Deep dive: carbon markets & offsets integrity - from pilots to scale

Why it matters

Voluntary carbon markets provide a mechanism for organisations to finance emissions reductions beyond their own operations. When credits are credible, they can channel billions of dollars to conserve forests, restore wetlands, deploy clean energy and improve livelihoods. But low‑quality credits have eroded trust, and the market remains fragmented and inefficient. Manual data collection, paper‑based audits and opaque baselines mean crediting decisions can take years and allow projects with dubious climate benefit to slip through. Investors in North America are increasingly expected to demonstrate due diligence on offsetting programmes and to support only high‑integrity credits that stand up to scrutiny.

Key concepts & current challenges

• Verification bottlenecks - Traditional MRV relies on periodic field visits, manual paperwork and spreadsheets. KPMG's 2024 study notes that delays in verification can stretch to two or three years, costing developers up to USD 2.6 billion by 2030 and leaving an estimated 4.8 gigatons of credits unissued. The slow pace reduces liquidity and deters innovation.
• Integrity gaps - Many projects fail tests of additionality, permanence and leakage. Legacy credits with optimistic baselines have flooded the market, depressing prices and undermining buyer confidence. Without robust standards, buyers cannot easily distinguish high‑quality credits from poor ones.
• Data fragmentation - Carbon projects use disparate registry formats and data fields, making it hard to compare projects or aggregate information. A common data model and digital infrastructure are needed to standardise reporting and improve price discovery.
• Policy evolution - Article 6 of the Paris Agreement creates a framework for cross‑border carbon trading. National consultations, such as the UK's draft principles for voluntary carbon markets and the Integrity Council's Core Carbon Principles, emphasise that credits should complement, not replace, internal decarbonisation. High‑integrity credits are expected to command price premiums and may be required by regulators.

What's working: pilots and programmes

Digital MRV pilots - Digital monitoring, reporting and verification is widely viewed as a game‑changer for market integrity. SustainCERT notes that digital innovations can drastically improve the reliability, efficiency and credibility of MRV activities. Benefits include improved data quality, automated calculations, and near‑real‑time credit issuance. Indonesia and the Gold Standard have launched a digital MRV pilot covering around 800,000 tonnes CO₂e of reductions. Verra and Pachama are piloting remote‑sensing platforms for forest carbon, using satellite imagery and machine learning to automate measurement, reduce costs and accelerate credit issuance. The platform aims to enable thousands of landowners to access high‑integrity finance at a fraction of the time and cost of traditional methods.

Field‑validated dMRV in India - Anaxee's Digital Runners project pairs a 40,000‑strong field force with AI‑driven data collection to verify agroforestry and cookstove projects across 120,000 villages. This approach slashes verification costs by up to 70 % and has cut the verification time for one pilot from 14 months to 6 months. By combining satellites, drones, IoT sensors and on‑the‑ground validation, the programme delivers granular data and addresses the "ground truth" gap, setting a template for other regions.

Long‑term procurement programmes - At COP30, Petrobras and Brazil's development bank BNDES announced ProFloresta+, a 25‑year initiative to purchase 5 million high‑integrity credits from Amazon restoration projects . The programme will provide predictable revenue to project developers and is backed by preferential financing. Such offtake agreements reduce market volatility and send strong demand signals for high‑quality credits.

Multilateral forest finance - Brazil's proposed $125 billion Tropical Forest Forever Facility aims to reward countries that keep forests standing using satellite verification. At least 20 % of funding is earmarked for Indigenous Peoples and local communities. By linking payments to national‑level conservation performance, the facility could catalyse sovereign Article 6 trades and large‑scale supply.

Demand for high‑quality credits - UNEP highlights that investors are increasingly willing to pay a premium for high‑integrity nature‑based credits because of their climate and co‑benefits. With new guidelines tightening integrity requirements, low‑quality credits may become unmarketable, accelerating the shift toward projects with robust MRV and governance.

What isn't working

• Verification delays and costs - Manual verification slows down credit issuance and burdens project developers. Some registries take two or three years to issue credits, undermining cash flow and deterring innovation .
• Over‑crediting and legacy supply - Optimistic baselines and weak controls have led to a glut of low‑integrity credits, depressing prices and eroding trust. Buyers must navigate heterogeneous methodologies and risk overpaying for ineffective offsets.
• Fragmented standards - Multiple registries and methodologies make it difficult to compare projects. Without harmonised data formats and common quality principles, market actors cannot easily evaluate credit quality or aggregate supply.
• Inequitable benefit sharing - Large‑scale projects sometimes neglect Indigenous and local communities. High‑integrity programmes must ensure equitable benefit‑sharing and free prior informed consent.

