Verra’s AI-Driven Shift for Credible Carbon Offsets

• Crisis in confidence over avoided deforestation credits stem from way baseline levels have been calculated
• In new appoach to be unveiled at COP28 Verra is consolidating five of the UN REDD+ methodologies into one framework
• Verra will provide data on jurisdiction’s deforestation activity to individual REDD projects
• It will also use technologies such as satellites, drones, remote sensing and artificial intelligence to more accurately measure deforestation
• Changes are being rolled out globally, starting in 13 countries including Brazil, Colombia, Kenya and Zambia

The practice of selling credits for projects that avoid deforestation has long been controversial, but this year has seen the market collapse in the wake of several high-profile pieces of research calling into question the efficacy of voluntary carbon market (VCM). Several big names have pulled out of offset plans, including easyJet and Nestle, and shifted the focus of their climate strategies to decarbonising their own operations.

One big source of the market’s credibility crisis is the way that baseline deforestation levels for VCM projects are calculated. These baselines are used to calculate the emissions reductions that each project has achieved, and the number of credits that can be issued against it. If a baseline is set too high, then the amount of credits sold by the project will be overestimated. Currently project developers calculate their own baselines, using a “reference” region that is broadly similar to where the project is located.

In an attempt to restore confidence, Verra, the world’s biggest issuer of carbon credits, has released a new draft methodology that it says will ensure all baseline data used for projects it certifies under its Verified Carbon Standard to be consistent within and across jurisdictions, and align the way baselines are calculated with the way that national and jurisdictional-level authorities calculate them.

Verra, which is expected to unveil the new methodology at COP28 in Dubai later this month, is consolidating five of its methodologies for projects under the United Nation’s Reducing Emissions from Deforestation in Developing countries (REDD+) into one comprehensive framework. Under the new approach, Verra will provide data on a jurisdiction’s annual deforestation activity to individual REDD+ projects.

Project developers will then use Verra’s data to calculate the emissions that would have taken place from deforestation in the absence of their project. Independent third-party auditors will verify the projects, and Verra will issue credits against the audited reports.

Julianne Baroody, senior director of forest carbon innovation at Verra, says: “It’s a lot more consistent to have all of the projects in the same jurisdiction using the same data, which will be provided by Verra and aligned closely with what the government (of that jurisdiction) uses.”

In addition, the data will be collected via new technologies that will ensure higher accuracy than previously. Verra has contracted a number of providers who will use technologies such as satellites, drones, remote sensing and artificial intelligence to more accurately measure the amount of deforestation taking place in a project area, and its surrounds. These include CTrees, Arbonauts and Space Intelligence.

United States-based non-profit CTrees will be providing data for four states in Brazil, and the whole of Colombia and Guatemala, working alongside Terra Global Capital, a Brazilian social enterprise with expertise in land tenure and project development. According to its co-founder and chief executive Dr Sassan Saatchi, it has deforestation data going back to 1990. Its satellite data can detect “the smallest farm, the smallest deforestation,” he says.

“The technology creates a much more rigorous data set for the whole jurisdiction that projects can use, and helps governments to monitor all regions for deforestation. It also reduces the risk of over crediting for baselines assessments for many projects within the jurisdiction,” he explains.

Drone footage of a deforested area in Para State, Brazil. Verra has contracted a number of providers who will use technologies such as satellites and drones to measure the amount of deforestation taking place in a project area. REUTERS/Ueslei Marcelino Acquire Licensing Rights

Although satellite data is already in use for monitoring of deforestation, other datasets were also used, he says. Using new technology will ensure that Verra’s data on deforestation is consistent and high quality, he adds.

“The only way you really can do this is with satellite data, you cannot really go to the whole country and measure the area. Verra has a very high requirement for accuracy, everything has to be 90%,” he says.

CTrees will also provide maps so that people can see where deforestation has occurred for themselves, rather than just a table displaying what it has calculated from the data, he says. Every area of forest will be monitored every two weeks, with all changes quantified, he adds. “The inventory data is just a number, but with our maps, every pixel would be observed, and you know which are the high carbon areas and the low carbon areas,” he says.

Verra believes that technological developments will make data more accurate and accessible, and improve global coverage over time. However, human input is still vital to ensure accuracy, and humans are often required to interpret satellite images, it says.

Verra’s changes are being rolled out globally, starting in 13 countries in Latin America and Africa, including Brazil, Colombia, Kenya and Zambia. Verra plans to release the final version ahead of COP28, which begins at the end of this month. It is aiming for the new baselines to be set in more than 40 jurisdictions globally by the end of 2024.

An indigenous man in Brazil wears a sticker on his headgear protesting against the United Nations’ REDD programme. Verra is ‘very confident’ that the changes it is making will improve trust in REDD projects. REUTERS/Ricardo Moraes Acquire Licensing Rights

All new projects will be required to use the new methodology with six months of the deforestation rate data being available for their jurisdiction, Baroody says. Existing projects will need to transition over at their next baseline assessment, which take place every six years.

Overall, Verra is “very confident” that the changes it is making will improve trust in REDD projects, Baroody says. “All of the studies that we have seen suggest that aligning the emissions from all projects is the best approach to creating consistency and also not having that potential for over-issuance.”

Thales West, assistant professor at Vrije University in Amsterdam and fellow of the Centre for Environment, Energy and Natural Resource Governance at the University of Cambridge, has co-authored scientific studies on the effectiveness of REDD+ programmes.

He believes that Verra’s new methodology would fix many of the current problems. “It will become much harder for developers to inflate project baselines (intentionally or unintentionally),” he says.

However, he adds that the framework of Verra’s new methodology remains “fundamentally flawed”, since it is still based on the idea that what happened in the past 10 years will happen again in the future. Such baselines do not take account of changes in governance and markets, which directly affect deforestation rates, he explains.

“The number of offsets REDD+ interventions can claim is based on performance,” he says. “It goes without saying that offsets based on poorly established baselines, either at the project or jurisdictional level, will unlikely represent actual carbon emission reductions.”