Exploring the Challenges and Potential of Voluntary Carbon Markets Through Cross-Industry Perspectives and Collaborations
September 5, 2023
New white paper on voluntary carbon markets, co-authored by the MCSC, BBVA, and IBM, published this week.
Voluntary carbon markets (VCM) can be a helpful and important tool in reducing greenhouse gasses in the atmosphere – and recent increased scrutiny, in response to claims of greenwashing and voluntary carbon credits quality, has led to more interest in moving VCM forward in a scalable and legitimate way. Despite VCM’s potential, one challenge is uncertainty related to the measurements and assessment of a carbon sequestration project’s impact, which can be hard to quantify. This is especially the case when it comes to carbon offsets from nature-based solutions (NBS), specifically when attempting to track the quantity of atmospheric carbon that is captured by soil or vegetation. As argued in a new white paper from the MCSC, Carbon Credits and Credibility: A Collaborative Endeavor, this challenge must be addressed urgently with new rigorous scientific and economic approaches to VCM in order to offset hard-to-decarbonize-emissions.
The paper’s authors, spanning across both academia and industry, are MCSC Impact Fellows Evan Coleman, Aneil Tripathy, and Sydney Sroka; IBM Research’s Levente Klein, Research Scientist; Ademir Ferreira da Silva, Research Engineer; Marina Rakhlin, Strategic Partnerships Program Director; BBVA’s Beatriz Roa, Head of Net Zero Strategy, and Jon Díez, Sustainability Principal Manager. Together, they examine and respond to measurement challenges in VCM through a collaborative and interdisciplinary approach; the white paper highlights some of their key findings.
Towards the goal of achieving the type of robust and scalable carbon sequestration assessments that could provide trustworthy market legitimacy, the authors share the results of a case study using satellite data and AI to estimate the sequestered carbon of two carbon offset projects bought in 2023. Based on geographical considerations and market purchases in 2022, for this pilot project, BBVA proposed an analysis of factors influencing the quality of two institutionally held carbon offset projects, located respectively in Colombia and Uruguay. These projects are useful examples of the particularities involved in afforestation and reforestation projects, and the need to find variables which can aid in transparent assessments of year-to-year biomass growth amongst projects available in the market.
“Our white paper highlights the value of working across different market actors: IBM as technology providers, BBVA as market participants, and MIT researchers, to tackle climate change action bottlenecks,” says Tripathy. “This project shows the importance of using criticism to reform markets towards concrete and verifiable climate action. In response to revaluations of the effectiveness of different climate finance mechanisms, such as carbon markets, we should utilize this criticism in a manner aligned to the scientific method. This supports greater transparency and collaborative efforts to integrate more accurate forms of carbon sequestration measurement into pre-existing market infrastructure. Such efforts move us beyond institutional paralysis, which is vital given the urgency of climate action.”
Embracing emergent technologies is one approach to move forward; as Rakhlin emphasizes in the paper, “applying technological solutions that tap into standardized data could aid in addressing the scaling challenge of VCC [voluntary carbon credits], AI-powered technologies hold the promise of making the VCM more verifiable and thus enabling various players in the ecosystem to share information, increasing support for carbon markets as the tool that will help preserve biodiversity and support local communities.”
This white paper is one of two from the MCSC that emphasizes the importance of large ecosystem measurement datasets in the monitoring and deployment of different NBS to climate change. The NBS measurement challenges tackled in relation to this VCM white paper are intertwined with the topic addressed in a second MCSC white paper, forthcoming, on the classes of ecosystem intervention that present salient opportunities to mitigate climate change.