Exposed: carbon offsets linked to high forest loss still on sale

Tucked on the edges of a biodiversity hotspot, the Tumring project in Cambodia is supposed to prevent a rainforest the size of Chicago from being chopped down.

Its supporters claim it has been doing exceptionally well. The Cambodian government hailed it as the “most successful” community-based forest conservation scheme on the carbon market and a climate solution.

Satellite images tell a different story. Tumring is experiencing dramatic deforestation, losing over 22% of trees in the project area since the scheme began. The Cambodian government does not account for this loss in official monitoring reports.

Nor is this an isolated case. In a joint investigation, Climate Home and Unearthed, Greenpeace UK’s investigative journalism unit, found similar discrepancies in two Brazilian projects, based on data from two different satellite monitoring platforms. Companies like Uber, ArcelorMittal and Marathon are still using credits from these three projects to offset their emissions – and there is nothing to stop them.

It raises serious questions for Verra, the largest standard setter in the voluntary carbon market, which oversees the projects.

Project owners disputed the findings, while Verra said it “is committed to refining and improving its methodologies based on the best available science and data”.

Mind the gap

By protecting trees the Tumring project generates carbon credits – or offsets – which are then used by polluters to compensate for their own emissions elsewhere. Texan oil firm Marathon is a major buyer, while the Cambodian and Korean governments, project partners, are planning to use a portion of the credits as part of their national net zero plans.

But the emissions avoided through the project are likely to be overstated given the deforestation rate appears to be higher than claimed. Project owners recorded just 3,450 hectares (ha) of forest loss in monitoring reports between 2015 and 2019, the most recent data submitted. Our analysis using the online tool Global Forest Watch showed forest loss was four times higher in that period, at 14,000 ha.

Climate Home and Unearthed looked at offsetting projects after a source raised concerns about apparent discrepancies between what project owners were declaring in their monitoring reports, and what could be seen through satellite images.

The team compared project filings with data developed by the University of Maryland and made available on the Global Forest Watch online platform. A second source of satellite data, Forobs, developed by the European Commission’s Joint Research Centre, was used to check the findings. This showed a similar trend.

Redd+ weaknesses

Verra is a major proponent of the UN-backed scheme Redd+, which stands for “reducing emissions from deforestation and forest degradation in developing countries”. It is designed to protect areas at risk of being deforested. Companies can buy carbon credits from these projects to discount their own emissions.

Critics have long raised concerns about weak quality control of this kind of project. An investigation published by The Guardian and Die Zeit earlier this year alleged more than 90% of Verra’s Redd+ projects were not driving emission reductions, largely because developers exaggerated the threat forests were facing. Verra disputed the findings.

Climate Home and Unearthed found that, in addition to inflated baselines, underreporting of forest loss throughout a project’s lifetime and light-touch regulation can lead to far too many credits being generated.

“The findings point out deep flaws in the forest carbon offset mechanism”, said Souparna Lahiri, a climate adviser for the Global Forest Coalition. The fact deforestation is increasing, instead of going down, “is deeply concerning” and “strengthens our conviction that the mechanism of offsetting cannot be fixed”, he added.

Self-reported deforestation

Each carbon credit represents a ton of CO2 kept from being released into the atmosphere by protecting trees. If a larger portion of forest is cleared than project developers claim, the volume of emissions they avoid will be overstated. When used by companies or governments to compensate for their emissions elsewhere, these credits would have a negative climate impact.

Verra says its role is to make sure that, when a company does invest in a carbon project, it has integrity and meaning, verified by the best standards and science. Monitoring reports are a crucial part of how progress is measured, since they disclose setbacks such as rising deforestation.

Monitoring reports are audited by third parties, then submitted publicly on a project’s page, alongside a host of other documents. In practice, they can be difficult for the public to understand and evaluate. There’s no standardised way to monitor projects.

The way the Cambodian government and its partners monitor deforestation in the Tumring area is opaque. They use national land cover data produced by Cambodia’s environment ministry that is not available publicly. It has a low tree cover threshold, meaning an area needs as little as 10% of trees to be counted as forested. To put it another way, you could chop down 90% of tree cover in a previously untouched section and still claim the forest was intact.

The Cambodian government has previously tried to discredit independent analysis showing that deforestation is higher in the country than state records.

Wildlife Works, which worked as a technical consultant for project validation and verification, said it “had no connection to the project” since completing the job and directed questions to the Cambodian government.

The Cambodian government did not respond to a request for comment. The Korean government told Climate Home and Unearthed that only credits from 2021 onwards would be used to offset national emissions.

Industry transparency

The Integrity Council for the Voluntary Carbon Market, an independent governance body for the industry, has called for greater transparency, urging offsetting projects to make all their information accessible to a “non-specialised audience” so a project’s climate impact can be better assessed.

Gilles Dufrasne, from the NGO Carbon Market Watch, said: “Current practice on the market simply isn’t up to standard and this lack of transparency needs to be plugged. More credible, and transparent, use of forest monitoring data is part of this.”

Sylvera, a carbon offsets analytics provider, noted in its 2022 State of Carbon report that the majority of the company’s D-rated projects, of which Tumring is one, “grossly under-reported the deforestation in the project area and have exceeded the baseline emissions”.

Samuel Gill, Sylvera co-founder and president, told Unearthed and Climate Home: “The technology to largely resolve issues like underreporting or overcrediting already exist and are being deployed.” He added: “These improvements take time to filter through the system and in the next few years we should see considerable uplift in project quality as a result.”

In theory, Verra already has various mechanisms to prevent worthless credits linked to deforestation from flooding the market and to punish project developers responsible for any irregularities.

Project owners are required to set aside in a “buffer pool”: a portion of credits that cannot be traded on the market. These act like an insurance policy: if trees meant to be protected end up being felled or burned in a fire, credits in the pool should be cancelled to ensure the integrity of the credits previously sold for offsetting purposes.

Additionally, complaints may trigger a project review and, if a developer is found to have issued too many credits, it can be sanctioned or made to pay a compensation.

But carbon market experts have doubts over the effectiveness of the system, saying the size and use case of buffer pools may be too limited. Only one project has ever had credits from the buffer pool cancelled, according to the Verra register.

Recurring problem

Over 17,000 kilometres away from Tumring, the Rio Preto-Jacundá Redd+ project is meant to achieve the same goal and protect an area of the Brazilian Amazon state of Rondonia.

The project has so