Carbon markets in motion: Criticism of offset projects

Carbon markets in motion: Criticism of offset projects

News item
08 Feb 2024

Carbon markets have evolved significantly due to changes in international climate policy, economic conditions and the growing recognition of the need to tackle climate change. FairClimateFund will pay more attention to this in a series of four new articles.

In this third part we discuss the quality of climate mitigation projects. In the previous article we already noted that there is growing attention to the quality of climate mitigation projects, especially if buyers of carbon credits claim to operate climate neutrally on the basis of those credits. However, several scientists have concluded that a large proportion of projects reduce CO2 emissions less than promised, despite verification or certification by one of the recognized standards, such as Verra or Gold Standard. In 2023, several investigative journalists also delved into the practice of compensation projects, including Follow the Money, the Guardian and Die Zeit. But before we go into this further, we first provide an overview of the types of projects and standards in the voluntary carbon market. You can read a summary of the blog here:

  • Types of projects and standardsstrong,
    The voluntary carbon market trades certificates for emission reductions from various projects, including forest protection and cleaner cooking methods. In 2022, more than 60% of investments in the voluntary carbon market were spent on forest projects. The ‘clean cooking’ sector that FairClimateFund mainly focuses on only accounts for a small part of the total market. In addition to different types of projects, there are also different standards that establish rules and guidelines for the certification of CO2 reduction in these projects. The largest standard in terms of turnover is Verra, with Gold Standard in second place.
  • Aspects of project qualitystrong,
    Climate mitigation projects aim to combat climate change. In addition, the projects must contribute to sustainable development. The criticism that flared up in 2023 is mainly about the quantification of emission reductions. Measuring emission reductions is especially difficult in forest protection projects. Although the risk of over-crediting appears to be greatest in forest protection projects, it is a broader phenomenon in the carbon market. There is also a lot of criticism of methodologies that quantify CO₂ emissions from cookstove projects. Other issues that arise with climate mitigation projects are additionality (for all project types) and permanence. The quality of a project in terms of sustainable development is a completely different dimension, and clearly not proportional to the quality of a project in terms of emission reductions.
  • New initiatives to improve project quality
    Following the transition from the Kyoto Protocol to the Agreement
    In Paris, the rules for regulated carbon markets will be redefined. This also includes drawing up new rules for the quality of projects. The voluntary market has its own rules, but the new rules for emission reductions that can be traded under Article 6.4 serve as a useful reference. Various initiatives have been taken since 2020 to evaluate the quality of existing projects and to ensure that of new projects:

2021: Carbon Credit Quality Initiative (CCQI)
2020-2021: Rating bureaus – BeZero Carbon, Calyx Global and Sylvera
2020: Task Force on Scaling Voluntary Carbon Markets
2021: Integrity Council for Voluntary Carbon Markets (IC-VCM)

Various initiatives have been set up to achieve improvements. FairClimateFund welcomes these initiatives and anticipates them by using the Fairtrade Climate Standard and/or applying Fairtrade Principles in all projects supported by FairClimateFund.

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