Interview: the builder's playbook for Carbon markets & offsets integrity — hard-earned lessons

When only 2% of carbon credits issued between 2010 and 2023 meet high-integrity standards according to a 2024 Nature Communications study, the gap between market rhetoric and climate reality becomes impossible to ignore. The voluntary carbon market (VCM), valued at approximately $560-680 billion in 2024 and projected to reach $800 billion by 2025, has experienced a credibility crisis that forced practitioners to fundamentally rethink how they approach additionality, permanence, and buyer due diligence. This interview synthesizes insights from project developers, registry officials, corporate buyers, and third-party rating agencies who have navigated these turbulent waters—revealing what actually works, what fails spectacularly, and the hard-earned lessons that separate high-integrity operations from greenwashing liabilities.

Why It Matters

The stakes in carbon markets extend far beyond compliance checkboxes. According to the Integrity Council for the Voluntary Carbon Market (ICVCM), approximately 11,000 organizations have committed to Science Based Targets as of 2024, with 65-72% of multinational corporations adopting net-zero targets that depend, at least partially, on carbon credits. Yet research published in Nature Communications found that 87% of voluntary market offsets from 2020-2023 carry high risk of not providing real, additional emissions reductions.

"The fundamental problem," explains a senior methodology specialist at Verra who spoke on condition of anonymity, "is that we built an entire market around proving counterfactuals—demonstrating what would have happened in an alternate universe where the carbon credit revenue didn't exist. That's inherently speculative, and speculation creates space for manipulation."

The financial consequences of getting this wrong are severe. Following the South Pole-Kariba scandal in 2023, where investigations revealed the company's flagship Zimbabwe forest protection project generated 5-30 times more credits than justified, major corporate buyers including Gucci, Nestlé, and McKinsey faced intense scrutiny over their climate claims. Delta Airlines now faces U.S. litigation over offset-based carbon neutrality assertions. The EU's "Empowering Consumers for Green Transition" directive has tightened greenwashing rules, making offset-dependent climate claims legally risky.

For practitioners building carbon market infrastructure, verification platforms, or procurement systems, these aren't abstract policy debates—they're operational requirements that determine whether your work creates genuine climate value or accelerated reputational destruction.

Key Concepts

Additionality: The Foundational Challenge

Additionality asks a deceptively simple question: would this emissions reduction have happened anyway without carbon credit financing? If a wind farm would have been built regardless of offset revenue—because electricity prices, government subsidies, or corporate renewable energy commitments made it profitable—then the credits it generates don't represent additional climate benefit.

"Additionality is where most projects fail, and it's where most greenwashing happens," notes a former project developer who now advises institutional buyers. "Renewable energy projects in particular have high risk of lacking additionality. The technology is cost-competitive in most markets now. Claiming carbon credit revenue was the deciding factor requires increasingly creative accounting."

The 2024 Harvard Environmental Law Review published "The Additionality Double Standard" by James Salzman and David Weisbach, arguing that false positives—certifying non-additional projects as additional—systematically undermine climate goals by allowing emissions to continue while buyers believe they've been offset.

Permanence and Reversal Risk

Carbon sequestered in forests, soils, or geological formations must remain stored to deliver climate benefit. Forest projects face reversal from wildfires, droughts, pest infestations, and management failures. The 2021 Bootleg Fire in Oregon, for example, burned through carbon offset areas, releasing stored carbon back into the atmosphere.

"We tell clients that forest credits are essentially renting carbon storage with an uncertain lease term," explains a carbon credit analyst at Sylvera. "Buffer pools help, but they can't fully insure against systemic risks like climate-driven increases in wildfire frequency. If your portfolio is 80% forest conservation credits, you have significant concentration risk."

Current mitigation approaches include buffer pools (reserving a percentage of credits to cover reversals), insurance mechanisms, and satellite-based monitoring. Verra's 2024 methodology updates now require real-time monitoring and explicit climate risk accounting for fire and deforestation threats.

Measurement, Reporting, and Verification (MRV)

The emergence of technology-enabled MRV represents one of the most significant developments in market infrastructure. Satellite imagery, machine learning classification, and IoT sensors increasingly provide independent verification of project claims, reducing reliance on self-reported data and periodic audits.

"The gap between what projects claim and what satellites observe is often enormous," notes a remote sensing scientist working with BeZero Carbon. "We've seen projects claiming protection of forest that satellite data shows was never under threat of deforestation. The technology to catch this now exists—the question is whether standards bodies and buyers actually use it."

