The severity of climate change means that we all, including businesses, need to get to zero carbon emissions as soon as possible. Voluntary carbon markets have been set up to allow businesses to buy and sell carbon credits to offset their emissions.
Carbon credits commit the purchaser to offset an equal amount of greenhouse gas emissions in the future, either by avoiding emissions elsewhere or by extracting an equal amount from the atmosphere.
The voluntary carbon market already pumps $2 billion (£1.57 billion) a year through the system – a figure that could rise tenfold over the next decade – but many companies are accused of greenwashing because they use carbon credits to avoid cutting their own emissions, and many of the projects that generate the credits have been criticised for failing to deliver real reductions in carbon emissions.
I was a founding member of the Climate Crisis Advisory Group (CCAG) and led its most recent report on voluntary carbon markets. Along with CCAG’s international climate experts, I agree with the White House’s recent report that voluntary carbon markets are a small but essential part of the global effort to reduce global warming. Scientific research shows that all the major approaches to creating carbon credits can work if done properly.
There are two main ways to create carbon credits: first, from projects that avoid emissions, such as renewable energy, energy efficiency, avoided deforestation, or protecting wetlands and marine ecosystems.
The second is to remove carbon dioxide from the atmosphere and store it through methods such as reforestation, biochar, and direct air capture. Reforestation seems like it makes sense, but care must be taken to use the right trees in the right places, and forests need to be managed and maintained over decades to ensure they survive.
Biochar is produced by burning organic waste in an oxygen-free chamber, creating a charcoal-like deposit that, when added to soil, traps carbon and fertilizes plants. Direct air capture sucks carbon dioxide out of the atmosphere or captures it emitted by power plants, then stores it safely in deep rock formations.
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To address key issues in voluntary carbon markets, we propose five ways to restore trust: These principles will ensure that companies are offsetting for the right reasons, and that one tonne of carbon credits actually equals one tonne of carbon removed from the atmosphere.
1. Increase transparency
All aspects of voluntary carbon markets need to be radically more transparent and remove the smokescreens used to hide bad practices. Financial transparency is essential to uncover unethical practices, demonstrate best practices, and ensure a fair deal for local communities.
The lack of international and national regulation means that engagement with organizations representing the public does not always take place, and even if it does, full financial transparency is not guaranteed. Having a robust and sustainable carbon credit system is in everyone’s interest and must be based on transparency.
2. Improved Certification
Monitoring, reporting and verification of carbon credits are essential to set a carbon price and ensure emissions reductions are real and verifiable. Voluntary carbon market projects need standardization across the sector, with clear verification and certification systems to build trust.
A small number of organizations currently act as standard setters, and together they can bring about a decisive shift in global standards. Changing fee structures to directly link measurable quality and performance, rather than just the quantity of certified offsets, would raise the standards.
3. Credit shouldn’t harm
Climate change mitigation efforts, including carbon trading, can unintentionally lead to harm and human rights violations. To avoid such unintended consequences, credible carbon credit projects must operate according to the humanitarian principle of “do no harm.”
Co-benefits, such as protecting and enhancing local biodiversity and human well-being, should be measured and add value to the credits. We propose a rights-based approach and the participation of local and indigenous communities in project design and ecosystem management.
4. Focus on high-quality credit
In an ideal world, voluntary carbon markets should focus on removing carbon from the atmosphere, not reducing emissions, because all companies would need to commit to net zero, meaning avoided and reduced emissions would already be happening, and only carbon removal would make a clear, measurable difference to business as usual.
Carbon credits should not be seen as a primary strategy for reaching emissions targets, but rather as a supplementary tool to be used only after companies have implemented all other possible reduction technologies and strategies. This will ensure that carbon credits truly contribute to achieving global climate goals, rather than allowing companies to avoid the deep reductions required by net-zero commitments.
5. Further international support
The latest CCAG report and the recommendations above clearly demonstrate the need for strong political support through the principles of regulation, transparency and governance at national, regional and international levels. Strengthening the political infrastructure relevant to voluntary carbon markets will increase market credibility and ensure that carbon offset schemes contribute meaningfully to global emissions reduction targets in the long term.
Carbon markets can help solve the climate crisis
Despite the current climate and environmental crisis, greenhouse gas emissions and harmful land use change are still rising. Voluntary carbon markets have recently faced criticism and challenges due to system weaknesses and failed projects.
The CCAG report suggests that ongoing reforms and new standards have the potential to mobilize billions of dollars in private finance to support projects that proactively reduce carbon emissions and deliver wider co-benefits for local communities and their surrounding environments. To contribute effectively to the fight against the climate crisis, the world needs voluntary carbon markets to realise their potential in scale, impact and fitness for purpose.
