The activities were meant to slash climate-heating emissions of methane – a potent greenhouse gas – caused by the decomposition of plants in rice fields by changing irrigation methods. But, in a 17-month review, Verra found a string of failures in the projects’ practices, resulting in the production of credits in excess of actual emission reductions.

Verra said this week it had, for the first time, imposed “significant sanctions” on the project proponents and the auditing firms tasked with certifying their operations, spurring calls from carbon market watchers for wider reforms.

In March 2023, Climate Home revealed Shell’s role in the rice farming schemes and their risk of generating worthless offsets due to integrity problems such as over-counting emissions reductions and accounting tricks used in their development.

The fossil fuel giant is directly involved in ten such projects and counted over a million credits from them towards its climate targets earlier this year, which are intended to reduce the “carbon intensity” of its fossil fuel products. Shell used those offsets while Verra was conducting its investigation, drawing condemnation from campaigners and carbon market experts.

Shell’s projects are among a total of 37 rice cultivation schemes revoked by Verra on Wednesday after the registry identified “serious issues”. These included insufficient evidence that the activities directly contributed to the reduction of methane emissions and a lack of justification for the use of simplified procedures that allowed project developers to dodge stricter compliance checks.

Late cancellation

Verra said it first suspended the projects in February 2023 after it became aware of concerns over how their rules were being applied. By then, however, they had been active on Verra’s register for nearly two years and had issued millions of credits. The project developers calculated the equivalent tonnes of carbon dioxide companies could offset based on the amount of methane emissions they estimated to have been avoided through the projects’ activities.

Asked why it originally approved the projects, a Verra spokesperson told Climate Home the organisation’s processes “evolve as new information and evidence comes in”. They added that “during that period, China’s COVID travel restrictions made it impossible to travel and perform on-site investigations”.

Fahran Ahmed, Verra’s chief program management officer, said in a statement that the standard’s announcement of sanctions showed its “commitment to ensuring greater integrity, transparency, and quality in the voluntary carbon market”.

“There are consequences for failing to follow the rules and requirements in place,” he added.

Fossil fuel transition back in draft pact for UN Summit of the Future after outcry

A Shell spokesperson told Climate Home the company was “disappointed to learn of the issues Verra identified with these projects during their recent review” and said Shell would “work closely with Verra to understand the impact of their findings”.

The spokesperson also said the projects “are not managed or operated by Shell”, although it became the “authorised representative” for them in late 2021 when it struck a series of agreements with the Chinese company that originally set up the schemes and listed them on the Verra registry.

The contracts seen by Climate Home granted Shell “full agency” over the projects, including all “applicable rights and responsibilities” equivalent to those of the project proponent. Shell declined to comment on how it carried out its responsibilities in relation to the projects.

Compensation claim

In a letter sent to a Shell subsidiary in China on Wednesday, Verra warned the company that it reserved all rights to take action, including seeking compensation for any carbon credits issued in excess of the correct amount.

In addition to using credits issued by the rice projects directly, Shell also offered them for sale to other companies for offsetting purposes. Chinese state-owned oil and gas firm Petrochina used over 300,000 of those credits before Verra’s decision to suspend the projects.

A farmer works on transplanting rice seedlings following days of heavy rainfall in China. REUTERS/Tingshu Wang

Prior to Climate Home’s 2023 investigation, the projects were listed by Shell on a dedicated webpage illustrating its carbon credits portfolio, which said the company employed “a rigorous internal screening process” to ensure it invests in activities with clear climate and environmental benefits. They were removed after the publication of the article.

Gilles Dufrasne, lead expert on carbon markets at Carbon Market Watch, said it was no surprise that Shell had been involved in carbon offsetting projects with no real climate impact. “They don’t have any credibility as an organisation in trying to do anything meaningful on climate change,” he told Climate Home.

Auditors’ failures

Washington-based Verra also identified “serious failures” in the work of four auditing firms responsible for checking the projects’ adherence to its rules and the correct measurement of emission reductions.

Verra has given the auditors 15 days to present a “strong” action plan to prevent the same issues occurring in future. Failure to do so will lead to a temporary suspension of their work with the registry.

Leaders are cutting fossil fuel finance – next comes unlocking clean energy for all

Dufrasne welcomed Verra’s decision to cancel the Chinese rice projects – but said it raises deeper questions about the agency’s overall functioning.

“There is a more systemic problem when something like this happens in the first place with 37 projects issuing bogus credits for years while auditors turn a blind eye,” he told Climate Home. “There is an excessive reliance on checks and balances that are not working properly.”

