So-called "avoided deforestation" projects do not deliver high-quality carbon credits and should not be used to claim climate neutrality, according to research from the University of California Berkeley’s Carbon Trading Project. The study was funded by Carbon Market Watch (CMW), a nonprofit watchdog.

"It is illusory to assume that storing carbon temporarily in forests can be used to permanently neutralize the effects of emissions in a way that can meaningfully tackle the climate crisis," the report said. "A fundamental shift away from the offsetting logic is required."

The report focuses on one carbon-crediting certifier, Verra, the largest certifier of avoided deforestation credits. Verra came under a barrage of controversy and media scrutiny this year after an investigation by The Guardian and others found that the credits it sold mostly did not offset emissions and were "likely junk."

The credits are often issued as part of "REDD+" schemes, which refers to "reducing emissions from deforestation and forest degradation in developing countries."

Here are the three big failings of Verra’s methodology, according to CMW and UC Berkeley.

1. Too much flexibility results in overcrediting

Verra gives project developers the freedom to cherry-pick the methodologies that maximize the credits they are eligible for. The baseline for these projects — what would have happened to a forest without intervention — is the foundation for creating a carbon credit. Verra allowed developers to exaggerate baselines and claim more credits, the researchers found. For example, the lowest baseline for one project was 14 times less than the highest baseline. Verra said it is updating its baseline methodology and all projects will be required to follow the update by 2025.

2. Ignoring international leakage

Researchers found that leakage, the deforestation that gets shifted to another area when a given area is protected, was not only underestimated but in some cases ignored entirely by Verra. The methodologies count leakage as a deduction to the number of carbon credits a project can issue, anywhere from 10 to 70 percent. But an average of only 4.4 percent was deducted from Verra’s REDD+ projects, and all its methodologies ignored international leakage, when deforestation is displaced into other countries, the report said.

It is illusory to assume that storing carbon temporarily in forests can be used to permanently neutralize the effects of emissions in a way that can meaningfully tackle the climate crisis.

Verra said its decision to exclude international leakage aligns with every standard on the market and while it should be mitigated and monitored, doing so in another country is impossible and could cause sovereignty issues. A project in Zambia, it said, can’t enforce measures in Zimbabwe.  

The report recommends identifying a "leakage belt," an area outside the project into which deforestation is expected to shift, and regulating how these areas are chosen to avoid cherry-picking, given that there is only one atmosphere which doesn’t care about international borders.

3. No transparency on how estimates are calculated

Project developers weren’t required to explain how they calculated the carbon content of forests, which opened the door to choosing equations that provided the largest number of carbon credits, according to CMW.

The report showed that project developers’ estimates of carbon content were 23 to 30 percent higher than the average found by UC Berkeley. The belowground carbon estimates were even worse, showing an overestimate of 61 percent.

The project developers did not have to disclose justifications for their calculations nor publish the data they used for their estimates. Of the 12 projects assessed by UC Berkeley, not one developer agreed to share their data.

Verra responded that many suggestions from the researchers are already being incorporated into a new methodology that the company is developing.