Offsets have a bad reputation. But they’re not as worthless as you might think

A controversial report in The Guardian this week claimed that over 90% of rainforest carbon offsets are, in its own words, ‘worthless’. That’s quite a claim.

We welcome any discussion about the carbon offsetting market — even if the conclusions aren’t entirely based in scientific reality. Understanding the good, the bad and the ugly about our sector is crucial if offsetting is to play what the vast majority of experts agree is a crucial part in solving the climate crisis.

From baselining to leakage, there are legitimate questions that should be asked, and need to be answered. Our friends at Sylvera and Verra, among others, have already done a fine job with that, but with a steady stream of greenwashing revelations also hitting the headlines, it’ll take a much more effort to shift increasingly sceptical perceptions of the voluntary carbon market (VCM).

Few (if any) in the VCM claim the system is perfect. We certainly don’t. Projects that overstate their benefits should be called out. But we do think that effectively tarring all offsets with the same brush is counter-productive. It means that those participants who genuinely are trying to make a difference — from project developers to small business owners willing to do their part — are either misunderstood, or misunderstand. Those nagging doubts might become fully fledged, and ultimately result in companies abandoning their offsetting programmes as the reputational risk starts to outweigh the benefits.

So we must ask ourselves if we’re doing enough to change the story, and help the media change the record. Part of that is to explain how we record and measure offsets in the first place. For the record, then, here goes…

What the Guardian report says... and doesn't say

1. 94% of rainforest projects are worthless

We know some projects have over-promised and under-delivered, but we dispute this figure. We think the methodology is flawed. It doesn’t compare like with like. As a result, according to Sylvera, that remaining 6% should be at least five times greater. BeZero’s own analysis suggests the figure could be as high as 44%. That’s a number we can work with.

In any case, we have a stringent Quality Assurance Manifesto that we follow before we agree to list any project. We analyse, scrutinise and research, then compile a report for internal review that accounts for things that fall outside the remit of certifications — including, for example, the true effects of the project on communities and biodiversity. After that, we come to a consensus, and decide whether the project is eligible for inclusion in our portfolio.

Certification isn’t an absolute guarantee for quality. Scrutiny isn’t just needed — it’s absolutely imperative. But equally, we need a fair hearing.

The Fenix Carbon review process

2. REDD+ can be effective. And new methodologies will help prove it

The Guardian report focuses on issues with REDD+, which covers emissions from deforestation and forest degradation. To strengthen the accuracy of its baselines, Verra (which certifies the most REDD+ credits) says it is “working to transition all REDD+ projects to one methodology”.

Developer Everland, which focuses exclusively on REDD+ projects, has also pointed out that a growing body of peer-reviewed research proves “the effectiveness of REDD+ in reducing deforestation and emissions.” It adds that further research, from a “large international group of collaborators,” will be published later this year. This will provide a more comprehensive, methodologically rigorous evaluation of REDD+ baselines. Sounds good!

Florestal Sta Maria (Verra 875), via Sylvera - the purple line shows the boundaries of the REDD+ project

3. The issue with forecasting reductions ‘exists with nearly every kind of credit’.

This is a blanket statement, and unfortunately implies that every offset — not just the rainforest variety — is equally opaque. But as we often say, not all credits are created equal. Setting a baseline for forestry is clearly far more challenging than with, say, renewable energy projects. That’s why we carefully investigate the calculations for baseline, additionality, leakage and buffer pools when considering overall quality. Yes, issues do exist, but with the right due diligence, they can be meaningfully mitigated.

Also, given REDD+ accounts for around just 40% of the carbon offset market by credits purchased, we need to be mindful of statements that homogenise perceptions of the VCM.

Source: Sylvera State of Carbon Credits 2022

4. Reselling of carbon credits is the problem that isn’t being talked about

With any market comes opportunity, and with any opportunity comes opportunism. Relatively little attention is paid to the detrimental impact of intermediaries in the sector, many of whom do not care what they are selling. Carbon credits are typically resold multiple times, at inflated prices. Ultimately this means that less of the buyer’s capital finds its way to the project, which means that less carbon is taken out of the atmosphere.

Update: A report from Carbon Market Watch in early February revealed that as many as 90% of brokers in the VCM do not disclose their fees or profits.

5. The carbon market is like the Wild West

Julia Jones, a co-author of the report, says: “As someone who sits outside of the kind of cut and thrust of the Wild West that is the carbon markets, I need to believe it can be made to work, because money is needed to fund the emissions reductions from forest conservation.”

If the wild west is defined by the presence of cowboys, we agree. But there are plenty of 'sheriffs' and "deputies', like BeZero, Sylvera (and even us 🙋) who are trying to change this perception. And we hope that, just like the Wild West, order will soon be restored.