Conflicts of interest

Voluntary carbon market standards like Verra rely heavily on external auditors to independently assess projects and their compliance with the rules. The registry only gives the final stamp of approval. But auditors are picked and paid directly by project developers, raising the risk of conflicts of interest.

Dufrasne said Verra should completely reform its system of third-party certifications “with more urgency and seriousness”.

When its rice scheme investigation was launched last year, Verra also banned any further use of the rice farming methodology used by the projects.

The registry has been developing a new rulebook for rice offset projects that it said would enable proponents to “credibly achieve emission reductions” and generate high-quality credits.

To advise them on this, Verra appointed an Indian company which is part of Shell, raising concerns about conflicts of interest.

(Reporting by Matteo Civillini; editing by Megan Rowling)

The post Verra axing of Shell’s rice-farming carbon credits in China fuels integrity fears appeared first on Climate Home News.

Forest cleared for agriculture in Acre, Brazil
(Pic: CIFOR/Kate Evans)

By Megan Darby

Even the staunchest advocates of the UN’s forest protection programme admit that “carbon cowboys” damaged its credibility.

The idea of REDD+, which stands for reducing emissions from deforestation and forest degradation, was to pay communities to protect forests and lock in carbon, but some unscrupulous operators were caught conning indigenous people and buyers alike.

Meanwhile, deforestation continued apace, causing somewhere between 11% and 20% of the world’s greenhouse gas emissions, depending on who you talk to.

Now, there are two certification schemes and project developers are keen to show they can help people and the environment, if they can only raise the money.

At a London meeting of participants in the REDD+ scheme on Wednesday, there were more sellers of forest carbon credits than buyers.

But there are plans to extend the market to ordinary consumers as well as corporations and governments, through an initiative called Stand for Trees.

Due to launch by Valentine’s Day 2015 and backed by US Aid, it will allow people to buy forest carbon credits on their smartphones.

Optimism

Greg Barker, climate envoy to the UK prime minister, told delegates he was more optimistic about REDD+ now than two years ago.

“Progress on REDD+ so far has been too slow. That money is taking too long to flow and not enough incentives are in place for this to work,” he said.

“But there is now a real push to make this work and learn the lessons of the last few years. This is no time to back away from this programme.”

The UK government has already contributed more than half a billion pounds to the scheme.

It backed the New York declaration on forests, which aims to halve deforestation rates by 2020 and eliminate the problem by 2030.

As well as storing carbon, trees help to filter water, prevent landslides, soak up floods, protect coastlines from storm surges and improve air quality.

Market failure

Last month’s seminal New Climate Economy report estimated the global value of all these “ecosystem services” at US$16.2 trillion in 2011.

“The current markets don’t reflect anything close to that true value,” said Barker. “Due to that market failure, deforestation continues at an alarming pace.”

An area of forest the size of western Europe disappeared last year.

Pressure on the land is increasing as demand for commodities such as palm oil, meat and timber grows.

In an aside, Barker promoted the meat-free Mondays campaign, noting that a lot of forest gets cleared for cattle ranching.

REDD+ aims to create a market for carbon credits to protect forests.

As a voluntary market with limited activity, it has yet to establish a universal price for those credits.

A tonne of forest carbon can be worth anything between US$3 and $18, according to one delegate.

Beyond carbon

Increasingly, project developers are aiming to do more than just preserve carbon.

Most of the schemes are in developing countries, where logging or oil palm farming is a tempting economic opportunity.

To succeed, REDD+ projects need to offer local people job opportunities in more sustainable sectors.

Almir Narayamagoya Surui, chief of the Paiter Surui in Brazil, has a leading role in one such project.

The Surui Forest Carbon Project is expected to prevent 242,000 tonnes of carbon dioxide emissions a year. It is certified by the Verified Carbon Standard.

It also has Gold status under the Climate, Community and Biodiversity Standard, which checks the project is boosting biodiversity and reducing poverty.

“We have a very close relationship with the forest,” Almir told delegates, through an interpreter. “The most important part of our community is living with the forest and our community knows really well how the forest works.”

Private partnership

The project has involved working with the likes of Brazilian cosmetics company Natura, which bought some of the first carbon offsets.

As the relationship with business developed, it opened up new lines of trade in sustainable forest products.

“It just shows how much this can benefit everyone,” said Almir.

He was critical of the Brazilian government, which is seen as cooling on forest protection.

