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Building the Modern Carbon Market the Planet Demands

The scientific evidence accumulated over the last several decades has become resoundingly clear. To avoid the worst impacts of climate change, we need to drastically reduce carbon emissions.
Each year deforestation accounts for as much as 10-20% of global carbon emissions (Friedlingstein, 2022). Ongoing deforestation also continues to threaten species with extinction and encroaches on the rights of indigenous and rural communities who depend on forests for their livelihoods.
The market for forest carbon, if properly designed, presents a tremendous opportunity to change land use incentives to reverse these trends. By compensating landowners for protecting and restoring forests, the market could reduce the amount of carbon in the atmosphere while creating space for nature and forest communities to thrive.
However, today’s carbon market has not managed to make a significant dent in global carbon emissions. The market has also suffered from well-publicized concerns about carbon credit quality, damaging trust in the market.

A Digital Future for Carbon Markets

Pachama envisions a future of high-integrity, digital carbon crediting that can scale at the speed necessary to address climate change. An effective carbon market that can restore nature globally must be:
1. High-Quality: Every credit represents an actual reduction in carbon emissions to the atmosphere. This is clearly the most important market attribute. If a credit does not represent at least 1 metric ton of carbon, then it could actually increase carbon emissions instead of reducing them because buyers use the credit to offset their own emissions. The Pachama Quality Standard defines five pillars of high-quality crediting: estimated emissions reductions must be accurate, additional, durable, net, and produce benefits beyond carbon.
2. Transparent: Buyers often describe today’s carbon crediting calculations as hopelessly complicated and difficult-to-understand. When purchasing carbon credits, a buyer should be able to easily understand what it is they are buying, that is, what a credit represents and how it’s calculated. The complexity of carbon crediting today makes it harder to trust the quality of the credits.
3. Scalable: The market for forest carbon has grown rapidly, yet it currently offsets less than a few tenths of a percent of global carbon emissions. Recent analyses suggest the market has the potential to drive net deforestation to zero and reforest an area about 10 times the size of France (Girardin, Proc. Natl. Acad. Sci.2017; Griscom, PNAS ,2020; Griscom, R. Soc., 2020). This requires scaling the current market by at least 100X (State of the Voluntary Carbon Markets, 2022)
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In order to meaningfully mitigate climate change, the carbon market needs to scale by 100x.

How Digital Platforms can Modernize Crediting

Carbon credit issuance is ultimately a process of monitoring, reporting, and verification (MRV): monitoring to calculate a project’s emissions reductions (i.e., credits), reporting to document the calculations before a credit registry, and verification of the calculations by independent auditors. Credit registries, such as Verra, now refer to future digital crediting platforms as digital MRV (DMRV) platforms.
DMRV platforms would modernize credit issuance in at least 4 important ways.
1. Shift from manual data collection to satellite observation
Despite remarkable advances in satellites and machine learning, carbon credit calculations today still rely on costly, labor-intensive methods. Field crews measure individual trees by hand to inventory carbon stocks over a small sample of a project’s area. These inventories cost tens to hundreds of thousands of dollars and can take months or even years to complete. The inventories must be repeated at each credit issuance, typically every 5-10 years, over a project’s lifetime.
Satellite-based carbon mapping offers a scalable, cost-efficient approach to carbon crediting. Satellites are also essential to enhancing credit quality, because they can observe forest change both within a project and the surrounding region, enabling a data-driven approach to computing a project’s emissions impact. Without a satellite view of the landscape, status quo crediting often relies on assumptions that can result in over-crediting (West, Börner, Sills, Kontoleon, PNAS, 2020; West, arXiv, 2023; Coutiño, Jones, Balmford, Carmenta, Coomes, 2022).
2. Shift from inconsistent, manual calculation to uniform, automated calculation
Today, project developers run carbon credit calculations in spreadsheets, which auditors then review line-by-line. Though rules vary by registry, nearly all allow significant room to adjust calculations on a project-by-project basis. Crediting volumes can vary widely for the same project depending on who performs the calculations. With digital platforms, credit calculations would be automated, standardizing crediting across projects and eliminating opportunities to manipulate crediting.
3. Shift from auditing projects to certifying platforms
With a shift to automated carbon credit calculation, platform certification would replace project-by-project spreadsheet audits, speeding up time to issuance from months or years to days. Periodic platform certification would verify the accuracy of all platform calculations before a platform can participate in the market. Pachama recognizes that not all project information can be verified by machine. But, we think high-quality, transparent, and scalable crediting requires standardizing calculations to the greatest extent possible.
4. Shift from static documents to interactive, digital visualization
Today, if you want to understand how credits are calculated for a project, you have to read through hundreds of pages of registry documents and trace calculations through enormous spreadsheets. Satellite observations hosted on a user-friendly platform with interactive data visualizations would allow buyers, landowners, and the public to “see” the impact of carbon projects for themselves.
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Through digital solutions, it is possible to audit systems, collect satellite data, make machine calculations, and generate interactive digital visualizations.

DRMV platforms have the potential to deliver high-quality and transparent crediting at a fraction of the time and cost of today’s traditional methods. This advancement will be critical to unlocking the full potential of nature as a climate mitigation solution. In our next blog post we’ll share more about Pachaama’s vision for modern, digital crediting.
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  • Markus Lutteman

    11 w

    A question for @Pachama: when working on reforestation projects, how can we ensure that we scale not just the number of trees, but also biodiversity? There have been examples in the past of reforestation projects that end up as monocultural tree plantations that attracts very little wildlife, if any.

    • Pachama

      9 w

      @markus_lutteman_141 Thanks for your question! We fully agree that successful reforestation projects should restore the land and that means a focus on biodiversity and native species. Our Project Evaluation Criteria is designed to check for some of the issues that you raised. For reforestation projects specifically, we require that the forest composition is a majority native species, there are at least 5 different species planted, and the species assemblage and density are similar to what would typically be found in the local ecoregion. Projects are only listed on our platform if they align with this criteria. You can see our Project Evaluation Criteria here: We also implement very high standards for our Pachama Original Projects. Most recently, we launched the Avahoula Climate Action Project. Not only will it sequester more than 840k metric tons of carbon dioxide throughout its lifetime, but it's also an ideal location to be one of the largest US-based reforestation efforts since this area is home to 60% of US bird species and 40% of North America’s waterfowl. Read more on the Avahoula Climate Action Project here:

    • Sarah Chabane

      11 w

      Super interesting! This is one more example of how advanced technological solutions can help us restore the earth. What is the main barrier for other companies to start implementing these different tools?

      • Pachama

        9 w

        @sarah_chabane That’s a great question. Some of the current barriers are accessibility to these new technologies and the need to evolve existing methodologies. In order to scale forest conservation and restoration projects, we need to modernize and reform the existing carbon market. This will require collaboration across a broad swath of stakeholders including scientists, policy experts, forest communities, non-profits, and corporations. Pachama hopes to help lay the ground work for a modernized approach and build solutions for this global climate challenge.

      • Johannes Luiga

        11 w

        Forests are crucial for binding CO2

        • Ford Brodeur

          11 w

          I was astounded to read, "recent analyses suggest the market has the potential to drive net deforestation to zero and reforest an area about 10 times the size of France". Thanks for that great insight!

          • Sarah Chabane

            11 w

            @ford_brodeur_ ... and France is quite big! 😬

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