The carbon credit market must be reformed or it will ‘go bankrupt’, leading scientists conclude in an international review of the offset industry.
The market for carbon offsets shrank dramatically last year after a series of scientific and media reports showed that many offset programs had little impact on the environment.
However, if offsets are comprehensively reformed, it could still unlock billions of dollars for climate and biodiversity action, experts conclude.
The Climate crisis advisory group (CCAG), led by former British chief scientific adviser Sir David King and made up of some of the world’s leading scientists, has produced a new assessment of the voluntary carbon market and how it can rebuild trust.
The unregulated sector must apply strict scientific standards to produce carbon credits, ensure the financial benefits are clear to local communities involved in projects, and prioritize carbon removal projects that suck greenhouse gases from the atmosphere, the CCAG said.
King said it was clear there were major problems with the current system for producing many carbon credits and that unless the voluntary carbon market changed, it would go bankrupt and be replaced by a system with higher standards.
“The voluntary carbon market is very reluctant to fully accept this. Our report is completely independent of them. It will be a challenge, but our simple message is: unless you do this, you are out of business,” he said. “Confidence has been lost and must be regained.”
In recent weeks, governments and voluntary initiatives have tried to restore confidence in carbon markets after their volume more than halved in a year, from US$2 billion ($1.6 billion) to $723 million in 2023.
Leading climate and biodiversity researchers, including Professor Mark Maslin of University College London and Chilean biologist Mercedes Bustamante, produced the report. It was funded by Verra, the nonprofit that sets the world’s leading carbon standard, although it had no oversight of the findings.
Maslin said: ‘Don’t be under any illusions: what we are saying is that it is not good at the moment, but we have to solve it.
“It cannot be left to the industry. Rules and regulations must apply; it has to be much stricter.â€
Until 90% of the CO2 credits have now been sold are based on ‘avoiding’ emissions (such as financing renewable energy so that less fossil fuels are used) rather than actually removing carbon dioxide from the atmosphere. The report recommended a shift to high-quality moves.
“Avoidance is a nightmare,” Maslin said. “We all agree that getting a carbon credit for a renewable energy project doesn’t make sense in most countries because it’s already cheaper.”
Verra’s president and interim chief executive, Judith Simon, said in a statement that the organization “is proud to support independent research that asks tough questions” and that “the key recommendations endorsed in this report are highly aligned with many steps we are taking.
“We fully agree,” she added, “that carbon credits should be transparent, science-based, and both well measured and monitored, with a commitment to the principles of each project.”
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