Verra, the leading nonprofit organization in the voluntary carbon credit market, has taken a significant and unprecedented step by rejecting 37 rice cultivation projects in China. Alongside this rejection, Verra has imposed substantial sanctions on the project proponents and the validation/verification bodies (VVBs) involved.
These actions are a result of an extensive quality control review, showing Verra’s commitment to improving transparency, integrity, and quality within voluntary carbon markets.
Cracking Down on Compliance
The projects in question employed the AMS-III.AU methodology, part of the UNFCCC Clean Development Mechanism. It was permanently inactivated by Verra in March 2023. This methodology was designed to reduce methane emissions through adjusted water management practices in rice cultivation.
However, the quality control review revealed serious issues, namely:
- insufficient demonstration of additionality,
- overstated project areas, and
- a lack of credible evidence to support baseline and project scenario implementation.
The review was bolstered by an analysis of remote sensing data, further validating the concerns raised.
Verra’s decision to impose sanctions on these projects marks a watershed moment in the voluntary carbon market. As part of the sanctions, Verra has issued non-conformity reports to four VVBs:
- China Classification Society Certification Company,
- China Quality Certification Center,
- Shenzhen CTI International Certification Co., Ltd, and
- TÜV Nord Cert GmbH.
These VVBs are required to present strong corrective action plans within 15 days to prevent similar issues from happening again. Failure to do so could result in their temporary suspension from doing audits of other projects under Verra’s Agriculture, Forestry, and Other Land Use (AFOLU) sector.
Verra’s Sanctions Send Shockwaves Through Carbon Markets
One of the most critical aspects of Verra’s action is the decision to seek compensation from the project proponents for the over issued Verified Carbon Units (VCUs). This move reinforces the importance of accountability in the carbon market, ensuring that projects adhere to the rigorous standards set by Verra. By holding project proponents accountable, Verra aims to maintain the integrity of the market and ensure that carbon credits represent genuine emission reductions.
About a year ago, Verra was criticized for the quality of carbon offset credits the certifier approves. The standard setter has been accused of approving “worthless” carbon offsets that could harm corporate climate goals.
Verra’s response to these issues reflects its broader mission to tackle global environmental and social challenges. The organization works with both the private and public sectors to support climate action and sustainable development, providing standards, tools, and programs that credibly assess environmental and social impacts.
As a mission-driven nonprofit, Verra is committed to reducing greenhouse gas emissions, improving livelihoods, and protecting natural resources.
In line with its commitment to continuous improvement, Verra is also developing a new rice cultivation methodology under the Verified Carbon Standard (VCS) Program. This new methodology will incorporate more robust provisions, including:
- guidance for field stratification,
- consideration of nitrous oxide emissions, and
- soil organic carbon stocks, and standardized protocols for methane measurements.
The goal is to enable project proponents to achieve credible emission reductions and generate high-quality VCUs. The consultation for this new methodology recently closed, and its official launch is anticipated later this year.
Reimagining Carbon Credits: A New Era for Rice Cultivation Projects Begins
The suspension and sanctions against the 37 rice cultivation projects conclude a process that began in March 2023. At that time, Verra inactivated the AMS-III.AU methodology following a thorough review.
The new methodology aims to address the shortcomings identified in the previous approach. This includes providing clearer guidance and more efficient processes for:
- determining additionality,
- quantifying emission reductions, and
- ensuring transparent data measurement, reporting, and verification (MRV) procedures.
As of now, Verra has registered 37 projects applying the AMS-III.AU methodology, with 25 of these projects having issued VCUs totaling 4.56 million units, which represents 0.43% of all VCUs.
Verra’s decisive action in this matter serves as a strong signal to the market that inclusion in the Verra Registry is a mark of quality and integrity of carbon credits. It also highlights the organization’s commitment to ensuring that all projects meet the high standards necessary to deliver meaningful environmental and social benefits.
Janice O’Brien, Director, Auditing and Accreditation, Verra, noted on this announcement saying that:
“Our quality control review identified serious failures that required a serious response. What we have learned in this process will also support the development of a more effective and credible rice cultivation methodology for future projects.”
By taking these unprecedented steps, Verra not only addresses the immediate issues with the rejected projects but also sets a precedent for how similar issues will be handled in the future. The organization’s actions are expected to contribute to a more robust and credible voluntary carbon market. This is particularly important in supporting global efforts to combat climate change and promote sustainable development.