A recent study reviewed 95 flawed carbon credit projects registered under Verra, the world’s largest voluntary carbon credit registry, and found signs of systematic flaws with the auditing process.
These issues suggest that carbon credits often fail to accurately represent actual emission reductions, thereby undermining global climate mitigation efforts.
The findings further erode trust in the carbon market, with specialists warning that its entire credibility relies on independent verifiers; “The voluntary carbon market is broken,” an expert said. See All Key Ideas
When questions arise about the integrity of carbon credits, project developers often point to one key safeguard: independent auditors who validate their credit claims. However, new research from the University of Pennsylvania Carey Law School suggests these auditors may not be as independent as they appear — a systemic problem that could be compromising carbon projects.
The study, published on the Social Science Research Network, examined 95 projects registered with Verra, the world’s largest voluntary carbon credit registry. These projects were deliberately selected because they had been previously flagged for overstating credits. The researchers found not only had these projects been initially verified by auditors, but two-thirds of the Verra-accredited auditors who worked on them failed to identify the flaws.
“This is evidence of a structural problem with the auditing program,” said Cynthia Giles, former senior advisor of the U.S. environmental agency, EPA, under President Joe Biden and co-author of the study. “No auditor can provide a truly independent, unbiased assessment. The point is not to blame auditors — the system itself makes independent reviews impossible.”
Globally, there are hundreds of validation and verification bodies (VVBs), auditing firms specializing in carbon offset initiatives. Among the largest are European companies SGS, DNV (Det Norske Veritas) and Bureau Veritas, which employ auditors with expertise in forestry, carbon accounting and climate science.
Project developers hire them to validate projects at every stage, from planning through monitoring. To secure certification from registries like Verra, which lends credibility to their projects, auditors must also have accreditation from these registries.
Giles argues there’s a conflict of interest in this process. Since auditors are getting paid by developers, they might interpret evidence in favor of their clients, even if that’s not a conscious decision. “It is potentially fatal for an auditor to say that a project is not worth the number of credits that the developer wants. It could strain that professional relationship.”
Registry organizations face a similar conflict of interest. Verra earns fees based on the number of carbon credits a project registers. The more credits claimed, the more revenue the company generates. “The entire system is structured to maximize the number of credits. The developer, the auditor, the registries and the buyers all benefit when there are more credits. Everybody has the same interest,” Giles told Mongabay.
... continue reading