Brazil’s deforestation rate increased in 2013 for the first time in a decade.

Destructive trend

The latest data from Brazilian NGO Imazon suggests the destructive trend is continuing into 2014.

In August, Imazon reported 437 square kilometres of forest were razed, 136% more than the same month in 2013.

At New York’s climate summit last month, president Dilma Rousseff highlighted a 79% reduction in deforestation over the past decade.

“Brazil does not announce promises; in Brazil we show results,” she said.

But the country did not sign up to the New York declaration on forests. Environment minister Izabella Teixeira told AP Brazil had not been consulted.

“In my country, I can see that many politicians think the environment is a barrier to the development of the economy,” said Almir.

“We understand that the environment is just as important as other sectors of the economy.”

The post Forest carbon projects turn to consumers in quest for cash appeared first on Climate Home News.

Pic: Flickr / Mike Miley

By Sophie Yeo

A global deal to reduce emissions from the aviation industry is looking increasingly unlikely to be agreed at the international negotiations taking place next week in Montreal.

A draft text of the resolution to be discussed at a council meeting of the International Civil Aviation Organisation (ICAO) seen by RTCC proposes that states work towards the development of a market based mechanism to reduce emissions.

But in a move branded “disappointing” by NGOs, it states that no decision will be taken until the 39th General Assembly in 2016 – one year after countries are set to cement a binding UN climate agreement in Paris.

The document requests the ICAO Council to “make a recommendation on a global MBM [market based measure] scheme that addresses key design elements … and the mechanisms for the implementation of the scheme from 2020.”

It highlights that an MBM should “contribute towards achieving global aspirational goals” for the aviation industry – improving the efficiency of the world fleet by 2% per annum up to 2050 – but equally “should not impose inappropriate economic burden on international aviation”.

China, America and the EU are said to be keen to move the text forward at the Council meeting, while developing countries are less enthusiastic, worried that any form of MBM could stifle their growing aviation industries.

15-year delay

There has been little action to reduce the sector’s growing greenhouse gas emissions since ICAO, the industry-influenced aviation arm of the UN, was assigned the task under the Kyoto Protocol in 1997.

This additional delay is likely to be seen as another victory for the airline industry. Many had hoped that the added threat of a controversial Emissions Trading Scheme (ETS) imposed by the EU would help bring matters to a head.

Under this system, all aircraft flying into or out of the EU were required to monitor and pay for their carbon emissions.

The outrage of other countries, which saw this system as a threat to their sovereignty, meant that last November the EU ‘stopped the clock’ on the proposed ETS for a year, in order to allow political breathing space for an international agreement to take place.

NGO disappointment

The approaching reinstatement of the EU ETS for international flights to and from the continent means that negotiations on a global deal have been gaining pace.

Many observers had hoped that an agreement for some sort of market based mechanism could be reached by the ICAO General Assembly at the end of September.

This text promises little but more talk and delay by ICAO and the aviation industry, according to Jean Leston, transport policy manager for WWF.

“It is not 100% disappointing, but it’s certainly 80% disappointing,” she says. “On the plus side, it is still calling for an MBM,”

Leston told RTCC there are fears that the industry may rely on implementing a “basket of measures” – a combination of technological and operational improvements aimed at improving the fuel efficiency of aircrafts – instead of committing to carbon trading scheme.

“If there is an agreement at the assembly then that is a victory of sorts, although the NGO community would say that’s a hollow victory because we don’t know what kind of MBM that’s going to be.”

Range of options

ICAO is currently considering three types of MBM: carbon offsetting, offsetting with an added revenue generation mechanism, and a cap-and-trade ETS.

The latest version of the draft text instructs the council to “finalize the work on the technical aspects, environmental benefits, economic impacts on international aviation and modalities of the three options for a global MBM scheme.”

The document acknowledges that the industry’s preference is for offsetting without generation – the least environmentally effective scheme – but continues to keep all three options on the table, to be decided upon at the 2016 General Assembly.

“ICAO is not making any meaningful decisions, and meanwhile the aviation industry can continue to pollute,” says Leston. The report itself emphasises that any mechanism eventually adopted should continue to promote the sustainable growth of the industry.

The aviation industry currently represents a significant chunk of net carbon emissions. In 2005, it was responsible for about 2.3% of CO2 emitted globally. If the international fraction of these emissions – about 62% of the total figure – were a country, it would be the 17^th largest emitter of CO2 in the world.

