Concerns raised about Verra’s “phantom” carbon credits amid recent reports.
SINGAPORE: The Singapore government is committed to thoroughly scrutinizing carbon markets and projects as it works to finalize a list of international carbon credits that companies can use to offset their carbon tax liabilities.
In response to a parliamentary inquiry on Tuesday (Feb 7), Minister for Sustainability and the Environment Grace Fu acknowledged a recent report by The Guardian. The report claimed that many forest carbon offsets certified by Verra, one of the world’s largest carbon crediting organizations, are likely “phantom credits” that provide “no benefit to the climate.”
Published on January 18 after a nine-month investigation, the report suggested that only a small fraction of Verra’s rainforest projects demonstrate actual reductions in deforestation. It alleged that scenarios predicting forest loss were overstated by an average of about 400%, raising doubts about the effectiveness of these projects and the legitimacy of the carbon credits purchased by companies to offset their emissions.
Verra was one of two carbon offset standard programs with which the National Environment Agency (NEA) signed memorandums of understanding (MOUs) last July to help establish a local framework for acceptable carbon credits.
“We are aware of the findings in The Guardian’s report concerning rainforest credits issued by Verra, as well as the responses and clarifications provided by Verra,” Ms. Fu stated. “We take all scrutiny of carbon markets and projects very seriously and are dedicated to ensuring that carbon credits maintain high environmental integrity standards.”
A carbon credit represents a reduction of one tonne of carbon dioxide emissions generated through activities that aim to reduce, remove, or prevent emissions, such as reforesting or investing in renewable energy. Companies can purchase these credits to offset their emissions, especially those in carbon-intensive sectors that find it challenging to completely lower their carbon footprint in the short term.
However, the practice of carbon offsetting has faced criticism due to the difficulties in verifying the actual impact of climate action projects. In this context, third-party registries like Verra are responsible for authenticating the projects.
In her remarks, Ms. Fu noted that Verra and Gold Standard were chosen by the NEA because they are two of the largest carbon crediting programs recognized under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). “CORSIA standards have been developed and supported by a multilateral process led by the International Civil Aviation Organization (ICAO), in collaboration with environmental groups and experts, and are considered among the most rigorous in the industry,” she explained.
The MOUs with Verra and Gold Standard are intended to assist Singapore-based companies in purchasing “high-quality international carbon credits” to offset up to 5% of their taxable emissions starting in 2024. However, these agreements are “not legally binding” and do not qualify all international carbon credits issued by Gold Standard and Verra, as companies must comply with the Singapore government’s environmental integrity criteria.
The government will incorporate the latest developments as it finalizes the criteria for environmental integrity regarding the international carbon credits eligible for carbon tax offsets. Ms. Fu indicated that a whitelist of acceptable credits, including eligible host countries, carbon crediting programs, and methodologies, will be published later this year.
