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How High-Integrity Credit Projects Deliver Impacts Beyond Carbon

How can buyers and sellers of carbon credits ensure the projects they choose will have the desired impacts and climate outcomes?

Sponsored Content | / This article is sponsored by Carbon Streaming | By Christian Yonkers | Published 3 months ago | About a 6 minute read

Image: UpEnergy

The integrity of the voluntary carbon market (VCM) has been called into question in recent years as awareness has grown of the prevalence of low-quality carbon offsets.

And while many companies are uncertain about how to properly vet projects, offsets still play a central role in most corporate sustainability plans. So, how can buyers and sellers of carbon credits ensure the projects they choose will have the desired impacts and climate outcomes?

A June 26 webinar hosted by Sustainable Brands® discussed the importance of community relationships in ensuring high-quality offset projects. Panelist Annie Guo heads up Microsoft’s nature-based solutions initiatives aimed at making the tech giant carbon-negative by 2030. Large companies such as Microsoft, she said, can use their outsized purchasing power to boost credibility and demand for truly impactful nature-based climate solutions. Offset projects, she added, should be aligned with an organization’s values as well as their decarbonization goals, and complement real reduction strategies within its supply chains.

Quantitative data is essential for any robust carbon credit; yet, many data gaps exist in offset projects (specifically, nature-based solutions such as reforestation, biodiversity conservation or regenerative agriculture) that shake buyer confidence. The myriad of social and environmental benefits of planting trees and other nature-based interventions must become quantifiable assets that companies can easily use in decision-making.

“How do we turn a pretty old approach such as tree planting into a sophisticated, scaled, securitizable asset?” Guo asked. “We’re going to invest across our entire supply chain to make sure the materials we need and the kinds of energy services we need, come into existence at the scale in which we need them.”

Matt Evans founded an organization to help low-income communities in the Global South suffering from energy poverty and chronic underinvestment from carbon-offset developers. UpEnergy replaces highly polluting, conventional cookstoves — which kill 3.8 million people each year — with clean alternatives, and uses the associated avoided emissions to generate offsets. Scopes 2 and 3 emissions are an untapped source of climate mitigation; and smaller, community-scale interventions represent massive potential for mitigation and offset generation, Evans explained.

“[Carbon offsetting] has a really interesting opportunity to abate emissions,” he said, “but also tremendous benefits for the end users of the products that we distribute.”

A common theme throughout the discussion was delivering impact beyond carbon reduction, and the ability to communicate an asset’s long-term social and environmental benefits with certainty.

“Is this benefit core to the durability of the project?” Guo asked. “I’m looking for whether the claim [about] other social benefits is material to supporting the longevity of that project.”

For Guo, durability is determined across four pillars: Do no harm, promote social wellbeing and environmental justice, establish a reasonable baseline, and guarantee that the project is doing the work it’s claiming to do.

“There’s got to be some assurance of durability,” she said. “I think this is where the industry falls short sometimes.”

The VCM’s rapid growth has sometimes been at the expense of due diligence, resulting in a proliferation of low-quality projects in the market. Guo highlighted the importance of understanding how the fine print and mechanics of carbon-offset agreements will pan out in the real world. Microsoft achieves this with robust internal due diligence that often exceeds existing market standards, which Guo said promotes transparency and credibility.

“I’ve [personally] dug into reading carbon-purchase contracts to identify ways they can be restructured with durability in mind,” she said. “We need these projects to be bankable. I want to be able to turn these projects into an asset that can be securitized.”

Erin Horleman, VP of Commercial Strategy at Carbon Streaming, agreed that offset buyers are typically motivated by mandatory reporting requirements from within their organizations. Buyers usually look to invest in projects that tie to their supply chain or ethos, so they often promise to purchase a certain quantity of credits to ensure long-term security — a practice called “credit offtake.”

Carbon Streaming invests in high-integrity climate project developments to provide carbon-credit buyers with a portfolio of high-impact, low-risk reduction and removal credits. The company gives buyers access to a supply of rigorously vetted carbon credits, along with detailed impact reporting and opportunities for long-term partnerships tailored to meet their sustainability objectives.

Connecting buyers with projects is central to Carbon Streaming’s strategy, a role Horleman believes deepens durability and transparency. Her company relies on local experts to build relationships with the communities impacted by offset projects to ensure buy-in across the carbon-credit value chain.

“We’re a public company, so we have a vested interest in the long-term success of the project,” she said. “The ability to meet with the people on the ground that are part of project implementation goes so far in terms of due diligence.”

The panel concluded with a variety of key considerations for potential offset buyers to keep in mind when choosing projects.

Getting close to a project is not only good for identifying co-benefits and securing community support, but for identifying potential pitfalls in contract language or project design that may threaten the project’s effectiveness or durability.

“It’s really hard to get answers to those kinds of questions when you’re too far removed from the project,” Guo stated.

Evans emphasized that UpEnergy’s projects are led by the communities and end users of their products. Regardless of project type, when generating offsets, he explained, “… it’s still equally important to think about what we are doing to the state of technology and the common practices in the places where we work over time, and really think about durable change and the decarbonization of entire sectors.”

Evans hopes to see more investment in avoided emissions rather than solely relying on technologies such as direct air capture to remove in the future what can be avoided now. Guo said due diligence and governance — either voluntarily or through regulations — will help bolster the efficacy of emissions-offset projects.

Horleman pointed out that offset buyers often have higher standards than certifiers; so, while it’s essential to keep tabs on the pulse of the regulatory environment, “we have to listen to our clients and what things are important to them.”

Evans added that many crediting agencies aren’t experts in the projects they certify, so UpEnergy often has to educate agencies on how projects work in the community.

Guo offered that thinking of carbon offsets as a real estate transaction can help make buyers and sellers more likely to consider the long term and connect with the deeper meaning of projects. She advised potential buyers to communicate their values and expectations to all involved parties and pre-negotiate prices “to come up with a framework on what you’d be willing to buy, so that you can move fast.”

“We’re working with our buyers to make sure that those projects aren’t going to disappear,” Horleman said. “We want our buyers to be able to engage with the same project and watch it progress and grow and expand, and to see the co-benefits only get bigger and better.”

Christian Yonkers

Christian is a writer, photographer, filmmaker, and outdoor junkie obsessed with the intersectionality between people and planet. He partners with brands and organizations with social and environmental impact at their core, assisting them in telling stories that change the world.

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