What's Working and What Isn't

What's Working

ICVCM Core Carbon Principles Adoption: The Integrity Council's Core Carbon Principles framework, with five programs now approved (Verra, Gold Standard, ACR, CAR, and ART) representing 98% of market volume, has established minimum quality thresholds. Credits bearing the CCP label underwent assessment for additionality, permanence, and co-benefit requirements. "The CCP framework isn't perfect, but it's the first credible attempt at market-wide quality standards," observes a carbon market strategist at a major European bank.

Third-Party Rating Emergence: Companies like Sylvera, Pachama, and BeZero Carbon have created independent credit quality ratings analogous to bond ratings in financial markets. Sylvera raised $57 million in its November 2024 Series B, reporting 7x customer growth since 2022, indicating strong demand for independent quality assessment. "Before these rating agencies, buyers were essentially trusting project developers to grade their own homework," notes a corporate sustainability officer at a Fortune 500 retailer. "Now we can compare ratings across projects and identify red flags before purchasing."

Digital MRV Integration: Verra's VCS Version 5 consultation in 2024 introduced digital monitoring, reporting, and verification processes designed to accelerate credit issuance while improving data transparency. Gold Standard issued 84 million credits in 2024, up 35% from 2023, partly attributable to streamlined verification processes that didn't sacrifice rigor.

Methodology Reforms Post-Scandal: Following the South Pole revelations, Verra suspended 37 rice cultivation projects in August 2024 after a 17-month review found serious methodology failures. Three Brazil REDD+ projects linked to land-grabbing were suspended in June 2024. "The system is showing it can self-correct, even if slowly," acknowledges a former Verra board member. "Suspensions hurt the market's reputation short-term but build credibility long-term."

What Isn't Working

Cheap Avoidance Credits at Scale: Research published in Nature Communications in August 2024 found that major companies from the largest 20 offset purchasers predominantly sourced cheap, low-quality credits from forest conservation and renewable energy projects—precisely the categories with the highest additionality and permanence concerns. "The incentive structure rewards volume over quality," explains a procurement consultant. "When procurement teams have carbon credit budgets rather than carbon impact budgets, they optimize for price per tonne, not climate outcomes per dollar."

Self-Regulatory Bottlenecks: Verra's October 2024 announcement of risk-based review processes—using algorithms to categorize projects by risk level and applying different scrutiny accordingly—came after a 25% workforce reduction following $9 million in 2023 losses. "You can't cut staff and claim you're improving oversight," critiques a carbon market analyst. "The optics are terrible and the reality may be worse."

Buffer Pool Inadequacy: Standard buffer pool contributions of 10-20% may prove insufficient as climate change increases reversal frequency. A 2024 Berkeley study found certain cookstove methodologies overcredited by a factor of 10, and Verra's VM0050 update now requires stricter monitoring—but only for new projects.

Fragmented Buyer Due Diligence: "Most corporate buyers still treat carbon credits as a procurement category rather than a risk management function," observes an ESG auditor. "They check basic registry certification and stop there. They're not reading methodology documents, cross-referencing satellite data, or stress-testing permanence assumptions."

Key Players

Established Leaders

Verra — Operates the Verified Carbon Standard (VCS), the world's largest voluntary carbon credit program. Achieved ICVCM CCP-eligible status in May 2024 after significant procedural reforms. VCS 4.7 launched in April 2024 aligned with CORSIA requirements; Version 5 consultation closed in November 2024.

Gold Standard — Founded by WWF, requires sustainable development co-benefits beyond carbon reduction. Issued 84 million credits in 2024 (35% increase from 2023). Only carbon standard holding ISEAL Alliance membership. Launched policy certification pilot in June 2024 allowing governments to certify emission reductions from national policies.

South Pole — Swiss carbon offset developer and trader, previously the world's largest. Operations continue with approximately 750 employees after 20% workforce reduction following 2023 scandals. Maintains presence in 30+ countries despite Kariba project controversy.

Climate Impact X (CIX) — Singapore-based carbon exchange launched in 2022 with satellite monitoring and machine learning verification. Positions Singapore as a hub for high-integrity carbon trading in Asia-Pacific.

Emerging Startups

Sylvera — London-based carbon credit rating platform. Raised $57 million Series B in November 2024 led by Balderton Capital, bringing total funding to $95.3 million. Approximately 160 employees, ~$15 million revenue in 2024. Provides independent quality ratings using satellite data and proprietary assessment models.

