Avoiding Over-Crediting in Climate Projects

Can we truly trust #carboncredit validation when auditors are paid by those they audit? #Carbonmarkets rely on third-party auditors to verify emission reductions - but the current model, where project developers hire and pay these auditors, creates a serious conflict of interest. Auditors must assess subjective factors like: (1) #Additionality - would the project have happened anyway? (2) #Leakage - are emissions simply shifting elsewhere? (3) #Permanence - will the impact truly last? These are complex, often qualitative judgments - and when an auditor’s paycheck depends on developer satisfaction, the risk of bias is real. 64% of Verra-certified auditors have been linked to projects with over-credited claims. It's time to rethink the system. (1) Create a global pool of independent auditors (2) Decouple verification from developer influence (3) Prioritize transparency and scientific rigor Credible carbon markets demand credible oversight. Without that, climate action loses trust - and impact. #CarbonMarkets #ClimateIntegrity #Sustainability #ClimateFinance #NetZero #CarbonCredits #ESG #Governance #Transparency #ClimateAction https://lnkd.in/dSNGncR9

A new study assessed carbon crediting mechanisms, addressing whether carbon credit projects lead to REAL emission reductions. Analyzing 2,346 carbon mitigation projects that account for nearly 1 billion tons of CO₂ (about 20% of all credits issued), researchers found that less than 16% of carbon credits issued constitute real emission reductions. Wind power projects in China and improved forest management in the US showed no statistically significant emission reductions. Cookstove projects achieved only 11% of claimed reductions, SF6 destruction 16%, and avoided deforestation 25%. Even the best-performing category, HFC-23 abatement, reached only 68% of claimed reductions. This assessment comes at a moment of carbon market expansion. The "offset achievement gap" identified by the study - 812 million credits that don't represent actual emission reductions - exceeds Germany's annual emissions. The research reveals three systematic issues: project developers often choose favorable data for their baseline or make unrealistic assumptions, methodologies sometimes use outdated data, and adverse selection leads to crediting projects that would have happened anyway (aka not "additional"). This evidence suggests carbon crediting mechanisms need reform to raise their potential for climate mitigation. It underscores the importance of scrutinizing carbon credit quality and prioritizing direct emission reductions over offsetting for businesses and investors. Kudos to Benedict Probst, Malte Toetzke, Andreas Kontoleon, Laura Diaz Anadon, Jan Minx, Barbara Haya, Lambert Schneider, Philipp Trotter, Thales A. P. West, Annelise Gill-Wiehl, Volker Hoffmann from great institutions.

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

Big tech is buying carbon credits that threaten traditional ways of life. Is your company next? Most carbon credit schemes I see are painful to examine. Corporate sustainability teams, you must keep this in mind:  Carbon credit schemes aren't just about environmental impact. They're about human impact too. The carbon credit scheme is NOT for displacing Indigenous peoples. It's for creating sustainable futures for everyone involved. These are the common mistakes I often see: - Focusing solely on carbon numbers without due diligence on human rights - Assuming all carbon credit projects equally benefit communities - Missing the connection between land rights and authentic sustainability Here's how to approach carbon credits more responsibly: - Research projects thoroughly, including their impact on local communities - Prioritize projects with clear consent from Indigenous peoples - Choose credits from projects with transparent governance structures - Look for independent human rights assessments of the projects And always remember to center the voices of affected communities. This way, you can achieve climate goals without compromising human rights. In Northern Kenya, a carbon credits scheme used by Netflix and Meta was just suspended AGAIN after a court ruled it was established unconstitutionally. It's not the first time, and traditional cattle-herding communities have seen their grazing lands severely restricted. The $42-90 million generated from carbon credits came at the expense of Maasai, Borana, Samburu and other Indigenous peoples' ways of life. Your climate action matters. But HOW you take that action matters just as much. What due diligence does your organization perform on carbon credit projects? Share your approach in the comments. ♻️ Repost to help others in your network navigate ethical sustainability.

