Carbon credits have enabled vital protection of tropical forests, despite being oversold

Carbon credits have enabled the vital protection of tropical forests despite being hugely oversold, a major analysis led by Cambridge University researchers has found.

The scientists discovered that many Reduced Emissions from Deforestation and Degradation (REDD+) projects achieved meaningful reductions in forest loss, offering real environmental benefits. However, their analysis also confirmed that almost eleven times more carbon credits were issued from the REDD+ voluntary carbon market than was justified. 

The study, which is published today in the journal Nature Communications, was conducted by an international team of researchers. "Many projects have successfully slowed deforestation, even if more credits were sold than are justified," says co-author Prof Julia Jones at Bangor University.  

And this is important, says fellow co-author Prof Anil Madhavapeddy, Professor of Planetary Computing here, because "conserving tropical forest remains a vital goal for protecting global biodiversity as well as protecting precious carbon stocks". 

Tropical forests are an invaluable global asset, but are under increasing threat. Carbon markets have the potential to contribute substantial funds to their protection.

But over the last two decades the voluntary carbon market – through which people can buy carbon credits to offset their carbon emissions – has boomed and almost bust.

Conserving tropical forest remains a vital goal for protecting global biodiversity as well as protecting precious carbon stocks.

Prof Anil Madhavapeddy

REDD+ schemes use funds from the sale of carbon credits to protect existing forests, but their valuation methods have come under heavy scrutiny leading to a crisis of confidence in the market. 

The new study reveals that nine high‑issuing REDD+ projects accounted for much of the over‑crediting, skewing both market value and public perception.

The research team synthesised six independent evaluations of the effectiveness of 44 REDD+ projects. (These represented almost half of the projects producing REDD+ carbon credits by 2020.) They found that four out of five projects successfully protected forests.

However, they also found that "many REDD+ projects were at far lower risk of deforestation than anticipated by project-led evaluations," says Dr Tom Swinfield, a researcher in Cambridge University’s Department of Zoology and first author of the study. "Credits were issued based on predictions that these forests were at imminent risk of deforestation, but in reality this risk was often lower."

He adds: "It's vital that future forest carbon credits accurately represent their benefits for these schemes to be a meaningful solution to deforestation."

Professor Julia Jones says: "A key take-home message is that 'bad credits' do not necessarily mean 'bad projects'. Many projects have successfully slowed deforestation, even if more credits were sold than are justified."

She adds: "The over-crediting scandal in the voluntary carbon market has left many with the unhelpful impression that anything to do with funding tropical forest conservation through carbon finance is a bit dodgy. It is important to set the record straight, as forest conservation is so vital to tackling climate change."

How are carbon credits generated?

REDD+ schemes generate carbon credits by investing in the protection of the world’s most important forests, from the Congo to the Amazon basin. Credits represent the carbon that is no longer released through deforestation as a result. Organisations and individuals can then offset their own carbon footprint by buying credits equivalent to a given quantity of emissions.

Carbon credits are generated by comparing the anticipated deforestation in a region before protection, with the projected deforestation once areas of forest are protected through a REDD+ project. This depends on accurately selecting other, unprotected areas of forest against which robust comparisons can be made.

The problem many independent evaluators have discovered is that the comparison areas chosen by crediting agencies were often more exposed to deforestation than project areas would have been, so too many credits have been issued.

An evolving market

The value of the carbon market has plummeted to around one quarter of its 2022 US $2 billion high, following widespread evidence that carbon credits were oversold.

Although the first generation of REDD+ methodologies has largely been phased out, the next generation has yet to be fully implemented – with major delays perhaps driven by concerns about getting the system right.

The researchers say that to avoid over-crediting, future REDD+ projects must draw on more representative reference forests to better assess the true contribution of projects to forest protection.

Several improvements – such as using independent data providers to remove any bias in valuing credits – are already helping to make these credits more robust. But researchers say that retrospective checking of project performance is also essential.

"This study confirms widespread over-crediting in the carbon market. But despite the challenges, carbon markets remain one of the few mechanisms we have to protect tropical forests while giving organisations and individuals the chance to compensate for their emissions," says Swinfield.

"Tropical forest conservation remains a vital goal for protecting global biodiversity as well as protecting precious carbon stocks," says Prof Anil Madhavapeddy here.

"Monitoring such large swathes of land benefits greatly from modern computational techniques to process petabytes of satellite and remote sensing data into a form usable by conservation practitioners and carbon crediting methodologies. At the Energy and Environment Group here in this Department we're committed to applying planetary computing to tackling such problems and improving the accuracy of data about our world."