Environment The empty promise of carbon credits

Investigation into Verra carbon standard finds most are ‘phantom credits’ and may even worsen global heating

Carbon offsets approved by the world’s leading provider and used by Disney, Shell, Gucci and other big corporations are largely worthless and could make global heating worse.

Research into Verra, the leading carbon standard for the rapidly growing $2bn voluntary offsets market, has found that, based on analysis of a significant percentage of the projects, more than 90% of its rainforest offset credits – among the most commonly used by companies – are likely to be “phantom credits” and do not represent genuine carbon reductions.

The analysis raises questions over the credits bought by international companies – some of which have labelled their products “carbon neutral” or have told consumers they can fly, buy clothes or eat certain foods without making the climate crisis worse. But doubts have been raised repeatedly over whether the credits are really effective.

The nine-month investigation by the Guardian, the German weekly Die Zeit and SourceMaterial, a nonprofit investigative journalism organisation, used dozens of interviews and on-the-ground reporting with scientists, industry insiders and Indigenous communities.

Verra, based in Washington DC, operates environmental standards for climate action and sustainable development, including its voluntary carbon standard that has issued more than 1bn carbon credits. It approves 75% of all voluntary offsets. Its rainforest protection programme makes up 40% of the credits it approves and was launched before the Paris agreement with the aim of generating revenue to protect ecosystems.

The findings of the investigation have been strongly disputed by Verra, which argues that the conclusions reached by the studies are incorrect and questions their methodology. It points out that its work since 2009 has allowed billions of dollars to be channelled to the vital work of preserving forests.

To assess the credits, a team of journalists analysed the findings of three scientific studies that had used satellite images to check the results of a number of forest offsetting projects, which are known as REDD+ schemes. Although a number of studies have looked at offsets, these are the only three known to have attempted to apply rigorous scientific methods to measuring avoided deforestation.

The organisations that set up and run these projects produce their own forecasts of how much deforestation they will stop, using Verra’s rules. The predictions are assessed by a Verraapproved third party. If accepted, they are then used to generate the credits that companies can buy to offset their carbon emissions.

For example, if an organisation estimates its project will stop 100 hectares of deforestation, it can use a Verra-approved formula to convert that into 40,000 CO2e (carbon dioxide equivalent) of saved carbon emissions in a dense tropical forest, though the formula varies according to habitat and other factors. Those saved emissions can then be bought by a company and applied to its own carbon-reduction targets.

Two groups of scientists – one international, the other from Cambridge University – looked at about two-thirds of 87 active Verra-approved projects. Some were left out when there was not enough information to assess them. The two studies from the international group found only eight of 29 Verraapproved projects with evidence of meaningful deforestation reductions.

The journalists compared the estimates made by the offsetting projects with the scientists’ results. The analysis indicated about 94% of the credits should not have been approved. Credits from 21 projects had no climate benefit, seven had between 98% and 52% less than claimed using Verra’s system and one had 80% more impact.

Separately, the Cambridge study of 40 Verra projects found that only four projects were responsible for threequarters of the total forest protected.

The journalists again analysed these results more closely and found that, in 32 projects, baseline scenarios of forest loss appeared to be overstated by about 400%. Three projects in Madagascar achieved excellent results. If those projects are not included, the average inflation is about 950%.

The studies used different methods and time periods, looked at different ranges of projects and the researchers said no modelling approach was perfect, acknowledging limitations in each study. However, the data showed broad agreement on the lack of effectiveness of the projects compared with the Verra-approved predictions.

Verra strongly disputed the conclusions about its rainforest projects and said the methods scientists had used could not capture the true impact on the ground, which explained the difference between the credits it approved and the scientists’ estimates. Verra said its projects faced unique local threats that a standardised approach could not measure, and it worked with leading experts to continuously update its methodologies and