SBTi policy and lessons from the 2023 redd+ controversy

^{Image: NASA Earth Observatory, 2009. Deforestation in Malaysian Borneo.}

How it started

In August 2022, Jon Oliver released a journalistic video lampooning the integrity of carbon credits. This scathing critique highlighted absurd examples of inefficient forest protection projects registered on the American Carbon Registry, such as The Nature Conservancy generating carbon credits from an already preserved reserve it partially owned. This satirical piece served as the precursor to a more severe and systemic critique.

On the 18th of January 2023, The Guardian sent shockwaves through the voluntary carbon market by publishing a nine-month investigation in the form of two articles: “More than 90% of rainforest carbon offsets by biggest certifier are worthless” and “‘Nowhere else to go’: forest communities of Alto Mayo, Peru, at the center of the offsetting row.” The first article presented a quantitative analysis focusing on the actual climate impacts of REDD projects, based on two published independent scientific studies (West et al. 2020, Guizar Coutiño et al. 2022) and one in the preprint (West et al. 2023). 

The journalists argued that most REDD projects failed to contribute to deforestation reductions despite millions of credits being sold to companies claiming carbon neutrality. The second article reported land usage conflicts between local people living in the Peruvian Amazon protected area and park authorities tasked with preventing illegal logging. With staggering figures (“94% of credits had no benefit to the climate”), coupled with name-and-shame tactics (“offsets used by Disney, Shell, Gucci are largely worthless and could make global heating worse”), and sensationalist content (“the silence of the forest broken by the sound of his children crying over chainsaws”), this investigation rocked the market and cast aspersions on REDD projects.

A technical debate setting up

On the same day, Verra responded by challenging the scientific methodology used in the studies to quantify deforestation rates, and Conservation International issued a statement to ensure that the structures shown being dismantled in the videos were vacant and the community was informed well ahead. Everland and South Pole, the two biggest REDD+ project developers, issued statements raising objective concerns on the selected datasets and control areas used in the scientific studies. Sylvera, a booming startup using data to provide carbon project ratings, stepped in, disagreeing with The Guardian’s investigation conclusions. The London-based climate tech found with its own tools that 31% of REDD projects were high quality (vs. 6% by The Guardian).

Interestingly, The Guardian failed to mention that two of the studies it relied on for its investigation assessed the same projects with different methodologies and came to completely different results and conclusions.

A high-profile project scandal adding weight to critics

In March, Bloomberg published an article presenting evidence of massive overcrediting in the case of a well-known REDD+ project in Zimbabwe called Kariba. This scandal tarnished South Pole’s reputation, as they sold the credits to dozens of companies, and plunged Verra, which certified and registered those credits, further into controversy. As two of the biggest market leaders were stained by this evidently fraudulent project, confidence in the entire market shattered.

In May, the European Parliament introduced new rules, making it harder for companies to call themselves 'climate neutral' and banning environmental claims solely based on carbon offsetting schemes.

By the end of May, Verra's CEO resigned after 15 years at the helm of the organization.

In August, Verra published updates to its Verified Carbon Standard Program, upon which all its methodologies rely, including social and environmental enhancements on deficiencies highlighted by The Guardian's article.

At the end of August, one of the scientific papers quoted in January by The Guardian (West et al. 2023) passed peer review and was published in Science, establishing its scientific legitimacy. To counter, Verra expanded their first technical review, still criticizing the scientific methodology but this time with a dash of irritation, calling the paper a "Dogmatic reliance on a particular methodological approach."

During the same period, Everland (whose business model solely relies on the sale of REDD+ credits) published an analysis with their calculations, concluding that Verra's baselines were accurate and REDD+ projects efficient. This biased analysis was shortly contradicted by Calyx Global, a prominent carbon credit rating agency, which also released their own assessment of 70 projects covering 94% of credits verified, concluding that almost two-thirds of REDD+ projects have a high risk of an overestimated baseline.

As the controversy endured, directly involved stakeholders started showing signs of frustration.

Le coup de grace?

On the 15th of September, a team of 14 researchers from the UC Berkeley Carbon Trading Project published a new 200-page report (Haya et al. 2023) assessing all four crediting methodologies that have generated almost all REDD+ carbon credits to date. Their research, based on literature reviews, on-the-ground reporting, and quantitative analysis, addresses a systemic critique of Verra’s rainforest carbon credit system and finds staggering shortcomings. The report comes to the general conclusion that the flexibility in crediting rules, the negligence and compromise of third-party auditors, and the lack of transparency allowed project developers to generate inflated REDD+ credits from high baselines, unrealistically low estimates of leakage and durability risk, and high estimates of carbon stocks in forests.

This time, Verra responded with a less defensive message than in January. The NGO acknowledged most findings and recommendations, stating that it has addressed them in both its Standard’s updates in August and in their new upcoming REDD methodology.

Scientific independent experts seemed to have won the technical debate, proving that previous REDD methodologies haven’t fulfilled their climate mitigation promises.

From rational debates to brawls

On the 19th of September, Corporate Accountability and The Guardian published a new analysis targeting all top 50 emission offset projects, including not only Verra’s REDD+ projects but also offsetting projects related to renewable energy sources, waste disposal, and carbon capture registered in all the biggest registries (American Carbon and Gold Standard).

This fierce and approximate investigation classified all projects as either “junk” or “potentially junk” based on qualitative indicators without exposing their backend reasoning and analysis.

All three registries released statements pointing out the methodological deficiencies of the article, using the same polemical semantics and accusing it of "cherry-picked secondary evidence" or "ill-informing" its readers.

The same controversial tone was used by Sylvera which, contrary to Verra, vividly tried to discredit Haya et al. 2023 report without giving any rational arguments. Instead of giving an objective rebuttal to this new research, it dismissed it as "pushing forward ideological opinions and calling them ‘science’".

The scientific debate became a tense brawl with a strong cleavage.

A never-ending story?

In November, multiple sources confirmed waves of layoffs in the South Pole, amounting to one-fifth of the company’s total staff.

At the end of November, Verra released its new REDD methodology, changing the way baselines will be calculated and updated, moving towards jurisdictional projects in the future. Verra selected five companies to provide mapping data for establishing new baselines.

In early December, the biggest carbon crediting standards announced their future collaboration at COP 28. Standing together, they wish to reassure voluntary carbon market buyers after this rocky year and join forces to be part of future Article 6 implementations

At the end of the year, a new paper presented as a rebuttal to West et al. (2023) has been submitted to Science for peer review. This study, led by academics involved in REDD+ (Space Intelligence and CTrees, two of the five companies recently missioned for new baseline estimations), Conservation International, and Verra, found serious issues with the comparison sites, the satellite data set, and calculation errors on carbon benefits, reviving this year's technical debate.

Lessons

In the realm of sustainable initiatives, meeting established standards is essential, yet even certified projects can face criticism. This reality is particularly pronounced in the case of carbon credits. Unlike traditional commodities, whose value is largely determined by market forces, the value of carbon credits relies heavily on trust and reputation. Therefore, maintaining credibility is paramount for their effectiveness.

Moreover, rather than resisting, embracing post-project evaluations through independent scientific assessments is key. This approach fosters transparency and bolsters confidence in the carbon credit system. However, when transparency is compromised, investigative journalism becomes crucial. By uncovering discrepancies and holding stakeholders accountable, journalists play a vital role in safeguarding the integrity of carbon markets.