Friday 29 Mar 2024
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This article first appeared in The Edge Malaysia Weekly on February 20, 2023 - February 26, 2023

One of the most talked about news articles in January was an investigation by The Guardian, Die Zeit and non-profit SourceMaterial into the veracity of Verra’s rainforest carbon offset credits. Essentially, the journalists accused Verra of overstating the emissions reductions generated from its “avoided deforestation” carbon credits.

Carbon credits are generated from projects that avoid, reduce or eliminate carbon emissions. Businesses and other entities purchase the credits to offset their own emissions. To purchase valid credits, they often seek those certified by well-known bodies like Verra. An “avoided deforestation” credit would be generated by keeping a forest that is not already protected from being cleared.

Verra is one of the biggest certifiers of carbon credit projects globally. Huge corporations like Shell, Gucci, Disney and Netflix have bought their credits to offset emissions. In Malaysia, Bursa Malaysia has mentioned plans to use Verra-certified credits in the voluntary carbon market.

The journalists analysed Verra’s projects and concluded that at least 90% of them demonstrate “no benefit to climate” and could contribute to global warming rather than reduce it.

They cited peer-reviewed studies by scientists who used satellite imagery to verify the impact of these rainforest projects and travelled to see some of Verra’s largest projects in Peru. The journalists said at Verra’s flagship project in Peru, they were shown videos by residents of their homes being destroyed by authorities who wanted to evict the residents for the sake of a carbon offset project.

Verra strongly disputes the findings. It argues that the studies ignore project-specific factors that cause deforestation. The criticisms of its methodology have already been addressed by a review, it says.

The core of the disagreement comes from calculating the baseline emissions from the project and, subsequently, the impact. If the project did not occur, what is the risk of deforestation for that particular plot of land? From that assumption, the number of emissions avoided by implementing the projects can be calculated. This methodology is being challenged by journalists and scientists, who argue that the threat of deforestation in a business-as-usual scenario has been overstated.

The calculation of emissions avoided through carbon offset projects can get technical. It is difficult to figure out whether it is greenwashing unless someone truly understands how the credits are calculated and visits the site itself to see the progress.

In response to the article, some parties have called for a change to the incentive structure of verifying, auditing and purchasing carbon credits, as well as a common methodology for calculating the impact of carbon offset projects.

ESG reached out to Bursa Malaysia for a response. The regulator said it is cognisant that international carbon standard providers like Verra are continuously improving their methodologies.

“For example, the exchange is aware that Verra has already shortened the reassessment of project baselines from 10 to six years. Verra is also consolidating the multiple methodologies for avoided deforestation projects and adopting a jurisdictional approach, which will help to improve the robustness of the methodology,” said Bursa Malaysia in an email response.

It stressed that, given the climate urgency, the precautionary approach must be taken and cost-effective measures to prevent environmental degradation should not be postponed.

“The exchange will be organising forums with international carbon experts to share their independent views and perspectives on this matter to raise awareness to all stakeholders, both purchases and developers, to ensure high-quality carbon credits are traded on our platform,” it added.

Regardless, as demand for carbon offsets increases, accusations of greenwashing are expected to rise and more debate over valid carbon credit projects will emerge.

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