“I see signs of improvement in the voluntary carbon market”

Christiane Weihe

A quality crisis, a credibility crisis, a crisis of confidence: a glance at the voluntary carbon market does not always give cause for optimism. But should it be written off altogether? Not at all! After all, good-quality carbon credits do exist, of course – along with players who are making efforts to improve overall quality and thus leverage the major potential of the market. One of them is climate expert Donna Lee, who worked for the US Department of State for many years before becoming an independent consultant. In 2021, together with Duncan van Bergen, she set up Calyx Global, a ratings platform that assesses whether climate projects are genuinely able to meet their emissions offsetting claims and thus enables businesses to access high-quality carbon credits.

Donna Lee, what prompted you to set up Calyx Global?

I have been working in the climate field for quite some time and in my experience, it has always been short of money. And then this voluntary carbon market came along and businesses were genuinely willing to invest large sums of money in offsetting their emissions. But unfortunately, the market had a major quality problem. We were inspired by the idea of providing independent, science-based information and channelling the cash to wherever it would have the biggest impact: in other words, into high-quality climate projects.

How many projects have you evaluated so far?

We have evaluated 450+ carbon projects and given greenhouse gas ratings across more than 20 different project types. But we don’t just look at climate impact. We have also evaluated more than 200 projects to determine their effects in terms of the Sustainable Development Goals and we are now also starting to identify projects’ social and environmental risks – to health, biodiversity or workers’ rights, for example.

What’s the situation with regard to quality at present?

There’s still a lot of work to do to improve the market overall. We have produced a graph that rates the projects that we have evaluated on a scale from A+ to E; in other words, from very good to very poor. Unfortunately, only 3% of the projects received our A+ rating, which means we did not find any material GHG risks. With most projects, we find risks such as a lack of additionality, non-permanence, over-crediting or double counting.

How do you select the projects that you evaluate?

We started out by considering whether rating the projects that represent the largest portion of the carbon credit market was a rational approach. That would have been quite straightforward because there are some very large projects out there. However, we found that these projects tend to receive lower ratings – in which case, all we can do is signal to customers what not to buy. So now we look for high-quality projects, although that’s rather like searching for a needle in a haystack.

How can the quality be improved?

Quality cannot be improved by only one actor. In the voluntary market, it requires multiple actors working in tandem. For example, the Integrity Council for the Voluntary Carbon Market is helping to define clear “quality” criteria and setting a minimum bar. Standards are working to meet that bar. Regulations can also help; for instance, California requires companies to disclose which specific carbon credits they are using to offset their emissions. In the short term, this may be painful, but transparency is usually good for a market. The investigative media also play an important role; they call companies to account if they make misleading emission reduction claims. And of course, there are initiatives or agencies like ours which provide information about the quality of projects and carbon credits.

Are you already seeing improvements in the market?

I see signs of improvement that fill me with optimism. The voluntary carbon market is a complex and sometimes very peculiar ecosystem. But I see the market maturing – partly because there are new players providing independent information, and also new technologies that make it easier to measure and monitor climate impacts or that can drive a higher level of transparency in the market. I also see businesses taking climate change seriously and therefore investing in climate projects early on to ensure greenhouse gas integrity and high-quality sustainable development impacts.

Thank you for talking to eco@work.

The interviewer was Christiane Weihe.

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Talking to eco@work: Donna Lee, co-founder of Calyx Global