Revealed: According to the findings of the analysis, more than 90% of rainforest carbon offsets by biggest provider are worthless.

The majority of the “phantom credits” in the Verra carbon standard may exacerbate global warming, according to research.

According to a new investigation, the forest carbon offsets approved by the world’s leading provider and utilised by Disney, Shell, Gucci, and other large corporations are largely worthless and may worsen global warming.

More than 90% of Verra’s rainforest offset credits, one of the most widely used by businesses, are likely to be “phantom credits” and do not represent genuine carbon reductions, according to analysis of a significant portion of the projects. Verra is the world’s leading carbon standard for the $2 billion (£1.6 billion) voluntary offsets market.

The analysis raises questions about the credits that a number of well-known companies bought. Some of these companies have said that their products are “carbon neutral” or that customers can fly, buy new clothes, or eat certain foods without making the climate crisis worse.

However, it has been repeatedly questioned whether they are truly effective.

The Guardian, the German weekly Die Zeit, and the non-profit investigative journalism organisation SourceMaterial conducted the nine-month investigation. It is based on new scientific research on Verra’s rainforest plans.

In addition, it has utilised dozens of on-the-ground interviews and reports with scientists, industry insiders, and Indigenous communities. Verra has vigorously refuted the findings, which are likely to raise significant concerns for businesses whose net zero strategies rely on offsets.

Verra, with headquarters in Washington, D.C., manages a number of the most prominent environmental standards for climate action and sustainable development. One such standard is its verified carbon standard (VCS), which has granted more than one billion carbon credits. Three-quarters of all voluntary offsets are approved by it. It launched its rainforest protection program prior to the Paris Agreement with the intention of generating revenue for ecosystem protection and accounts for 40% of the credits it approves.

Verra contends that the studies’ findings are erroneous and questions their methodology. In addition, they emphasise that their efforts since 2009 have made it possible to channel billions of dollars toward vital forest preservation efforts.

The investigation revealed:

• According to two studies, only a small number of Verra’s rainforest projects showed signs of reducing deforestation. Further examination revealed that 94% of the credits had no effect on the climate.
• A 2022 University of Cambridge study’s analysis revealed that the average Verra project’s threat to forests had been overstated by 400 percent.
• Among the dozens of businesses and organizations that have purchased rainforest offsets that have been approved by Verra for environmental claims are Gucci, Salesforce, BHP, Shell, easyJet, Leon, and the band Pearl Jam.
• At least one of the offset projects has serious concerns about human rights. When The Guardian went to a flagship project in Peru, they were shown videos of residents saying that park guards and police were cutting down their homes with chainsaws and ropes. They talked about tensions with park authorities and forced evictions.

The evaluation: A group of journalists looked at the results of three scientific studies that used satellite images to check the results of a number of forest offsetting projects known as Redd+ schemes in order to evaluate the credits. Although offsets have been the subject of a number of studies, these are the only three known to have attempted to measure avoided deforestation using rigorous scientific methods.

Using Verra’s rules, the organizations that set up and run these projects make their own predictions about how much deforestation they will stop. A Verra-aproved third party evaluates the predictions, which, if accepted, are used to generate credits that businesses can purchase to offset their own carbon emissions.

For instance, if a project estimates that it will stop 100 hectares (247 acres) of deforestation, the organisation can use a Verra-aproved formula to turn that into 40,000 CO2e (carbon dioxide equivalent) of carbon emissions saved in a dense tropical forest if deforestation does not occur. However, the formula varies depending on the habitat and other factors. A business can then buy those saved emissions and use them to meet its own carbon reduction goals.

A total of approximately two-thirds of the 87 Verra-aproved active projects were examined by two distinct groups of scientists, one based internationally and the other in Cambridge, UK. The researchers decided not to include some of them because they didn’t think there was enough information to give them a fair evaluation.

Only eight of the 29 Verra-aproved projects where further analysis was possible showed evidence of significant deforestation reductions, according to the two studies from the international group of researchers.

The journalists were able to conduct additional research on those projects by contrasting the estimates produced by the offsetting projects with the scientific findings. About 94% of the credits generated by the projects should not have been approved, according to the analysis.

The investigation revealed that credits from 21 projects had no impact on the climate, seven had an impact that was between 98% and 52% less than claimed using Verra’s system, and one had an impact that was 80% greater.

In addition, despite the fact that some of the 40 Verra projects studied by the University of Cambridge team had stopped some deforestation, the areas affected were extremely small. Three-quarters of the protected forest was the responsibility of just four projects.

In 32 projects where Verra’s claims and the study findings could be compared, the journalists found that baseline scenarios of forest loss appeared to be overstated by approximately 400 percent. Three projects in Madagascar have had a significant impact on the figures and produced excellent outcomes. The average rate of inflation is approximately 955 percent if those projects are not included.

The researchers acknowledged the limitations of each study, stating that “no modelling approach is ever perfect” and that the studies examined various ranges of projects using various methods and time periods. However, the data demonstrated widespread agreement regarding the projects’ lack of effectiveness in comparison to the Verra-aproved predictions.

The peer review process has been completed on two of the studies, and a third has been published as a preprint.