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

€10 per ton for reforestation? That price should make you nervous. Here’s why: things that look cheap in climate often cost us more later. I have seen many reforestation credits at €10 or €15 per ton. Whenever I spot one, these questions fire in my head: - Who gets the money? - Are there real trees in the ground? - Did any CO2 disappear from the air? If a project checks out at €50–€80 per ton, I pay attention. Every serious report (like Pachama’s) points there. → Cheap credits almost always mean corners get cut → Real climate work has real costs: - Land and trees - Local people paid fairly - Smart tech and regular checks - Years of tracking A “bargain” price? 🚨 Big warning sign. Many reforestation projects with low prices miss key stuff: → No proof of CO2 removed → No one watching the forest long-term → Middlemen take money, not local workers What can go wrong with cheap credits? - You buy empty promises instead of real action - Forests might not survive — or even exist - False claims = greenwashing, not impact I look for credits that pass the big filters: - Verified by third parties - Follow ICVCM’s Carbon Core Principles - Show proof at every step -> transparency No easy wins here. No shortcuts. No magic button for “cheap, perfect climate impact.” When a company saves on credits, real climate work is lost. A €10 per ton deal? I would not trust it. Want to see how great projects look? The Pachama study is a strong place to start, or check what we do at Senken. 💚🌱

𝗡𝗲𝘄 𝗗𝗿𝗮𝗳𝘁 𝗳𝗿𝗼𝗺 𝗦𝗶𝗻𝗴𝗮𝗽𝗼𝗿𝗲: "𝗔𝗻𝗻𝗲𝘅 𝗔 – 𝗗𝗿𝗮𝗳𝘁 𝗚𝘂𝗶𝗱𝗮𝗻𝗰𝗲 𝗼𝗻 𝗩𝗼𝗹𝘂𝗻𝘁𝗮𝗿𝘆 𝗖𝗮𝗿𝗯𝗼𝗻 𝗠𝗮𝗿𝗸𝗲𝘁 🔹 𝗥𝗼𝗹𝗲 𝗼𝗳 𝗖𝗮𝗿𝗯𝗼𝗻 𝗖𝗿𝗲𝗱𝗶𝘁𝘀 & 𝗠𝗮𝗿𝗸𝗲𝘁𝘀 Carbon credits equal 1 tonne of CO₂e reduced or removed. Voluntary carbon markets help companies offset unavoidable emissions while financing climate projects that may not happen otherwise. As per the World Bank, carbon markets can cut mitigation costs by up to 32%. 