Former Verra CEO: We need to plan for a future after carbon credits

Image: Carolina Pino for Verra. Trees classed as part of a deforestation avoidance project.

David Antonioli headed up Verra for almost 15 years. His tenure there ended in June 2023, shortly after investigative reporters led by the Guardian accused Verra’s rainforest certification programme of widely overstating the climate benefits of certified projects. This, in turn, undermined the credibility of corporate climate commitments from buyers such as Gucci and Disney.

Verra denied many of the accusations but nonetheless forged ahead with plans to evolve the rainforest protection programme by mid-2025. Antonioli’s successor Judith Simon will oversee the final parts of this work.

The origins of the ‘Wild West’

Speaking exclusively to edie, Antonioli reflects on how the world’s voluntary carbon markets grew far more rapidly than international end-to-end standards were able to be developed, resulting in a disjointed patchwork of approaches from developers and buyers.

The global markets value doubled within a year to reach around $2bn in 2021-22, and are set to grow in value at least fivefold through to 2030.

Antonioli says: “If I had a magic wand, we’d have had initiatives like the VCMI and the ICVCM 10 years ago, before this thing got so big and people asked so many questions.”

He elaborates: “If I look at the rules that govern the market, they’re mostly based on achieving each tonne and having someone standing behind each tonne… we now want to be thinking about a bigger, more enduring objective”.

In other words, voluntary carbon markets were originally set up so that emitters could compensate for their carbon by paying for an avoided or reduced tonne– probably halfway across the world. Emitters did this to reduce the cost of compliance with national emissions trading rules.

This naturally resulted in a race to the bottom. In the absence of regulation, legislation or voluntary international standards, developers made carbon claims that didn’t stack up. Companies used offsetting to claim they could keep doing – or even grow – high-carbon operations.

Only recently have buyers and developers been asked the hard questions in the mainstream, beyond the realms of market experts and corporate sustainability professionals.

Guiderails are now being developed in a bid to bake in integrity from developers and verifying bodies – enhancing the ‘standing behind a tonne’.  The UN has also implored businesses not to use offsetting as an alternative to decarbonisation, and corporates have access ample further advice on using offsetting to go beyond simple carbon accounting.

Yet Antonioli believes that many carbon credit deveopers and buyers are still investing as a means to simply ‘net’ emissions on the road to net-zero.

They do want more robust data on projects’ climate impacts, and assurances that they generate social progress rather than feeding into issues of inequality and injustice, he argues. But these wants may not be formalised, Antolioli says.

“I think a lot of people have the understanding – and maybe even the hope – that the best that we’re doing in carbon is having an impact longer-term. But we haven’t made that explicit, and we’ve not set the rules to achieve that necessarily.”

A transitional approach

Antonioli has just published a new report on ‘transitioning’ voluntary carbon markets to ‘a new paradigm’.

His vision is of markets which go beyond the reactionary, deal-by-deal, tonne-by-tonne approach and look more systemically at the long term. How could carbon markets finance be directed, at scale, to the types of projects delivering emissions reductions which would not have otherwise happened?

This is necessary to keep the global aims of the Paris Agreement within reach.

Some authorities, like the EU and the State of California, have created ‘positive lists’. These identify activities which categorically need carbon finance to exist. Developers shaping other kinds of projects, and seeking finance, need to explain why in lengthy project descriptions. These need to be audited and sent to credit agencies.

This could be taken globally, Antonioli states – if the architects streamline the process, and are even clearer on timelines.

What generates a tonne of avoided or reduced carbon now won’t necessarily do so in the future. Emerging global standards will soon end the issuance of credits generated from switching from coal to natural gas, for example. Issuance has already dwindled from methane management at old coal mines. The lines are blurrier when it comes to credits from landfill gas, waste incineration, and cleaner cooking stoves.

And, what needs carbon finance to be done today may be able to self-sustain in a matter of years.

This opens up an even “thornier” question – do all carbon market players even want to think about achieving a globally decarbonised economy, when reaching this point would limit the issuance of new credits?

They need to be. Climate scientists have warned that warming on pre-industrial levels of 2C or more would put the livelihoods of 3.3 billion people at risk, wreaking untold damage on the global economy. There is little to no hope of business growth on hot-house earth.

An inevitable endgame?

Antonioli says: “One thing that we don’t answer is ‘when should carbon crediting stop, and how do we ensure that the limited financing it provides can ensure long-term transitions?’”

Antonioli says: “What I find exciting is that, if we think of carbon, essentially, as a subsidy, asking how we use it thoughtfully.”

He does not believe that mulling the end of crediting from certain activities would deter investment, acknowledging instead the ample opportunities to drive change now and the longer-term need for businesses to offset residual emissions around mid-century. He emphasises the need for a well-planned transition for those working on projects in the Global South.

Thoughtful use of carbon markets finance in 2024 would entail unlocking positive tipping points for decarbonising particular sectors, in Antonioli’s view. This term refers to positive change cascading once a certain proportion of the sector has made the change, typically around 15%.

An example floated by Antonioli is regenerative agriculture. Farmers see the transition as costly and risky upfront, as finance products are not mature and returns are likely to drop for at least a year. But farmers also know that transitioning can enhance soil quality and flood resilience, plus diversify income from cover crops and pollinator planting.

The Sustainable Markets Initiative claims that 15% of global cropland was managed using regenerative practices in 2020, and estimates that this needs to increase to at least 40% by 2030 if global nature and climate goals are to be met. Yet year-on-year growth in the proportion in the 2010s stood at just 0.6%.

The role of buyers

Carbon credit buyers, often businesses looking to meet net-zero targets, are not bystanders in the systemic transition of the market, Antonioli says.

“I hope that buyers will add the long-term plan to the discussion, and start asking what they are actually investing in in more detail. By adding this additional dimension to the discussion, my hope is that we can create a much more positive, compelling narrative.”

Caring about a tonne, he says, is “limited” and “niche”. Caring about creating a more sustainable future for all humanity is far more compelling.

Many businesses are already awaiting more clarity on the credibility of the market before investing. But they could, in Antonioli’s view, stop fretting over each tonne by looking at systems change and positive tipping points, within their own sectors.

Many food retail, food manufacturing and fashion firms are already looking at generating carbon credits in or beyond their value chains through regenerative agriculture. Case studies include luxury fashion label Burberry, ice cream makers Ben & Jerry’s and meal kit provider HelloFresh.

Other firms are looking at beyond value chain mitigation, backing carbon reduction, avoidance or removal schemes without necessarily using the resulting carbon credits in their emissions accounts.

Antonioli summarises: “A company may very well find that this makes a more sensible investment … than trying to force every single one of its producers to report emissions.

“The emissions reductions you achieve when you enable a full transition of an entire sector are going to dwarf the reductions you achieve through paying for carbon. For me, that’s the real big ‘a-ha moment’.”

Click here to access Antonioli’s report on ‘Financing the Transitions the World Needs: Towards a New Paradigm for Carbon Markets’.

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