Verra, on the other hand, vehemently refuted the findings of the studies regarding its rainforest projects and stated that the approaches that the researchers took were unable to accurately capture the actual impact on the ground. This is the reason why the credits it approves do not match the estimated reductions in emissions.

The carbon standard said that its projects faced unique local threats that can’t be measured with a standard approach. It collaborates with leading experts to keep its methodologies up to date and make sure they reflect scientific consensus. It has reduced the amount of time projects must update their threats in order to better account for unforeseen drivers like Brazil’s election of Jair Bolsonaro. Verra stated that although it has utilised some of the research methods in its own standards, it does not believe they are suitable for this kind of project.

Verra was particularly concerned about the international group’s use of “synthetic controls,” in which comparable areas were chosen and used for deforestation measurements. Verra thought this was a problem because the controls would compare the project to a hypothetical scenario rather than a “real area, as Verra does,” and they might not reflect the conditions that existed prior to the project. However, the authors of the study contend that this mischaracterises their work: In both instances, real areas serve as the comparison areas, and the rates of deforestation there are used to determine the levels of deforestation. Artificial controls are not used by the Cambridge group.

“I have worked as an auditor on these projects in the Brazilian Amazon and when I started this analysis, I wanted to know if we could trust their predictions about deforestation. The evidence from the analysis – not just the synthetic controls – suggests we cannot. I want this system to work to protect rainforests. For that to happen, we need to acknowledge the scale of problems with the current system,” said Thales West, a lead author on the studies by the international group.

The findings, according to North Carolina State University professor and co-author Erin Sills, were “disappointing and scary.” She was one of a number of researchers who said that funding for rainforest conservation needed to change quickly.

“I’d like to find that conserving forests, which conserves biodiversity, and conserves local ecosystem services, also has a real effective impact on reducing climate change. If it doesn’t, it’s scary, because it’s a little bit less hope for reducing climate change.”

The Cambridge group of researchers included David Coomes, a professor of forest ecology at the University of Cambridge who was a senior author on a study that looked at avoided deforestation in the first five years of 40 Verra schemes. He reviewed the Guardian’s findings and stated that there was a significant discrepancy between the carbon standard’s approval and the amount of deforestation that his team estimated the projects were preventing.

“It’s safe to say there are strong discrepancies between what we’re calculating and what exists in their databases, and that is a matter for concern and further investigation. I think in the longer term, what we want is a consensus set of methods which are applied across all sites,” he said.

According to Bangor University professor and co-author Julia Jones, if carbon markets are to be expanded, the world must urgently rectify the system for measuring emission reductions in order to protect tropical forests.

“It’s really not rocket science,” she said. “We are at an absolutely critical place for the future of tropical forests. If we don’t learn from the failures of the last decade or so, then there’s a very large risk that investors, private individuals and others will move away from any kind of willingness to pay to avoid tropical deforestation and that would be a disaster.

“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.”

Yadvinder Singh Malhi, a Jackson senior research fellow at Oriel College, Oxford and a professor of ecosystem science at the University of Oxford who was not involved in the study, stated that two of his PhD students had gone through the analysis without finding any errors.

This study demonstrates the primary obstacle in utilising Redd+’s benefits for climate change mitigation. The difficulty is not with measuring carbon stocks; It’s about accurately predicting what will happen in the future in the absence of Redd+ activity. In addition, in a world with intricate societies, politics, and economics, looking into the future is a dark and messy art. The report demonstrates that these future projections have greatly exaggerated the Redd+ climate benefits because they have been overly pessimistic about baseline deforestation rates. Despite the fact that many of these projects improved biodiversity conservation capacity and local communities, their impacts on climate change are regrettably much weaker than anticipated. This report is pretty persuasive, despite my wish that it were otherwise.

According to Shell, using credits was “in line with our philosophy of avoid, reduce, and only then mitigate emissions,” as stated by the Guardian. While Lavazza stated that it purchased credits that were certified by Verra, “a world’s leading certification organisation,” as part of the coffee products company’s “serious, concrete and diligent commitment to reduce” its carbon footprint, Pearl Jam, BHP, and Salesforce did not respond to requests for comment. It intends to investigate the project more thoroughly.

In an effort to maximise its positive impact, the fast food chain Leon no longer purchases carbon offsets from one of the projects in the studies. In order to focus on projects like “funding for the development of new zero-carbon emission aircraft technology,” EasyJet has abandoned carbon offsets.

Barbara Haya, director of the Berkeley Carbon Trading Project, has spent the past two decades investigating carbon credits in the hope of establishing a means by which the system can continue to function. She stated, “The implications of this analysis are huge. Companies are using credits to make claims of reducing emissions when most of these credits don’t represent emissions reductions at all.

“Rainforest protection credits are the most common type on the market at the moment. And it’s exploding, so these findings really matter. But these problems are not just limited to this credit type. These problems exist with nearly every kind of credit.

“One strategy to improve the market is to show what the problems are and really force the registries to tighten up their rules so that the market could be trusted. But I’m starting to give up on that. I started studying carbon offsets 20 years ago studying problems with protocols and programs. Here I am, 20 years later having the same conversation. We need an alternative process. The offset market is broken.”

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