A recent investigation into Verra, the world’s leading certifier of carbon offset credits, by the Guardian newspaper, the German weekly Die Zeit and SourceMaterial, a non-profit investigative journalism organisation, alleged that more than 90% of Verra’s rainforest offset credits were likely to be “phantom credits” that do not account for real carbon reductions.

Washington, DC-based Verra approves three-quarters of all voluntary carbon market offsets. Its Verified Carbon Standard (VCS) has signed off on more than one billion carbon credits and its rainforest protection programme, which was launched pre-Paris Agreement, makes up 40% of the credits it approves.

Energy Monitor caught up with Verra’s CEO, David Antonioli, to ask how the organisation responds to the investigation’s allegations, and what can be done to fortify the efficiency and credibility of carbon offsets going forward.

Verra CEO David Antonioli. (Photo courtesy of Verra)

Why do you dispute the conclusions of the recent investigation into “phantom credits” on your platform?

We find the Guardian‘s allegations completely baseless. They were based on one researcher’s studies – two studies, but one researcher’s approach – and the concerns we have about their particular methodology is that they were comparing apples and oranges.

When you develop a forest conservation project, you have to assess it against a scenario, and that scenario has to have similar fundamentals to be able to make a credible assessment about what’s happening in the area you’re trying to protect. That’s what our rules require. To create a baseline you have to find an area that is as similar as possible. These guys created alternative reference areas that in many cases were different forest types, didn’t have the same socioeconomic drivers and were often located in entirely different geographies far away.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

The other thing we believe the Guardian got very wrong is it they took those analyses and added its own analysis on top; it cherry-picked and extrapolated in ways that don’t make sense. The second study it mentioned, by Cambridge University, actually recognises these projects are reducing deforestation, but it does not translate that into emission reductions. The Guardian does that on its own and it makes the biggest rookie error ever: the journalists converted Guizar-Coutiño et al.’s findings on deforestation and degradation into emission reductions and compared these figures with the pre-project predictions of the project developers. You should never do that, you should only compare against actual emission reductions achieved by the project, which is what we credit against.

So apples and oranges all the way, and it led to sensationalist headlines. I think the market is confused about what counts as a real credit. The market’s also confused about what counts as a legitimate claim. The supply side of the market should be addressed through the Integrity Council for Voluntary Carbon Markets [an independent governance body for the voluntary carbon market] and the demand side should be addressed through the Voluntary Carbon Markets Integrity Initiative, which will define what kind of claims you can make when you buy an offset. Our hope is that these two new initiatives will help address much of the confusion.

Which parts of the investigation did you think were fair and accurate, and how did the oversights occur?

All science is useful, provided it’s done in a responsible, thoughtful way. The second study has some useful insights, which need to be fed into how we move forward, but we’re already aware of what it’s saying; for example, the whole idea of creating “dynamic baselines”, which are baselines that change with more accurate and more recent data. One of the rules we’ve required for all programmes is that you have to revise your baseline every six years. It used to be every ten years, but science told us that conditions on the ground change faster, so we’ve cut it to six years.

There’s a lot in these studies, and others, that we’ve incorporated not only into our forest conservation work but also our afforestation/reforestation work and our improved forest management work – like the dynamic baselines.

What are you doing about your REDD+ methodology so that you avoid overstated baselines?

We’re committed to integrity and we’re committed to quality. We set rules and requirements that projects have to follow to get issued VCUs [Verified Carbon Units]. Those rules and requirements change over time, because best practices change. We’ve been very clear all along – not just with REDD+ but with everything we do – that we’re in a state of constant improvement, and that’s what we need to do to move the market forward. We recently launched a public consultation on what’s going to be the fifth version of the VCS.

[Keep up with Energy Monitor: Subscribe to our weekly newsletter]

On REDD+, there are three things we’re doing to address the concern about over-crediting. First, ten years ago, when we started, nobody had ever done an accounting methodology for REDD+. Now there are five. That has created confusion, but it has also created a lot of action on the ground. Now, we’re consolidating those five methodologies into a single methodology for all projects so we can be consistent across the board.