Science warning

Studies from Manchester Metropolitan University indicate that a market based mechanism is essential if the aviation industry is to achieve its ICAO-set goal of carbon neutral growth in the aviation industry from 2020.

Its most recent report, released this week, said that it was essential that a market based mechanism was achieved as soon as possible, in order to avoid the global warming that would be triggered by the carbon emitted between now and 2020, after which the aviation industry is bound to limit its emissions.

Professor David Lee, the author of the report and a scientific advisor to ICAO, explained to RTCC that, because CO2 is a long term pollutant that builds up in the atmosphere, the end point of policy negotiations is less important than immediate action – a fact which is says is often forgotten by policy makers.

“These early savings pay off,” he says. “Actually, the whole issue is about timing. You can translate this through to the whole of CO2 emissions; not just aviation – everything. Timing is everything.

“We have to reduce the emissions early. Otherwise the end point is really almost irrelevant.

“If we reduce emissions very late to achieve our emissions goal and pat ourselves on the back, actually the real environmental outcome could be so much worse than if we adopted early measures.”

General Assembly

The text is still in its draft stage, and will be debated by the ICAO Council on the 4 September before being presented to the General Assembly on the 24^th.

This means that changes could still take place – or that it could be rejected entirely. Leston describes this as being a “worst case scenario”, as it leaves the negotiations at an even weaker stage than they currently are.

RTCC understands that some of the key countries who have typically been seen as an obstacle to negotiations, in particular China and America, are intending to support the text, while it is the developing states such as India and Brazil that are likely to put up opposition. The EU is said to support the text.

“A lot of the developing states are still questioning the need for an MBM at all,” says Leston.

“They’re looking for a lot of exemptions, and some of them will arbitrate against the idea of a global MBM, saying it would cost their economies, their industries, and that they don’t think it’s a universal requirement.”

The post Aviation industry unlikely to agree emissions reduction deal until 2016 appeared first on Climate Home News.

Boosting local economies is key to improving the quality of carbon offset programmes, according to Bernard Giraud, President of the Livelihoods Venture.

With scepticism about the integrity of some offset programmes, Giraud says the Livelihoods Fund, one of the projects run by the venture, provides a better alternative, with businesses offsetting carbon and tackling social issues at the same time.

“Companies invest in a mutual fund and that is used to support the restoration of ecosystems that provide livelihoods to the local population. In return the companies receive carbon credits that have a very high social and environmental value because they are linked to the livelihoods of very poor populations,” explains Giraud.

Projects have included mangrove restoration to protect coast lines, sequester carbon and boost fisheries and tree planting to provide forestry incomes as well as absorbing carbon from the atmosphere.

The fund is currently worth €30m with seven businesses including Danone and Credit Agricole taking part.

“Companies can provide expertise so for example Schneider Electric is working on access to energy and Danone is working on nutrition,” said Giraud.

“Danone’s dairy and water business is effectively processing products that come out of the soil. It is quite natural that companies like Danone would be involved in projects that link between livelihoods and the conservation of natural resources.”

The post How private sector expertise can make carbon credits greener appeared first on Climate Home News.

The entire London Olympic Games’ carbon footprint could be wiped out if the steelmaker ArcelorMittal cancelled just 3% of its excess carbon emission permits, according to two UK green groups.

Sandbag says a carbon neutral Olympics would be a better legacy than the ArcelorMittal Orbit Tower. (Source: Flickr/msdeegan)

Climate campaigning NGO Sandbag and Low Carbon Community Network (LCCN) have called on the steel giant, an official supporter of the event, to do just that and eliminate the necessary number of permits.

ArecelorMittal is the single most oversupplied company in the European Emissions Trading Scheme (ETS) sitting on a stockpile of €1.6 bn worth of credits, largely as a result of the recession reducing industrial, and so CO2, output.

Heavy industry was awarded credits for free when the scheme began with the idea being that those using more than their allowance would have to purchase extra allowances, incentivising companies to be efficient.

The firm’s Orbit structure at the Olympic Village has also caused controversy with some questions over the green credentials of a 2000 tonne steel structure.

“For ArcelorMittal, a carbon neutral London 2012 would be a far better Olympic legacy than the Orbit could ever be,” said Rob Elsworth, Policy Officer, Sandbag.

“What is more the steelmaker could achieve this effortlessly by cancelling less than 3% of the spare carbon allowances that European governments awarded them for free. Such a gesture would also help reduce the supply of allowances in the EU emissions trading scheme at a time when it is struggling to remain relevant.”

