Verra says 4 mil overissued rice cultivation carbon credits yet to be compensated

Verra's recent review found 25 of the 37 suspended rice cultivation projects in China had overissued voluntary carbon credits, and two project proponents, associated with 20 projects and more than 4 million overissued carbon credits, have not proposed any compensation solution, the organization said in a statement late Jan. 9.

Verra is the world's largest voluntary carbon credit issuer. In the past two years, the organization has been reviewing its projects and refining its carbon crediting methodologies to address criticisms from media and academia, and restore investors' confidence in the voluntary carbon market.

In August 2024, Verra announced the rejection of 37 rice cultivation projects in China that had serious issues, like overissuance of carbon credits or not meeting eligibility criteria for carbon crediting. Meanwhile, Verra imposed the first-ever sanction against the respective project proponents and validation and verification bodies, or VVBs.

Following the rejection, Verra conducted a review that identified the projects that had overissued carbon credits, determined the amount of overissuance, and approached the project proponents for compensation solutions, according to the latest statement.

Four project proponents were involved in the 25 projects that had overissued carbon credits, Verra said.

Verra added that two of the four project proponents, Vitol (China) Energy Co. Ltd. and Timing Carbon Asset Management Co. Ltd. successfully compensated for 480,000 voluntary carbon credits across five projects. Verra did not disclose the exact compensation solutions.

"However, a total of 4.08 million credits are yet to be compensated for," Verra highlighted. 4.08 million carbon credits represent 4.08 million mtCO2e of overstated, phantom emission reduction.

Verra has suspended the registry account of Search CO2 (Shanghai) Environmental Science & Technology Co. Ltd., which is responsible for 10 rejected projects and 2.22 million outstanding credits, the statement showed. Verra said their account will be closed if they do not compensate for the issuance of excess VCUs.

Verra said the remaining 1.86 million overissued credits were associated with 10 projects where the proponent is Hefei Luyu Agriculture Technology Co. Ltd. Hefei's authorized representative, Shell Energy (China) Limited, had been representing these projects on the Verra Registry.

However, Verra said Hefei and Shell terminated their communications agreement on Sept. 11, 2024. Given that Hefei itself has never held a registry account, these projects are no longer associated with any account holder on the Verra Registry.

"Consequently, Verra has moved the projects to an administrative account. Hefei has no further active projects and is not permitted to register new projects or open a registry account until compensation is completed," the statement showed.

In August 2024, Verra also issued non-conformity reports to four VVBs associated with the rejected projects, including China Classification Society Certification Company, China Quality Certification Center, Shenzhen CTI International Certification Co. Ltd. and TÜV Nord Cert GmbH.

In the latest statement, Verra said it is in the final stages of reviewing the responses received from the four VVBs regarding the non-conformity reports. Depending on the findings, Verra said it may suspend the VVBs' ability to validate or verify projects in the future.