Pachama — San Francisco-based AI-powered forest monitoring platform. Total funding of $88 million including $9 million extension in March 2024. Uses machine learning and satellite imagery to verify forest carbon projects. Acquired by Carbon Direct in November 2025.

BeZero Carbon — London-based carbon credit rating agency providing risk ratings for offset projects. Competes with Sylvera in providing independent quality assessment to corporate buyers and investors.

Patch — Carbon credit API platform enabling companies to integrate offset purchasing into products and services. Facilitates both avoidance and removal credit procurement.

Key Investors & Funders

Breakthrough Energy Ventures — Bill Gates-founded fund investing across climate solutions including Pachama and various carbon removal technologies.

Index Ventures — Lead investor in Sylvera's earlier rounds, continued participation in Series B. Significant exposure to carbon market infrastructure.

Salesforce Ventures — Participated in Sylvera funding; strategic interest in carbon market integration with enterprise software platforms.

Generation Investment Management — Al Gore's firm with holdings across sustainable finance infrastructure including carbon market participants.

Examples

South Pole and the Kariba REDD+ Collapse: The 2023 unraveling of South Pole's flagship Zimbabwe forest protection project stands as the voluntary carbon market's most significant scandal. Bloomberg and The New Yorker investigations revealed the project generated 5-30 times more credits than deforestation threat justified. Corporate buyers including Gucci, Volkswagen, Nestlé, and McKinsey faced greenwashing exposure. Verra launched investigations and froze new credit issuances in October 2023; South Pole terminated the Kariba contract that same month. The project accounted for approximately 10% of South Pole's €232 million 2022 revenue. "Kariba showed that the entire REDD+ model was vulnerable to systematic over-crediting," notes a carbon market analyst who studied the case. "The methodology incentivized exaggerating deforestation baselines."

Microsoft's Carbon Removal Portfolio Approach: Rather than purchasing cheap avoidance credits, Microsoft has committed to removing all its historical emissions by 2050 and procures high-durability carbon removal from direct air capture, biochar, and enhanced weathering projects. The company's 2024 Environmental Sustainability Report detailed procurement of over 3 million tonnes of carbon removal across its portfolio. "Microsoft's approach recognizes that avoidance credits don't solve the stock problem—the carbon already in the atmosphere," explains a carbon removal procurement specialist. "They're paying premiums of $200-600 per tonne for permanent removal versus $5-15 for forest conservation credits, but they're getting actual atmospheric carbon reduction."

Verra's Rice Cultivation Methodology Suspension: In August 2024, Verra suspended 37 rice cultivation projects after a 17-month review identified serious methodology failures. The suspension demonstrated that certification bodies could retroactively apply quality controls—but also raised questions about why these projects passed initial review. "The rice projects showed a pattern of overestimating methane reduction from alternate wetting and drying practices," notes a methodology specialist. "Projects were claiming emissions reductions based on theoretical maximum benefits rather than measured outcomes. When independent researchers checked the numbers, they didn't hold up."

Action Checklist

• Conduct additionality stress tests on all credit procurement by asking: what would have happened without carbon revenue? Reject projects where the answer is unclear or where alternative financing was available
• Prioritize carbon removal over avoidance credits, especially for long-term net-zero claims; removal projects (direct air capture, biochar, enhanced rock weathering) have clearer additionality and permanence profiles
• Require ICVCM Core Carbon Principles labeling or equivalent independent verification; CCP-eligible programs represent 98% of market volume and meet minimum integrity thresholds
• Cross-reference project claims with third-party ratings from Sylvera, BeZero, or Pachama before purchasing; rating agencies use satellite data and independent analysis to verify claims
• Implement portfolio diversification across project types, geographies, and methodologies to reduce concentration risk from reversal events or methodology failures
• Establish ongoing monitoring protocols rather than point-in-time verification; subscribe to rating updates and satellite monitoring services for projects in your portfolio
• Build legal review into offset claims before marketing; the EU's Green Claims Directive and increasing U.S. litigation make "carbon neutral" assertions based on low-quality credits legally risky
• Document due diligence processes for audit purposes; CSRD and SEC climate disclosure rules require defensible methodology for carbon credit claims

FAQ

Q: How can buyers verify additionality claims when the concept is inherently speculative? A: Perfect additionality verification is impossible because it requires proving a counterfactual—what would have happened without carbon credit revenue. However, buyers can improve confidence through multiple approaches: prioritize project types with clear financial dependency (projects that wouldn't be economically viable without credit revenue), require detailed financial barrier analysis in project documentation, verify that claimed barriers aren't contradicted by market trends (e.g., renewable energy projects in markets where renewables are already cost-competitive), and use third-party rating agencies that apply consistent additionality assessment frameworks across projects. The 2024 Harvard Environmental Law Review analysis suggests focusing on projects with higher implementation costs relative to carbon revenue—if credits represent less than 15% of project financing, additionality claims warrant skepticism.

