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Digital public infrastructure can catalyze carbon removal and bolster carbon credit initiatives.

6 mins read

As the effects of climate change worsen, carbon credit markets are an increasingly important tool in reducing global emissions. Yet, for these systems to be wholly effective, they require access to credible, transparent, and representative data. Digital public infrastructure (DPI) offers one approach to advance the large-scale data exchange needed to mitigate the challenges faced by carbon credit markets, while simultaneously promoting interoperability, scalability, and trust. 

Carbon credit markets aim to offset or reduce emissions.

Voluntary carbon credits aim to address the challenges of climate change by offering individuals and organizations a mechanism to offset their carbon emissions through investment in environmental and carbon sequestration projects. Mandatory carbon trading schemes are often regulated by government policies. Conversely, a voluntary carbon credit market provides a platform where entities can purchase carbon credits through their own initiative. In this case, one credit often equates to one metric ton of carbon dioxide removed from the atmosphere or prevented from being emitted. These projects can range from afforestation and reforestation, renewable energy, direct air capture, biochar, ocean-based carbon removal, carbon sequestration in soils, and others.  

The  Global Carbon Removal Partnership, through a multi-stakeholder effort, formulated a set of principles for responsible carbon removal. Through global consultation, they have also developed a white paper that delves into the pressing questions surrounding carbon sequestration, aiming to guide the future of carbon credit projects towards more ethical, effective, and community-beneficial practices.

Yet, there are challenges with the voluntary carbon credit market.

The voluntary carbon credit market has come under scrutiny for enabling greenwashing, a practice where entities may overstate their environmental achievements to appear more eco-friendly than they are in reality. This concern arises when organizations purchase carbon credits as a simple solution to claim carbon neutrality, without implementing significant operational changes to reduce their carbon footprint. 

Moreover, the effectiveness and integrity of carbon credit projects available in the market are increasingly questioned. Some projects may overestimate their carbon sequestration capabilities or claim credit for carbon capture that would have otherwise occurred naturally, a concept known as additionality. There is also a notable gap in acknowledging local cultures and practices in nature-based projects, leading to inaccurate representations of the actual carbon credits generated. Often, the ancillary benefits of these projects, are not realized by those communities. 

Although the voluntary carbon credit market represents a significant instrument for combating climate change, several specific challenges need to be addressed to enhance the market’s effectiveness, robustness, transparency, and equity: 

  • Quality and integrity of credits: There is concern, and increasing media attention and pressure, about the quality and actual environmental impact of carbon credits. Projects in the market may overestimate their carbon reduction or removal impact and may not account for local values, culture, or good practice.  
  • Lacking standards: Fragmentation of various standards and methodologies for measuring and verifying carbon sequestration occurs across the market. Definitions are misunderstood or not universally agreed upon. This leads to confusion, lack of uniformity and accounting, and therefore, skepticism about the true value of carbon credits. Moreover, even with processes that certify projects based on existing standards, there is increasing concern around compliance. 
  • Monitoring and measurement: Monitoring the efficacy of carbon sequestration can be extremely difficult,  due to several factors, including: permanence, or how long carbon can be sequestered given a particular method;  proving additionality, or that the sequestration wouldn’t have happened in any case without the intervention of the project; and leakage, or when carbon reduction in one place leads to an increase in a different location. 
  • Transparency and traceability: There are currently challenges of transparency in the tracking and reporting of carbon credits. Without proper tracking, it’s difficult to ensure that credits are not double-counted, or that projects are delivering against their promised benefits. 
  • Regulations: The carbon credit market, for the most part, does not operate within formal regulatory frameworks. This can lead to broad uncertainty. 
  • Social and environmental impacts: Projects, particularly those in the Global South, often do not take into account co-benefits of inclusivity with local communities. This can lead to negative social and environmental impacts including displacement, biodiversity loss, and land degradation. 

