Insight Focus
- Two investigations allege some carbon offset projects may over-estimate emission reductions.
- Credits generated by projects to reduce emissions from deforestation were included.
- Carbo standards organisations have rejected the investigations’ claims.
Two new investigations have alleged that a certain type of carbon offset project may be vastly over-estimating its emissions reductions, according to an article published by the Guardian paper last week, triggering a widespread debate over whether some nature-based carbon credits really represent the carbon reductions they claim to.
Research by the Guardian, German newspaper Die Zeitgeist and investigative reporting agency Source Material asserted that “analysis of nearly 100 million carbon credits found that only a fraction of them resulted in real emissions reductions.”
The probe focused on credits generated by projects that aim to reduce emissions from deforestation and forest degradation – known as REDD+ – that in 2022 issued the most carbon credits of any project type. Deforestation and forest degradation lead to a decline in tree cover and a reduction in the forest’s ability to absorb carbon dioxide from the atmosphere.
REDD+ generates carbon offsets by undertaking projects to preserve forest cover. Project owners measure the annual rate of deforestation and compare that rate with a historical baseline. If the verified rate of deforestation declines compared to the baseline, the project is adjudged to have reduced emissions and credits are issued.
The investigators reviewed documents and data relating to 29 projects that have issued 95 million carbon offsets, and concluded that of the 29, just eight reduced emissions. This, the investigators said, meant that around 94% of the credits issued did not represent carbon reductions.
The report has triggered a storm of controversy in the carbon offset market, with project developers and standards organisations, including Verra, the company that oversees the methodologies that govern most REDD+ projects, rejecting the Guardian’s criticisms.
One respondent, project developer Everland, said the report contained “methodological weaknesses, significant uncertainties, lack of peer-reviewed science for one critical reference, and misrepresentation of another”, and concluded that “REDD+ is one of the most effective proven mechanisms, developed over decades by pioneers in the sector to provide economic value for conservation.”
Some REDD+ project owners have announced they will suspend requests for issuance of carbon credits, while Verra has said it will review its REDD+ crediting methodology this year.
Meanwhile, prices for REDD+ credits slumped in the wake of the report, with prices reported between $2.25 and $5.00 in the week ending Jan. 23. At the end of 2022 prices had ranged between $3.05 and $6.80.
At the same time, market participants have noted an increase in popularity of carbon offsets derived from renewable energy projects as corporate buyers look for credits untainted by the controversy.
The Guardian’s investigation has also renewed a discussion of the relative merits of carbon reductions and carbon removals. The latter involves absorbing CO2 from the atmosphere and sequestering it, either in newly-planted forests or land cover, or by technologies such as direct air capture or carbon capture and underground storage.
Proponents of carbon removal assert that it is easier to count and verify total removals than it is to establish how much CO2 has been reduced compared to a historical baseline.
The debate triggered by the Guardian article centres around the concept of baselines, which are used to measure the success of almost all offset projects.
For example, carbon reductions achieved by renewable energy projects are calculated by establishing what emissions would have been from a fossil fuel-fired power plant.
However, removals technologies rely simply on calculating how much CO2 has been sequestered or absorbed by a specific project, and do not rely on a counterfactual to establish a total reduction.
The renewed debate is likely to have some impact on the anticipated publication of the Integrity Council for the Voluntary Carbon Market’s Core Carbon Principles, which will set threshold standards for carbon credits, and also in the UN’s development of its rules for the new Article 6 carbon market which is currently underway.
