Carbon markets: The crisis of confidence, as described in The New Yorker
Last week’s article from The New Yorker shines a light on the crisis of confidence which has impacted major portions of the voluntary carbon credit markets. This purported scandal that appears to be having a significant impact on the market, with voluntary carbon credit trading volume falling for the first time in years.
However, these challenges also present an opportunity for stakeholders to step back and re-examine the future of voluntary carbon markets. In seeking to rebuild confidence in voluntary markets, enhanced credibility and transparency will be critical.
While nature-based offsetting projects remain critical to achieving global climate goals, the current structures also possess shortcomings from a market perspective which have been highlighted by recent events, ranging from vague forecasting and unreliable baselines to a lack of additionality and data availability. These shortcomings have been magnified by a combination of a lack of transparency and the absence of a universally agreed upon set of standards for carbon credits. And major decision-makers are taking notice, with Parties in the Paris Agreement recently informally agreeing that forestry is no longer a reliable source of credits, and that an alternative source of high-quality credits is needed.
That’s where technology-based carbon credits come in. Tech-based credits, which include both carbon removal and carbon avoidance offer significant intrinsic advantages in terms of transparency and measurability. While nature-based offsetting projects have dominated voluntary markets to date, and will certainly remain important, experts such as Morgan Stanley head of ESG fixed income research Carolyn L. Campbell predict that after 2030, technology-based carbon offsetting will surpass their nature-based counterparts.
In the meantime, we must remain committed to bolstering trust in voluntary markets through approaches to carbon offsetting rooted in data and transparency. We applaud the efforts of the hardworking professionals surrounding the Core Carbon Principles and Assessment Framework recently introduced by the Integrity Council for the Voluntary Carbon Market. DevvStream is steadfastly committed to providing partners with the highest quality credits backed by readily available data.