This new consolidated REDD+ methodology will be released in Q3 of this year and will ensure that forest conservation credits issued in Verra’s flagship VCS programme maintain the highest level of integrity. One key feature of this new methodology is that it relies on a jurisdictional deforestation baseline that then gets allocated down to individual projects based on the specific deforestation risk in that area. Use of a single deforestation dataset per jurisdiction will establish an overall cap on the emission reductions individual projects can claim and therefore ensure that all of the emission reductions do not add up to more than what is possible within one jurisdiction.

Second is the shorter baseline reassessment periods down from ten to six years, and last is just a serious embrace of digital MRV [measurement, reporting and verification] to lend even more credibility to the credits and transparency to the process.

There were claims of forced evictions at one offsetting project in Peru. What are you doing to make sure that these kinds of human rights abuses don't occur in the future?

Our rules require of all the projects that the participants have land tenure. That normally creates a whole series of activities related to making sure communities get access to the rights to the land. There are allegations for sure, and I know one is being investigated by Conservation International. We're waiting for that process to be complete and we treat those allegations very seriously, of course.

There is increasing academic research that suggests indigenous peoples and local communities are the most effective stewards of the world’s forests. What mutual benefits do you see for carbon markets and these communities, and how can they best be realised?

That's where I think REDD+ can be so powerful, because it's giving trees a value – for being left standing. Ultimately, there are not many people going around saying, 'hey, I'll pay you to keep your trees standing'. There are a lot of people saying, 'I'll pay you to cut them down for cattle ranching, timber, mining or whatever'. Or they don't even pay them [local communities] and just kick them off the land. One of the great things that REDD+ has promised to do is strengthen the communities that are great stewards of the land and give them the resources they need to protect the forest effectively.

But it's going to be messy and it's going to be hard, and the price has to be right because in many cases, people are weighing up the two options. It's certainly better than nothing, which used to be the case, but equally you've got to make sure there is a credible deforestation threat.

Do you think we need to establish biodiversity” or social impact” credits to better value the co-benefits of nature-based solutions?

We're currently developing a new nature crediting framework to drive finance to high-quality nature conservation and restoration activities that can help meet the goals and targets of the Global Biodiversity Framework adopted at the 15th Conference of the Parties [COP15] in Montreal, Canada. This nature crediting framework, which is being developed as part of Verra’s Sustainable Development Verified Impact Standard [SD VISta] programme, will enable projects to issue stand-alone, transactable and standardised nature credits by certifying projects’ high-quality conservation and restoration outcomes. These credits will be available for purchase to invest in conservation and restoration activities and will drive needed finance to projects implementing biodiversity conservation and restoration activities.

That's very powerful, but it’s also very important that you don't conflate the two from an accounting standpoint. I think there's a strong argument to create a new market that looks at biodiversity benefits on their own. So there would be two markets: the carbon market, which can help drive biodiversity in places where you have forests at risk, and other markets for biodiversity units or benefits that may not necessarily rely on forests being under threat but can provide important biodiversity support.

We are still working with others to identify a unit that can be understood by the market in order to be traded, but that also reflects the fact that nature is not fungible. Because projects in this space are so diverse, developing such a standardised unit is a challenging task. For example, some projects may focus on habitat connectivity and watershed health, whereas others focus on a particular animal species.

Do you think that carbon avoidance, reduction and removal projects need to be better delineated?

Ultimately, it's down to buyers to decide what they want, and we need to have in mind what net zero looks like in 2050 compared with where we are today. Today, we have forests under threat and we have emissions that could be avoided [or reduced] using forest carbon credits like REDD+, but in 2050, we'll need to have carbon removals at scale, because we will only be able to reduce emissions by 90–95%. We need to start investing in technologies like biochar and direct air capture – all those things are very costly, and sometimes take a long time to deliver, but we need to start financing them now.

Ultimately, buyers have to decide how they want their mix of offsets to look. Some projects do offer both, particularly when you're looking at REDD+.