← Back to Insights

Carbon Credit Quality: What Buyers and Sellers Need to Know

Earthmover Markets Team
Carbon credit quality assessment

Carbon credits have a quality problem — and the voluntary carbon market has paid a steep reputational price for it. In 2023, a series of investigative reports by The Guardian, Die Zeit, and SourceMaterial concluded that a significant share of the REDD+ forest protection credits issued by Verra's Verified Carbon Standard — one of the world's largest carbon registries — had dramatically overestimated their climate impact, in some cases issuing credits for carbon that was never actually protected. The resulting controversy shook buyer confidence, contributed to a sharp decline in voluntary carbon market transaction volumes, and triggered a wave of policy and regulatory scrutiny that is still playing out.

The lesson from this episode is not that all carbon credits are fraudulent or that carbon markets are beyond redemption. The lesson is that carbon credit quality is a genuinely complex technical and governance challenge that requires rigorous standards, independent measurement, and transparent disclosure to solve. For corporate buyers trying to build credible net-zero strategies and for project developers trying to attract investment and buyers, understanding what makes a carbon credit high-quality — and how to assess it — is no longer optional. This article provides a structured framework for thinking about carbon credit quality across the dimensions that matter most.

The Core Quality Dimensions: The "REDD Principles"

The voluntary carbon market has converged around a set of quality principles that any carbon credit should satisfy. These are often summarized as Real, Additional, Measurable, Verifiable, and Permanent (RAMPV), though different frameworks use slightly different formulations. "Real" means that the emission reduction or removal actually occurred in the physical world, as opposed to being a paper accounting entry. "Additional" means that it would not have occurred in the absence of the carbon project and its revenue. "Measurable" means that it can be quantified with sufficient precision to support the credit claim. "Verifiable" means that an independent third party can confirm the measurement. "Permanent" (or "durable") means that the carbon benefit will persist over time, not be reversed by future events or decisions.

Of these five dimensions, additionality and permanence are the ones where the most significant quality failures have occurred in the voluntary carbon market. Additionality is particularly challenging for avoided deforestation projects (REDD+), where determining what would have happened to a forest in the absence of the project requires counterfactual reasoning about deforestation rates that is inherently uncertain and subject to manipulation. Permanence is a chronic concern for forestry projects, which face fire, disease, and land use change risks, and for soil carbon projects, which depend on continued land management practices. The contrast with engineered removal approaches like direct air capture, where carbon is stored geologically and permanence is near-certain, is stark.

The Quality Spectrum: From Avoidance to Removal

One of the most important quality distinctions in the voluntary carbon market is between avoided emissions credits and carbon removal credits. Avoided emissions credits represent cases where a carbon project prevented CO2 or other greenhouse gases from being emitted — for example, protecting a forest that would otherwise have been cleared, replacing a coal power plant with a renewable energy project, or installing cookstoves in communities that would otherwise have burned wood inefficiently. These avoidance credits are useful, but they do not remove CO2 that has already accumulated in the atmosphere — they only prevent the stock from growing further.

Carbon removal credits, by contrast, represent cases where CO2 is actively extracted from the atmosphere and stored. These include direct air capture, enhanced weathering, biochar, soil organic carbon, afforestation and reforestation (which sequester carbon in growing biomass), and ocean-based removal approaches. Because removal credits directly address the historical accumulation of CO2 in the atmosphere, they are increasingly viewed as higher quality for the purpose of corporate net-zero claims. The Science Based Targets initiative's Net-Zero Standard, for example, explicitly requires that residual emissions at net-zero be neutralized with carbon removal, not just avoided. This distinction is driving a quality tiering in the market that is beginning to be reflected in prices.

Standards and Registries: Navigating the Landscape

The voluntary carbon market is governed by a patchwork of independent standards and registries, each with its own methodologies, verification requirements, and governance structures. The four dominant registries are Verra (which administers the Verified Carbon Standard, or VCS), Gold Standard, American Carbon Registry (ACR), and Climate Action Reserve (CAR). Beyond these, newer registries and standards specifically focused on engineered carbon removal — including Puro.earth, the Oxford Offsetting Principles framework, and emerging government procurement standards in the EU and UK — are gaining traction.

