In an op-ed last week, our chairwoman Anne Finucane and former EPA administrator Gina McCarthy called on businesses and nonprofits to set aside ideological debates and instead focus on establishing rules that can support a high-functioning voluntary carbon market. To get buyers off the sidelines, however, it will be critical to restore trust in carbon credits, so that it’s easy to identify “quality” credits where one credit equals one tonne of carbon impact. The best path to this goal is to adopt monitoring, reporting, and verification (MRV) approaches that lean on outcome-based, as well as process-based, monitoring.
The good news is that we aren’t starting from scratch. Those of us who have been steeped in the market from the start are well aware of the risks posed by credits with questionable impact. Many have been working steadily to address those risks since the early days of the voluntary market. The first carbon project was developed in the 1980’s, well before scientists had easy access to free Landsat data, and more than a decade before Google Earth first gave us satellite images viewable from home. Without these technologies, practitioners did what they could at the time: they authored methodologies that focused on ensuring the process was sound, even if the precise outcome (forest carbon storage over vast acres of forest, for example) wasn’t easily quantifiable with the technology of the day.
We now have the tools to quantify and assess those outcomes, which can dramatically improve the quality of available credits. In recent years the market has begun to adopt these new technologies. A whole suite of credit ratings agencies has cropped up, using modern earth observations to help companies identify quality projects with observable impact. The registries are keeping up, albeit slowly – for example, Verra just released an update to its REDD+ methodologies that is intended to shore up quality by adopting newer, standardized datasets for predicting deforestation baselines. And, while we don’t yet know what the Integrity Council on Voluntary Carbon Markets (ICVCM) will say about MRV when they release part 2 of the Core Carbon Principles later this year, many hope they will require outcome-based, performance benchmarks.
So where does all of this progress leave buyers? Ironically some of the best bets may be avoided deforestation projects. Despite the reputational damage REDD+ has endured, a significant portion of these projects are high quality, and intense scrutiny by ratings agencies and media outlets means there’s a lot to work with when identifying those that are meeting their promises. Nature-based removals, such as reforestation and blue carbon projects, still occupy a relatively small slice of the market and thus have received less scrutiny.
With so many new removal projects under development, there is a need for more data-driven MRV approaches that assess the likelihood of sustained success for the full duration of a project. On the technological side, organizations such as the Carbon Removal Alliance are investing to ensure that high quality MRV is baked into these nascent technologies from the beginning, though these credits also remain scarce. To reach net zero, we will need all of these approaches, so this pace of industry-wide progress on outcome-oriented MRV must be sustained.
For the VCM to reach its full potential, we need to acknowledge the risks in the current suite of carbon credits and continue to improve quality intentionally. Accomplishing this requires a shift in focus to assessing the outcomes of carbon projects, as well as the processes through which they were produced.
The bottom line is this: in order for the private sector to participate meaningfully in the VCM, credit quality must continue to improve – but, as Anne & Gina point out, companies also need rules that make sense to their bottom line.