DPI has the potential to enhance the effectiveness of carbon markets.

Digital public infrastructure, as an approach to facilitating interoperable systems both within and across borders, would create the ability to manage, distribute, and analyze large volumes of data – offering new potential for enhancing carbon removal strategies and effectively managing carbon credits. Because DPI can manage complex datasets, ensure transparency, and facilitate collaboration and cooperation, it is an invaluable tool in the global fight against climate change. 

Carbon trading and market integrity 

To help mitigate problems associated with the lack of robust standards, transparency, and accountability, DPI can: 

  • Create digital marketplaces for trading carbon credits efficiently and transparently. Coupled with clarity on standards and metrics applied to the monitoring and verification of each project, DPI can offer new capabilities for ensuring impact, trust, and accessibility. 
  • Ensure validity of carbon credits through registries that prove that each credit is unique, and that fraud or double counting is not taking place. 

Standards compliance 

To facilitate compliance with standards that certify projects based on their promised social and environment, DPI has an opportunity to: 

  • Create registries that adhere carbon removal projects to specific standards transparently. 
  • Offer insights into the local social and environmental impacts and co-benefits. 
  • Allow the user to better understand the implications of different standards for making purchasing choices. 

Monitoring and verification 

To overcome challenges related to durability and longevity, DPI can support with: 

  • Data management by collecting, processing, and making data on various projects available and maintaining a database on carbon removal projects. 
  • Verification by implementing digital tools for continuous monitoring and authentication to ensure projects are credible and delivering against their intended outcomes. Remote sensing, or satellite imagery, the Internet of Things and other sensors can be used to gather real or near real-time data. Performance metrics and continuous reporting can also be used to manage the verification process. Verification is often conducted by third parties as an independent assessment. 

Data analytics and AI 

DPI offers capabilities for advanced data analytics and AI to track and monitor carbon emissions to better inform carbon reduction strategies. 

  • Data can be integrated from various carbon emission sources to create a comprehensive view of global greenhouse gas emissions. 
  • AI and machine learning can be applied to predict future emission trends and the effectiveness and integrity of various carbon removal methods. 

Public engagement, collaboration, and trust 

For the development of a robust and trusted carbon credit market, the public must be engaged with content that allows for gaining an understanding on climate change and the various actions and options available. Developing processes to allow for collaboration across communities and sectors is also important. DPI can support this by: 

  • Providing access to content and resources that raise awareness, provide education, and allow the public to better understand their choices for climate change action. 
  • Creating multi-stakeholder platforms that allow governments, civil society, and the private sector to collaborate, learn, and facilitate transparency and accountability. 

DPI is already accelerating digital inclusion and trust in a number of countries – but we must continue to expand its applicability to meet the urgency of the moment.

Numerous initiatives aligned with the concepts presented in this paper are already in motion. The Climate Action Data (CAD) Trust, a member of DIAL’s Climate Data JLN, is one such example. By aggregating large-scale carbon registry data, this open-source system promotes a transparent and trusted record of carbon market activity. CAD Trust, along with many others, demonstrates the significant advancements that have been achieved in developing innovative technologies and methodologies for carbon sequestration, establishing regulations and standards, and enhancing digital infrastructure. These developments facilitate the trade of carbon credits, enhance awareness, and provide robust monitoring and verification tools. 

Yet, there is an urgent need for further action. The current state of our climate change battle is not promising. Despite ongoing efforts, atmospheric carbon dioxide levels have reached 425 parts per million (ppm), alarmingly close to the 430 ppm threshold, which is critical to avoid exceeding a 1.5 degrees Celsius temperature increase. 

A comprehensive approach to building national and cross-border DPI stacks offers fundamental capabilities in this context. It enables transparency, scalability, and efficient data exchange. As a comprehensive infrastructure, DPI could supercharge climate change initiatives, offering enhanced clarity, insight, and trust in carbon removal methods and the carbon credit market.