A playbook for scaling high‑integrity credits

1. Start with robust pilots. Select projects with strong additionality and permanence, ideally using digital MRV from the outset. Look for pilots backed by credible registries and local partners. Use small‑scale pilots to test methodologies, data flows and community engagement before scaling.
2. Digitise measurement and reporting. Adopt satellites, drones and sensors to gather real‑time data. Automate calculations and build transparent dashboards. Digital MRV reduces verification costs and shortens issuance timelines.
3. Standardise data and adopt open models. Use common data schemas and emerging standards (e.g., the Common Carbon Credit Data Model) to ensure comparability and interoperability across projects. Shared data improves price discovery and reduces transaction costs.
4. Secure long‑term offtake agreements. Programmes like ProFloresta+ demonstrate the value of predictable demand and concessional financing . Long‑term purchase commitments de‑risk projects and encourage investment.
5. Align with Article 6 and national policies. Choose projects that can generate internationally transferrable mitigation outcomes (ITMOs) and comply with host‑country rules. Engage early with regulators to ensure projects are compatible with national climate strategies.
6. Embed co‑benefits and equity. Design projects that deliver biodiversity, water and social benefits. Ensure benefit‑sharing with Indigenous Peoples and local communities. Premium pricing should reflect these co‑benefits.
7. Implement risk management. Use buffer pools, insurance products and diversified portfolios to mitigate reversal and leakage risks. Discount credits to account for uncertainties.

Fast‑moving segments to watch

• AI‑driven carbon accounting - Platforms using machine learning to estimate biomass, detect leakage and monitor project performance will become mainstream. Integration with registries will enable near‑real‑time credit issuance.
• Article 6 sovereign trading - Honduras and Suriname's letters of intent with Deutsche Bank to develop sovereign rainforest credits signal the emergence of government‑to‑government transactions.
• Data standardisation and blockchain - Efforts by the G20 and the Climate Data Steering Committee to develop a common carbon credit data model could reduce fragmentation and enable cross‑border trading.
• Long‑duration carbon removal - Durable removal methods such as geological storage and mineralisation offer permanence but require significant investment. Projects are beginning to adopt digital MRV to demonstrate performance and attract funding.

Action checklist for investors

• Conduct due diligence: Review crediting methodologies, buffer pool provisions and MRV systems. Avoid credits lacking strong baseline and permanence safeguards.
• Prioritise digital MRV: Invest in or demand credits from projects using satellite, drone and sensor technologies. Digital data reduces the risk of manipulation and speeds up issuance.
• Seek long‑term supply agreements: Enter into offtake contracts with trusted developers, locking in price and volume to support project cash flows.
• Support policy harmonisation: Engage with industry initiatives (e.g., ICVCM, VCMI) and regulators to promote common standards and data models.
• Integrate co‑benefits: Favour projects that deliver biodiversity and social outcomes alongside emission reductions. Ensure community benefit‑ sharing is part of the project design.

FAQ

Why is digital MRV important? Manual MRV is slow, costly and error‑prone. Digital tools automate measurements, reduce verification costs and enable projects to issue credits more quickly. Digital MRV also provides continuous data streams, enhancing transparency and trust.

What makes a credit high‑integrity? High‑integrity credits are additional, permanent, account for leakage and comply with robust methodologies. They are verified by third parties and use transparent MRV systems. Programmes like Gold Standard, Verra's improved methodologies and national codes (e.g., Kenya's digital MRV regulations) provide guidance.

How can investors manage risks when buying credits? Diversify across project types and geographies, use buffer pools, purchase from trusted registries and discount credits based on risk. Enter into long‑term offtake agreements with clear governance structures.

Sources

• KPMG. (2024). Scaling Trusted Voluntary Carbon Markets: Verification Delays and Digital MRV Opportunities. KPMG.
• SustainCERT. (2024). Digital MRV: Improving Reliability, Efficiency and Credibility. SustainCERT.
• Fastmarkets. (2025). COP30 Summary: Indonesia Digital MRV Pilot and Brazil's ProFloresta+ Programme. Fastmarkets.
• Anaxee. (2025). Digital Runners Case Study: Field Force and AI Tools for Verification. Anaxee.
• Verra & Pachama. (2025). Remote-Sensing Pilot Announcement: Cost and Time Reduction. Verra.
• UNEP. (2025). High-Integrity Carbon Markets: Investor Shifts and Quality Premiums. United Nations Environment Programme.