits, and ensuring that data can withstand scrutiny from regulators, financiers, and stakeholders. Organizations that prioritize these systems are not only better prepared for evolving disclosure requirements, they are also better positioned to attract investment, manage risk, and deliver measurable impact. As sustainability expectations continue to rise globally, the institutions that will lead are those that understand that accountability is not an administrative requirement; it is a strategic asset. Because in sustainability and climate action, what gets measured, verified, and audited is what ultimately builds trust and delivers lasting results.

Companies are buying their way to net-zero with a product no one can prove is real. The worst part? It's completely legal. A company just bought 100,000 carbon credits. They paid real money for them. They're counting on them to hit climate targets. But here's the question: did those credits actually remove any carbon? The carbon credit market is growing fast. Companies need offsets. Projects claim reductions. Money changes hands. But without verification, it's just promises on paper. A forest that was never going to be cut down gets sold as "saved". The same emission reduction gets sold to three different buyers. A project claims 1,000 tons removed but measured 300. Carbon credits only work if they represent real, verified emission reductions. That's where MRV comes in. Measurement, Reporting, and Verification. → Measurement: Quantify the amount of CO₂ reduced or removed using field data, sensors, and models → Reporting: Document and share the data in a transparent, standardized format → Verification: Independent third parties assess the data to confirm accuracy and compliance → Issuance: Upon successful verification, carbon credits are issued representing verified reductions MRV systems prevent double counting, carbon leakage, and overestimation. Without them, carbon markets collapse into speculation and greenwashing. But traditional MRV is expensive, complex, and slow. Field teams. Manual data collection. Months of verification. Small projects can't afford it. Large projects struggle with consistency across regions. That's changing. Three organizations are fixing MRV at different points in the system. Pachama leverages AI and satellite data to monitor and verify forest carbon projects, ensuring their credits meet global standards. Regrow Ag provides software solutions to enable farmers to adopt regenerative agriculture practices, improving soil health and reducing emissions by using MRV to verify practices Sylvera offers data-driven tools to assess the quality of carbon credit projects, helping investors make informed decisions. Digital MRV is emerging as the next evolution. Satellite imagery, AI, and IoT sensors can monitor projects in real time, cut verification costs, and improve accuracy across diverse regions. Standardization is helping too. Universal MRV protocols make it easier to compare projects, build trust, and scale carbon markets without sacrificing integrity. Carbon markets only work if credits are real. MRV is what makes them real. So here's my question to you: should carbon credits without independent third-party verification be allowed to be sold at all? And that's day 18, of Climtober - 31 days of demystifying climate solutions, one topic at a time. Come back tomorrow for Day 19 and by November 1st, you'll understand the landscape better than most people working in it. Looking to tell effective stories for GTM in Climate? Check the pinned comment.

The new VM0048 methodology was published to replace the previous VM0015, bringing significant improvements to the transparency, standardization, and credibility of REDD-type carbon projects. One of the motivations for this change was the widely shared concern among experts and the market that, under VM0015, the flexibility given to proponents in defining the baseline, especially the future deforestation rate, could lead to overestimation of credits in some cases. To mitigate this risk, VM0048 implemented a different approach: the adoption of jurisdictional baselines, in which Verra itself provides the historical data and the deforestation rate to be used by projects, based on consistent and comparable analyses across regions. This change represents an important step forward. By centralizing baseline definition, Verra helps promote greater conservatism, predictability, and environmental integrity—key attributes for both the voluntary market and the move toward a regulated market, via Article 6 of the Paris Agreement. In my opinion: The positive: greater credibility for the market (necessary!). The challenge: higher costs for projects. The so-called PADA Fee (Project Activity Data Allocation Fee) is now mandatory for projects requesting the jurisdictional baseline. Costs: US$10,000 fixed per request + US$0.25 per hectare (based on the KML submitted) Maximum ceiling: US$150,000 per project These costs arise precisely in a context where projects tend to generate fewer credits per hectare due to the new methodology's more conservative approach. In short: greater rigor and transparency, but fewer credits and higher costs. This new reality may pose an additional obstacle for new developers and initiatives attempting to integrate small properties, one of the biggest gaps in the current Brazilian carbon market. The challenge now lies with developers and investors: reviewing the technical and economic viability of projects, as well as adapting business models to this new market configuration, which (we hope) will be accompanied by greater rigor, clarity, and trust from buyers, regulators, and society. Reference: https://lnkd.in/daf5ikG2 #VM0048 #VM0015 #Verra #carboncredits #REDD #jurisdictionalbaseline #PADAfee #ICVCM #CCP #projetosREDD #mercadodecarbono #sustentabilidade #climatefinance #naturebasedsolutions