🔹 𝗨𝘀𝗶𝗻𝗴 𝗖𝗿𝗲𝗱𝗶𝘁𝘀 𝗶𝗻 𝗮 𝗖𝗿𝗲𝗱𝗶𝗯𝗹𝗲 𝗪𝗮𝘆 Companies must priorities internal reductions first. Credits should only be used for residual emissions. Tools like abatement cost curves, energy audits, and benchmarking can help identify feasible in-house measures. 🔹 𝗖𝗹𝗮𝗿𝗶𝗳𝗶𝗰𝗮𝘁𝗶𝗼𝗻𝘀 𝗼𝗻 𝗖𝗼𝗿𝗿𝗲𝘀𝗽𝗼𝗻𝗱𝗶𝗻𝗴 𝗔𝗱𝗷𝘂𝘀𝘁𝗺𝗲𝗻𝘁𝘀 (𝗖𝗔𝘀) CAs are required under Article 6 of the Paris Agreement for international credit transfers between governments (ITMOs). 𝗙𝗼𝗿 𝘃𝗼𝗹𝘂𝗻𝘁𝗮𝗿𝘆 𝗰𝗼𝗿𝗽𝗼𝗿𝗮𝘁𝗲 𝗯𝘂𝘆𝗲𝗿𝘀, 𝗖𝗔𝘀 𝗮𝗿𝗲 𝗻𝗼𝘁 𝗿𝗲𝗾𝘂𝗶𝗿𝗲𝗱, but companies must avoid double-counting by ensuring: • Credits 𝗮𝗿𝗲 𝗿𝗲𝘁𝗶𝗿𝗲𝗱 under their name • Credits 𝗮𝗿𝗲 𝗰𝗹𝗮𝗶𝗺𝗲𝗱 𝗼𝗻𝗹𝘆 once across the value chain • Credits come from 𝗿𝗲𝗽𝘂𝘁𝗮𝗯𝗹𝗲 𝗿𝗲𝗴𝗶𝘀𝘁𝗿𝗶𝗲𝘀 🔹 𝗖𝗹𝗮𝗿𝗶𝗳𝗶𝗰𝗮𝘁𝗶𝗼𝗻𝘀 𝗼𝗻 𝗩𝗶𝗻𝘁𝗮𝗴𝗲 "𝗩𝗶𝗻𝘁𝗮𝗴𝗲" refers to the year the emissions reduction occurred. As a best practice, credits should align with the 𝗰𝗼𝗺𝗽𝗮𝗻𝘆’𝘀 𝗰𝗼𝗺𝗺𝗶𝘁𝗺𝗲𝗻𝘁 𝗽𝗲𝗿𝗶𝗼𝗱 (𝗲.𝗴., 𝟮𝟬𝟮𝟭–𝟮𝟬𝟯𝟬 𝗳𝗼𝗿 𝟮𝟬𝟯𝟬 𝘁𝗮𝗿𝗴𝗲𝘁𝘀), ensuring the credits reflect current methodologies and baselines. 🔹 𝗖𝗿𝗲𝗱𝗶𝘁 𝗤𝘂𝗮𝗹𝗶𝘁𝘆 𝗠𝗮𝘁𝘁𝗲𝗿𝘀 Singapore highlights 7 principles for environmental integrity: ✔️ Not double-counted ✔️ Additional ✔️ Real ✔️ Quantified & Verified ✔️ Permanent ✔️ No Leakage ✔️ Do No Harm Use of standards like 𝗜𝗖𝗩𝗖𝗠 𝗮𝗻𝗱 𝗖𝗢𝗥𝗦𝗜𝗔 𝗶𝘀 𝗲𝗻𝗰𝗼𝘂𝗿𝗮𝗴𝗲𝗱. Companies should also 𝗰𝗼𝗻𝗱𝘂𝗰𝘁 𝗱𝘂𝗲 𝗱𝗶𝗹𝗶𝗴𝗲𝗻𝗰𝗲 𝘂𝘀𝗶𝗻𝗴 𝘁𝗵𝗶𝗿𝗱-𝗽𝗮𝗿𝘁𝘆 𝗿𝗮𝘁𝗶𝗻𝗴𝘀 𝗮𝗻𝗱 𝗿𝗶𝘀𝗸 𝗺𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁 𝘁𝗼𝗼𝗹𝘀 (𝗶𝗻𝗰𝗹𝘂𝗱𝗶𝗻𝗴 𝗶𝗻𝘀𝘂𝗿𝗮𝗻𝗰𝗲 𝗮𝗻𝗱 𝗽𝗿𝗼𝗷𝗲𝗰𝘁 𝗾𝘂𝗮𝗹𝗶𝘁𝘆 𝗹𝗮𝗯𝗲𝗹𝘀). 𝗦𝗶𝗻𝗴𝗮𝗽𝗼𝗿𝗲’𝘀 𝗖𝗮𝗿𝗯𝗼𝗻 𝗧𝗮𝘅 𝗙𝗿𝗮𝗺𝗲𝘄𝗼𝗿𝗸 Since 2024, 𝗰𝗮𝗿𝗯𝗼𝗻 𝘁𝗮𝘅-𝗹𝗶𝗮𝗯𝗹𝗲 𝗰𝗼𝗺𝗽𝗮𝗻𝗶𝗲𝘀 𝗶𝗻 𝗦𝗶𝗻𝗴𝗮𝗽𝗼𝗿𝗲 𝗰𝗮𝗻 𝘂𝘀𝗲 𝗲𝗹𝗶𝗴𝗶𝗯𝗹𝗲 𝗶𝗻𝘁𝗲𝗿𝗻𝗮𝘁𝗶𝗼𝗻𝗮𝗹 𝗰𝗮𝗿𝗯𝗼𝗻 𝗰𝗿𝗲𝗱𝗶𝘁𝘀 (𝗜𝗖𝗖𝘀) 𝘁𝗼 𝗼𝗳𝗳𝘀𝗲𝘁 𝘂𝗽 𝘁𝗼 𝟱% of their taxable emissions. 🔹 𝗧𝗿𝗮𝗻𝘀𝗽𝗮𝗿𝗲𝗻𝘁 𝗗𝗶𝘀𝗰𝗹𝗼𝘀𝘂𝗿𝗲𝘀 Disclosing the volume, source, type, and purpose of carbon credits is crucial. Under 𝗜𝗙𝗥𝗦 𝗦𝘂𝘀𝘁𝗮𝗶𝗻𝗮𝗯𝗶𝗹𝗶𝘁𝘆 𝗗𝗶𝘀𝗰𝗹𝗼𝘀𝘂𝗿𝗲 𝗦𝘁𝗮𝗻𝗱𝗮𝗿𝗱𝘀, companies must also disclose how credits support their net-zero targets. #𝗖𝗮𝗿𝗯𝗼𝗻𝗖𝗿𝗲𝗱𝗶𝘁𝘀 #𝗩𝗼𝗹𝘂𝗻𝘁𝗮𝗿𝘆𝗖𝗮𝗿𝗯𝗼𝗻𝗠𝗮𝗿𝗸𝗲𝘁 #𝗦𝘂𝘀𝘁𝗮𝗶𝗻𝗮𝗯𝗶𝗹𝗶𝘁𝘆 #𝗖𝗹𝗶𝗺𝗮𝘁𝗲𝗔𝗰𝘁𝗶𝗼𝗻 #𝗦𝗶𝗻𝗴𝗮𝗽𝗼𝗿𝗲 #𝗡𝗲𝘁𝗭𝗲𝗿𝗼 #𝗗𝗲𝗰𝗮𝗿𝗯𝗼𝗻𝗶𝘀𝗮𝘁𝗶𝗼𝗻