The Games’ promise to be the greenest ever appears to have been fulfilled but ethical and environmental controversies surrounding corporate sponsors such as Dow Chemical have dogged the event regardless.

The post Green groups call on ArcelorMittal to underwrite Olympic carbon emissions appeared first on Climate Home News.

Carbon offsetting is a complex process, and needs effective measuring and verification processes. Investment experts ‘The Livelihoods Fund‘ have first hand experience of how to set up and run projects – this is their story.

Since, 2008, in the Casamance and Sine Saloum regions of Senegal, Livelihoods Fund has been experimenting with a new approach to carbon compensation for and by rural communities.

The project is spread across 400-plus villages in the Casamance and Sine Saloum regions of Senegal.

Substantially more than 100 million mangrove plants have been planted to restore mangroves swamps, boost fish supply and generate carbon credits. The project involves planting mangroves of the Rhizophora species in suitable areas.

It is a decentralized project with sites spread across 400-plus villages in the two regions. Livelihoods Fund is working with a local association called Oceanium, which has been active in the area since 1990, in its efforts to preserve the intertidal environment through mangrove restoration.

The sites that were chosen for restoration were degraded mangroves habitats, which were converted by local people for pig farming or rice cultivation.

Mangrove restoration, among other things, is providing fishery resources (fish, shellfish, crustacean), fuel wood for local communities and, through improved hydrology, can increase rice yields.

The Livelihoods project has restored 1,780 hectares in 2009 and 4,900 hectares in 2010 and 2011 providing a carbon capture potential of 750,000 tons of CO2 over 20 years time.

The project has restored 1,780 hectares in 2009 and 4,900 hectares in 2010 and 2011 providing a carbon capture potential of 750,000 tons of CO2 over 20 years time.

At the same time, it will help over 400 villages to maximise the benefits of their local ecosystem, through improved resources in fish and shellfish and in buffering against the “salinisation” of farming grounds.

The project has now been submitted for final validation to the United Framework Convention on Climate Change-Clean Development Mechanism (UNFCCC-CDM) board.

The Senegal Designated National Authority has approved the project which has enabled the Fund to address the issue of ownership of the trees (public, communal or traditional) and the carbon assets.

In addition, Livelihoods Fund has developed a carbon accounting and reporting methodology to account and report net carbon sequestration of large scale Mangroves restoration projects, with field testing on this project.

The Methodology was approved by the CDM and entitled as “Afforestation and reforestation of degraded mangroves habitats” AR-AM0014.

The success of the Senegalese mangrove restoration project will potentially benefit other projects in other countries by demonstrating the possibility of up-scaling “small scale” mangrove projects to “high scale” ones, conversion of a localized annual project into a multiyear and multi site project and inclusion of below-ground biomass in a carbon pool to allow accounting of net carbon sequestration through mangrove restoration.

Livelihoods fund is a unique carbon investment fund that provides its investors access to carbon credits encapsulating a commitment to nature-based biodiversity and community development projects.

Its fundamental goal is to create social value for rural communities and contribute to their food security through the restoration of their ecosystems. Livelihoods Fund now unites 5 investors: Danone, Credit Agricole, Schneider Electric, French Post and CDC Climat and invests in carbon mitigation projects that in return, generate carbon credits for fund investors to offset their own C02 emissions or sell the credits.

Livelihoods is open to partner with other co-founders, for example Voyageurs du Monde in Senegal. Projects under the fund are based in developing countries and are vetted by an Advisory Board, of which IUCN is a member.

The post Rio+20 Business Focus: A new approach to carbon compensation appeared first on Climate Home News.

(© C. Senthilvel/2941 Biomass-Based Power Project at T-Kallupatti Village, Madurai District, Tamil Nadu)

Many businesses invest money in tree planting projects in the developing world, which in turn allows villages and communities to get paid for protecting and maintaining their woodland.

In the seventh of a series of UNFCCC CDM Radio Club reports RTCC is hosting, Kensika Monshengwo, a freelance journalist from the Democratic Republic of Congo talks about carbon credits as the currency of tomorrow.

His podcast helps to explain how the carbon credit systems works, and how it can be a benefit to people in the country.

Monshengwo was one of the finalists in the 2011 UNFCCC/CDM African Radio Contest.

The radio club aims to spread the word about the CDM in Africa and extend the benefits of the mechanism to communities that have not yet benefited from the scheme.

The post PODCAST: How carbon offsetting is working in the DRC appeared first on Climate Home News.