Anton Cartwright – Fellow from Class Akani and Director at Econologic & Credible Carbon comments on The Gaurdian article that suggested Verra’s avoided deforestation carbon (known as REDD+ in the carbon industry) to be “worthless”.
The Guardian, who worked with Die Zeit’s and the privately-funded SourceMaterial, claims come amidst rising carbon market activity from the private sector. As awareness around climate change grows and companies scramble to meet their “carbon neutral” and “net zero” pledges, companies are realising that it is easier to fund projects around the world that cut emissions than to change their entire business model. In theory, it makes no difference whether a factory in the United States cuts emissions at its own plant or through a forestry project in South Africa for example, given that we share the same atmosphere. In fact the same investment might cut more emissions through the forest than in the factory, and deliver livelihood benefits to people in South Africa. But that only holds true if we can be sure about the emissions cuts. Since 2012, the United Nations has been largely missing as the regulator of this ‘market for the absence of greenhouse gases’. In their absence Verra, a US based NGO, has established a reputation for providing world leading standards for climate action and sustainable development. Verra’s website proclaims that everything they do “is in service of increasingly ambitious climate and sustainable development goals – and an accelerated transition to a sustainable future.” Verra’s work is important. Knowing when a carbon credit genuinely reduces greenhouse gases in the atmosphere matters, given the stakes around climate change and the amount of money changing hands. This is also why The Guardian exposé matters.
Rather than argue about the details of carbon accounting and methodologies, some of which is innately contestable, Cartwright reflects on three market rules that would make carbon offsetting safer, more impactful and would insulate well-meaning NGO’s in the carbon market, like Verra, from further damaging exposés.
I have lost track of how many people have forwarded me The Guardian’s “reveal” about most (90%?) of Verra’s avoided deforestation credits being an “illusion”. I like trees, but have always been nervous of the claims being made about forest carbon. I do however have some sympathy for the people at Verra, some of whom I have met. Given the ‘regulatory soup’ that is the global carbon market at the moment, an exposé like this has felt inevitable for some time: too many standards, claims and counter claims, combined with some bullish new market players has made it increasingly tricky to know what constitutes a carbon credit. It feels to me as if any defence or refutation of what is being transacted as carbon credits has become innately contestable, and that is not a healthy situation for any market trying to tackle a global crisis.
We note that Verra has challenged the Guardian’s findings and expect that this will rumble on. As a smaller regional standard and registry, Credible Carbon tries to remain innovative and to get as much money as possible back to projects that support a just climate transition by cutting emissions and reducing poverty. We have the great advantage of being able to visit each of our projects regularly and keeping an eye on their progress. In contrast Verra, motivated by the appeal of a new, globally fungible asset class, set out to write one rule book for all projects everywhere. That was always going to be difficult given that what constitutes a “good” or “appropriate” climate response varies greatly across countries, as does the ability to supply the data needed to generate carbon credits. Regrettably, Verra’s size and influence means the general impact of the recent news will undermine trust and confidence. The uncertainty, and associated transaction costs, will be great for consultants and lawyers but terrible for projects and market development.
As the “rules of the [carbon market] game” get visited and revisited in the wake of this recent news, it is worth noting three simple guidelines that would remove much carbon risk and help the global carbon market make a proportionate contribution; three easy to enforce guidelines that would demarcate a much safer space for carbon markets.
- Nobody should be forward trading credits. So much carbon risk could be avoided if projects only got paid for historically avoided emissions that can be more-easily verified. Radical uncertainty is a feature of our time and while this need not signify the end of market transactions, it requires extreme caution when letting companies use offsets to meet their targets now based on something that will happen in years to come.
- Companies should not be allowed to offset more than 10% of their emissions between now and 2050. On this score South Africa’s carbon tax and offset guidelines, in place since 2019, set a valuable global precedent; 10% is adequate to mobilise significant investment for a green, low-carbon and socially inclusive projects….about the amount of investment that these projects can safely absorb at the moment. More importantly, as the CDM revealed prior to 2012, carbon markets need to be one option in a suite of instruments used to achieve global net-zero by 2050, not the only show in town. When applying this restriction, carbon markets will find a healthy overlap with the recommendations of the Science Based Targets Initiative.
- The United Nations must re-enter the carbon market as the uber-regulator. Since 2012, and the effective ending of the Kyoto Protocol and the Clean Development Mechanism, the global carbon market has been operating in a regulatory vacuum. The vacuum has been irresistible for NGOs to fill. But each NGO has brought their own rule book, entry fee and process. The result has been competing and confusing standards, disproportionate global influence for un-elected (even if well-meaning) NGOs and higher barriers to market entry for projects. Article 6 of the Partis Agreement, which entered into force at the end of 2021, allows respective governments to describe how they will apply these rules to engage the global carbon market and address domestic priorities. The United Nations should provide the high level rules, within which countries and regions shape their domestic carbon markets to meet local priorities. Countries and regions should do this mindful of what constitutes an internationally credible offset offering, but without the influence of existing NGO standards.
Visit Credible Carbon’s website: https://www.crediblecarbon.com/news-and-info/news/three-things-that-would-insulate-the-carbon-market-from-further-damaging-exposes/