Q: Are forest conservation (REDD+) credits fundamentally unreliable, or can high-quality projects be identified? A: Forest conservation credits can be high-quality but require more rigorous scrutiny than other project types. The Nature Communications research finding that 87% of voluntary credits carry integrity concerns was particularly damning for REDD+ projects. Key quality indicators include: realistic deforestation baselines verified against regional satellite data, strong land tenure and community consent documentation, buffer pools exceeding minimum requirements (consider 20%+ rather than standard 10-15%), ongoing satellite monitoring rather than periodic audits, and third-party ratings from Sylvera or BeZero specifically assessing the project. Verra's post-2024 methodology updates (VM0048 and VT0007) strengthen requirements, so newer projects under revised methodologies may warrant more confidence. However, buyers with low risk tolerance should consider weighting portfolios toward removal projects with clearer permanence profiles.

Q: What's the minimum viable due diligence for corporate buyers who lack in-house carbon market expertise? A: At minimum, corporate buyers should: (1) only purchase credits from ICVCM Core Carbon Principles-eligible programs (Verra, Gold Standard, ACR, CAR, or ART), (2) obtain ratings from at least one independent agency (Sylvera, BeZero, or Pachama) before purchasing and reject projects rated as low quality or high risk, (3) avoid renewable energy credits unless clear additionality evidence exists (the default assumption should be non-additional), (4) avoid making "carbon neutral" marketing claims based solely on offset purchases—the legal and reputational risks now outweigh benefits, and (5) document the rationale for credit selection in case of regulatory inquiry. For more sophisticated approaches, engage specialized carbon procurement consultants or consider joining buyer coalitions that pool due diligence resources.

Q: How should companies respond if credits in their portfolio are later identified as problematic? A: The first step is acknowledging the problem rather than defending past purchases. Companies should: (1) assess the scope—what percentage of portfolio and climate claims are affected, (2) engage legal counsel before public statements given increasing litigation risk, (3) consider whether replacement credits from higher-quality sources can be purchased to maintain integrity of net-zero claims, (4) evaluate whether marketing claims need to be revised or withdrawn, (5) document lessons learned and strengthen due diligence processes to prevent recurrence, and (6) communicate transparently with stakeholders about the issue and remediation steps. The companies that emerged with least reputational damage from the Kariba scandal were those that acknowledged the problem early and publicly committed to improved procurement standards.

Q: Are carbon removal credits (direct air capture, biochar, etc.) worth the premium pricing over cheaper avoidance credits? A: For companies with genuine net-zero commitments rather than offset-for-compliance strategies, removal credits increasingly represent the credible option despite 10-50x price premiums. Avoidance credits—preventing emissions that might have occurred—don't address atmospheric carbon concentrations. Removal credits extract carbon from the atmosphere, creating clear additionality (expensive technology wouldn't be deployed without revenue) and often better permanence (geological storage lasts millennia versus decades for forests). Microsoft's approach of paying $200-600 per tonne for removal versus $5-15 for avoidance reflects this logic. However, the removal market is much smaller—current capacity represents a tiny fraction of claimed corporate demand. Companies should consider blend strategies: removal credits for the most defensible claims, high-quality avoidance credits for near-term targets while removal capacity scales.

Sources

• Nature Communications, "Demand for low-quality offsets by major companies undermines climate integrity of the voluntary carbon market," August 2024
• Harvard Environmental Law Review, "The Additionality Double Standard" by James Salzman and David Weisbach, April 2024
• Integrity Council for the Voluntary Carbon Market (ICVCM), Core Carbon Principles Assessment Framework, May 2024
• Verra, VCS Version 4.7 Release Notes and CORSIA Alignment Documentation, April 2024
• Gold Standard Annual Report 2024, Credit Issuance and Retirement Statistics
• Bloomberg, "Carbon Offset Seller's Forest-Protection Projects Questioned" (South Pole investigation), March 2023
• The New Yorker, "The Great Cash-for-Carbon Hustle," October 2023
• Fortune Business Insights, Carbon Offsets Market Size and Growth Projections, 2024-2032
• Sylvera Series B Funding Announcement and Company Metrics, November 2024