As the voluntary carbon market booms, growing efforts are underway to enhance its integrity. They promise to give the market a central role on the road to net zero, says david antonoliCEO of standard-setter Verra
Environmental Finance: The voluntary carbon market is poised for dramatic growth. How is Verra affected by this growth?
david antonoli: The most obvious effect is the sheer volume of projects coming through the door. We’re seeing huge growth in projects seeking pipeline listing and registration. We are stepping up so we can capture and process all those requests.
As the market grows, it’s important that we stay true to our north star, which is environmental impact and long-term sustainability. We have created a separate team to work on methodologies and to update our rules to ensure that those rules complement emerging regulations. The Inflation Reduction Act in the US is a great example of a government stepping up in the financing of climate action. This could end up reducing the number of projects coming through the Verified Carbon Standard, as activities become subject to regulation or other government incentives.
EF: On the supply side, a public consultation has been launched on the Core Carbon Principles from the Integrity Council for the Voluntary Carbon Market [ICVCM]. What are your expectations for that process?
GIVES: We’ve been involved with that, and I’m on the board of the ICVCM. I think the process has been good. My hope is that it will provide some clarity regarding the level of performance that carbon credits need to demonstrate.
There are two narratives about why the ICVCM was created. One is that the voluntary carbon market is just the Wild West and there’s all sorts of dodgy stuff in the market. I don’t agree with that. The other narrative is that the ICVCM will address a lot of the confusion that’s out there about the market.
And there is a lot of confusion. When you’re entering this market, you have no idea whether a Verra-issued VCU [Verified Carbon Unit] is the same thing as a unit from another voluntary registry. People don’t know how rigorous they are, whether they provide the same environmental value and give buyers the confidence to invest in a particular project. I hope that the ICVCM sets out a minimum level of performance to give the market that clarity.
EF: On the demand side, meanwhile, the Voluntary Carbon Markets Integrity Initiative [VCMI] has published its Claims Code of Practice. What are your hopes for that?
GIVES: Again, that helps to bring clarity. If the VCMI gets it right, buyers will be able to make claims on the credits they buy, but only if they are complementing internal reductions. That starts to drive the long-term solution and gives carbon markets an incredibly powerful role.
We know we can’t offset our way out of the climate problem. There aren’t enough offsets, and we need to make sure those internal reductions happen. The climate problem is so big, and governments are finding it hard to regulate. This makes voluntary internal reductions really important to get us to net zero, and offsets have an important role in complementing those.
The work the VCMI is doing has huge potential to help clarify the claims companies are making, ensuring that those claims are rigorous, and will hopefully prevent critics simply calling those claims out as greenwashing.
EF: What about market infrastructure? What is Verra doing to promote credit supply and what other measures is Verra taking to ensure it serves the market and its stakeholders?
GIVES: It’s important to note that we don’t have a role in creating supply; all we can do is ensure that we’re processing the projects that come to us. To do that, we’ve almost quadrupled our staff in the last two years – there are now more than 100 of us. We’ve also developed new systems and procedures to streamline our processes and make them more transparent to developers.
There’s also the work we are doing to support new methodologies. The crush of projects is generating a lot of interest in developing new methodologies, and there are a lot of interesting ones coming through. For example, we’ve just published a new methodology on carbon removals from biochar.
EF: Finally, what new directions are you seeing the market taking?
GIVES: Certainly, we’ve seen an increased interest in carbon removals, although I think we need to be mindful that we have a long way to go to address emissions avoided. There are still lots of opportunities for impactful activities, such as protecting standing forests and existing ecosystems that provide essential climate mitigation.
We’ve also got a consultation out on the role of third-party crypto instruments and tokens. Without getting ahead of its findings, crypto has the potential to scale the sources of financing for projects and to do it in a more transparent and accessible way. Any approach would, of course, have to ensure market integrity and protect against fraud.