Registries are not equal in their rigor, and the quality of credits varies significantly even within a single registry, depending on the project type and methodology used. Buyers should pay attention to the specific methodology a project uses, not just the registry name. Some methodologies — particularly those for REDD+ and large-scale cookstove projects — have been criticized for systematic overestimation of climate benefits. Others, particularly those for engineered removal approaches with direct measurement, have stronger evidence bases. The Integrity Council for the Voluntary Carbon Market (ICVCM) has recently published its Core Carbon Principles and Assessment Framework, which provides an independent, cross-registry quality benchmark. Credits that receive ICVCM approval — which is still being rolled out as of late 2024 — should represent a meaningful quality floor.

Price as a Quality Signal (and Its Limitations)

In well-functioning markets, price is a reasonable signal of quality — higher-quality goods command higher prices. In the voluntary carbon market, there is a meaningful correlation between credit quality and price: nature-based avoidance credits typically trade at $5–$20 per tonne, high-quality nature-based removal credits (afforestation with rigorous monitoring) trade at $20–$50 per tonne, biochar and enhanced weathering credits trade at $100–$300 per tonne, and direct air capture credits trade at $400–$1,000 per tonne. The price hierarchy roughly tracks the permanence and verifiability of the removal approach.

However, price is an imperfect quality signal for several reasons. Market information asymmetries mean that buyers often lack the technical expertise to distinguish high-quality from low-quality credits within a price tier. Registry certification provides a quality floor but does not guarantee a high score on all quality dimensions — and the gap between "meets minimum standard" and "best-in-class" can be substantial. Forward contracts for high-quality removal credits, which some buyers are now using to lock in supply years in advance, require the most careful due diligence because the project has not yet delivered its credits when the contract is signed. Earthmover's measurement and verification platform is specifically designed to help buyers assess credit quality rigorously before and after purchase, using independent data rather than relying solely on registry certification.

What Sellers Need to Know

For project developers and landowners on the sell side of the carbon market, understanding credit quality requirements is equally important — but from a different angle. Buyers are increasingly sophisticated, and the reputational disasters of 2023 have made them more demanding. Projects that cannot demonstrate rigorous additionality assessment, robust monitoring, and transparent reporting are increasingly likely to find their credits discounted or unsalable in the primary market. This creates a strong incentive for project developers to invest in high-quality measurement and verification infrastructure from the start of project development, rather than treating it as a compliance cost to be minimized.

The growing corporate demand for third-party independent verification — beyond what registries provide — represents an important market signal. Companies like Microsoft, which publishes detailed annual reports on its carbon removal procurement, are setting new standards for what "trustworthy" carbon procurement looks like. Projects that can demonstrate independent, high-quality measurement data — rather than relying on modeled estimates or conservative accounting assumptions — will be able to command price premiums and access the most demanding corporate buyers. For sellers, the path to maximizing long-term revenue runs through quality, not volume.

Key Takeaways

  • Carbon credit quality hinges on five dimensions: Real, Additional, Measurable, Verifiable, and Permanent — with additionality and permanence historically the greatest sources of market failures.
  • Carbon removal credits (DAC, biochar, soil carbon, afforestation) are increasingly preferred over avoided emissions credits for corporate net-zero claims.
  • The ICVCM's Core Carbon Principles provide an emerging cross-registry quality benchmark that buyers should monitor as it is rolled out.
  • Price tiers roughly track quality but are imperfect signals — buyers need independent technical assessment, not just registry certification.
  • Project developers who invest in rigorous, independently verified measurement will command price premiums and access the most demanding corporate buyers.
  • The SBTi Net-Zero Standard explicitly requires carbon removal (not avoidance) to neutralize residual emissions at net-zero targets.

Conclusion

Carbon credit quality is not a niche concern for technical specialists — it is the central challenge that will determine whether voluntary carbon markets become a genuine climate solution or a source of continued greenwashing controversy. Buyers, sellers, regulators, and standard-setters are all grappling with how to raise the bar in a market that has historically rewarded volume over rigor. At Earthmover, we believe that the path forward is fundamentally about measurement: building the technical infrastructure to produce independent, quantified, transparently disclosed carbon accounting that all market participants can trust. The market needs that foundation, and we are working to provide it.