In the global effort to combat climate change, the carbon credit market has emerged as a pivotal player, offering businesses a mechanism to offset their carbon emissions and contribute to environmental conservation. Within this intricate landscape, Verra stands as a key player, providing standards for carbon credit programs.
However, as the demand for carbon credits grows, so do concerns about the efficiency and integrity around some of the Verra projects and the measurement of their results.
In this blog, we will explore the carbon credit market and shed light on the issues associated with Verra.
The Verra controversy
Verra was founded in 2007 and is a non-profit organization that develops and manages standards for greenhouse gas accounting and the certification of many carbon offset projects. Verra controls the world's largest voluntary carbon market program, the Verified Carbon Standard (VCS), and they certify the carbon credits which offset emissions. This essentially means that projects that Verra certify are able to issue registered carbon credits, which can then be purchased by businesses, organizations or individuals to help counter their carbon emissions and footprint.
However, earlier this year Verra came under scrutiny, particularly from the Guardian, which claimed that over 90% of Verra’s rainforest offset credits did not meet the ‘additional criteria’ which means they do not represent genuine reduction in emissions. Furthermore, they claimed that the initial predictions regarding the threat of deforestation have been significantly overstated, by over 400%, resulting in the trade of credits intended for safeguarding trees that were unlikely to face threats in reality.
Large companies and brands such as Disney, Netflix, Gucci and Shell were among those that have bought rainforest offsets approved by Verra for environmental claims.
The controversy surrounding Verra and these particular credits is an issue for the Voluntary Carbon Market as it calls into question the reliability of carbon credits per se and threatens the carbon emission movement as companies and organizations have grown skeptical about whether ALL carbon credits are a genuine method for reducing emissions.
Whilst Verra understandably denied these claims and suggested that the Guardian had ultimately reached an incorrect conclusion the scandal certainly opened people’s eyes to the broader issues with the Voluntary Carbon market and forced Verra to look at how projects are certified to provide more rigour around carbon credits.
The issues with the voluntary carbon market
Rapid market growth
The carbon credit market has experienced unprecedented growth in recent years, driven by businesses seeking to fulfill sustainability commitments. While this surge is encouraging for environmental initiatives, it has led to concerns about: the sheer volume of carbon credits flooding the market raises questions about the quality and effectiveness of the projects being implemented and the potential for dilution of impact.
Verification challenges
The main issue is that there is not one single verification mechanism. This means that many of the offsets rely on self-regulation. There is a suggestion that that companies and organizations fail to offset in alignment with their initial beliefs and intentions, which requires constant monitoring. Which is also made more challenging due to the fact many offset projects take place in locations geographically distant from the purchasing companies. With numerous third-party entities verifying carbon offsets, distinguishing authentic offsets from potential credits that don’t deliver or are even fraudulent.
Exaggerated and fraudulent claims
One of the main types of carbon emissions is an ‘avoided emission’ which refers to the reduction or prevention of greenhouse gas emissions that would have occurred under a baseline or business-as-usual scenario.
For example, a project that protects a forest from being cleared for agriculture is considered to have avoided emissions. If the forest were to be cut down, it would release stored carbon dioxide into the atmosphere, contributing to climate change.
By preventing this deforestation, the project is credited with avoiding or reducing emissions, and it may generate carbon credits that can be sold in the carbon market.
However, the calculation of these credits is entirely hypothetical as they are calculating something that did not happen and the measurements are merely estimations. This can lead to exaggerated or fraudulent claims meaning less carbon is being offsetted than claimed which greatly hinders the carbon reduction movement, which have been one of the main carbon credits criticised.
How can we fix these issues?
Standardisation and transparency
Establish clear and standardized methodologies for baseline determination, additionality assessment, and emissions quantification. Enhance transparency by providing detailed project information and methodologies to stakeholders.
Third-Party Verification
Strengthen third-party verification processes to ensure independence and reliability. Robust and impartial verification can build trust in the market and reduce the risk of double counting or inflated claim.
Permanence safeguards
Implement mechanisms to address the permanence of avoided emissions, including insurance or guarantee funds that provide financial security against potential reversals. This would enhance the market's resilience to unforeseen events.
Education and awareness
Increase awareness and education among market participants, including businesses and consumers, about the complexities and nuances of carbon offsetting. This can foster responsible participation and informed decision-making.
Verra's new frameworks
In order to combat some of the issues within the voluntary carbon market Verra has been quick to introduce new frameworks to strengthen their business. REDD+ stands for Reducing Emissions from Deforestation and Forest Degradation and AUD stands for Avoiding Unplanned Deforestation activities.
The new REDD and AUD methodology will strengthen the Voluntary Carbon Market and is known as VMD0055.
The new features include;
- Having baselines determined by using a specific deforestation dataset for a designated jurisdiction which is endorsed by Verra and meets rigorous standards and requirements.
- Verra will now assign baseline data to projects after evaluating the deforestation risk in their respective project areas. This ensures that the verified emission reductions for all projects in that jurisdiction align with the overall potential emission reductions in the area.
This new approach complements, rather than replaces, government Forest Reference Emission Levels (FRELs). Verra will collaborate with governments, use official data where available, and share all final data with relevant government agencies as it implements this innovative baseline-setting method.
This new approach to the VCM will hopefully improve this field and strengthen the movement towards a carbon neutral planet.
In conclusion, while the voluntary carbon market plays a pivotal role in fostering climate action and sustainability, it is not without its challenges. Ultimately, the journey towards a more sustainable future demands a collective and unwavering commitment to refining and fortifying the mechanisms that underpin the voluntary carbon market.