A Public Service Announcement for those who are committed to quality in forest carbon accounting: If you have been in this space, you are probably familiar with the term "dynamic baselines." Dynamic baselines are seen by many in the community as a key innovation to prevent over-crediting by forest products specifically and nature-based solutions in general. I will post a link to a fuller description of dynamic baselines below, but in brief they improve the measurement of additional carbon sequestration and storage by identifying a "control" area or group of areas OUTSIDE of the project that "look like" the project across multiple criteria. This allows us to simply measure the difference between what happens in the project and what happens in the control. This is very similar to the approach taken by vaccines or other health interventions to make causal inferences regarding an intervention. We know a lot about dynamic baselines. Together with TerraCarbon and The Nature Conservancy, we wrote the world's first carbon accounting methodology (VM 0045) that used dynamic baselines. We are implementing projects under VM45 and its sister methodology, VM47. Since we launched this work, others (including rating agencies, carbon portfolio managers, scientific researchers and others) have also begun to use dynamic baselines to assess credit quality. One thing we have recently noticed is other groups that DON'T use dynamic baselines saying that they do. We could maybe coin here a new term, "Dynamic baseline-washing," to describe this phenomenon, in which project developers using slightly improved versions of conventional approaches describe those approaches using the term, "dynamic baseline." I don't think this is malicious, I think this is because people misunderstand what dynamic baselines are. People hear the term and think a baseline is dynamic if it changes over time. This is an UPDATED baseline; and although all dynamic baselines are updated, not all updated baselines are dynamic. A dynamic baseline also MUST include the use of matched controls. If you are NOT using matched controls to set a baseline, and are instead simply updating your baseline based on new data analysis, YOUR BASELINE IS NOT A DYNAMIC BASELINE. Period. And if that's the case, please stop calling your baseline "dynamic." Look, dynamic baselines are not a panacea. Yes, they are a huge leap forward in our work to curtail over-crediting, but they introduce many new challenges (primarily financial). We can and should have robust debates about their applicability and quality, and we should absolutely be open to the utility of traditional approaches to baselines in certain circumstances. But we absolutely must be clear and honest with each other, with buyers, with landowners and with the general public about the methods we are (and aren't) using. https://lnkd.in/d3jjUp8u

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.