In early 2023, a Guardian article took the world by storm. It revealed that more than 90 per cent of rainforest carbon credits issued by Verra (the world’s largest voluntary carbon standard) were “phantom credits.” These projects were meant to prevent deforestation, but satellite imagery showed little to no measurable impact. Among the 50 largest offset projects worldwide, 39 were either “junk” or “likely worthless.” In Brazil’s Pará state, prosecutors went further, asking a federal court to annul an offset contract covering thousands of hectares of forest because its baseline was inflated and local communities were excluded from consultation. Even Reuters has cautioned that “some of the offsetting efforts can come under criticism as greenwashing,” adding that companies face growing reputational risks for using low-credibility offsets.
Such revelations have revived a question that now refuses to go away: are carbon credits saving the planet or selling us an illusion?
Carbon credits are so contested, but what are they? Each credit equals one metric ton of carbon dioxide (or equivalent) either avoided or removed from the atmosphere. Companies buy these credits to offset ongoing emissions and claim “net-zero” status. There are two types of markets: the compliance market, regulated under frameworks like Article 6 of the Paris Agreement, and the voluntary carbon market (VCM), where any company or individual can purchase offsets.
It is this voluntary space, now worth billions, that offers both climate finance potential and credibility risks. Credits are generated by projects that cut emissions, such as shifting from coal to solar, or remove carbon through forests, soil, or blue carbon systems. Developers then seek certification from standards like Verra’s VCS or Gold Standard, among many others operating worldwide. In theory, these registries reward genuine climate action; in practice, they have sometimes been criticised as the Wild West of environmental finance.
Critics argue that the voluntary market has been built on optimism rather than evidence. One way this was proven was when carbon savings were counted far beyond realistic baselines. A 2024 investigation by The Washington Post found that projects distributing clean cookstoves across Africa, often certified and sold as high-impact carbon offsets, had wildly overstated their climate benefits.
Reporters examined projects from Malawi to Kenya and found that many credited reductions were based on unrealistic assumptions about how frequently people used the stoves or how much wood they replaced. In several cases, the supposed emission cuts were exaggerated by as much as tenfold. So when Big Oil and aviation companies announce “carbon neutral” operations, their credits have at times come from such projects whose impact exists more on paper than on the ground.
Carbon markets were born from the idea that capitalism could help save the climate
But should we be dismissing carbon credits altogether and ignore a crucial fact: the planet urgently needs climate finance, and for many developing countries, carbon markets are one of the few available sources. The challenge, then, is not to abandon the mechanism but to restore integrity to it.
That effort is now underway. The Integrity Council for the Voluntary Carbon Market (ICVCM), an independent governance body launched in 2022, has introduced a framework called the Core Carbon Principles (CCPs). These principles define what constitutes a “high-integrity” credit: one that is real, measurable, additional, and permanent. Projects that meet the CCP label undergo stricter scrutiny for environmental and social safeguards, and the credits they generate can command higher prices. The ICVCM is working in tandem with the Voluntary Carbon Markets Integrity Initiative (VCMI), which focuses on corporate claims and disclosure, ensuring that companies cannot make “carbon neutral” statements without demonstrating actual emissions cuts.
New rating agencies like BeZero, Calyx Global, and Sylvera have also emerged, ranking projects based on transparency, permanence, and community impact. This “credit rating” ecosystem is still evolving, but it reflects a growing recognition that carbon finance cannot rely on trust alone.
Technology, too, is starting to change the game completely. The traditional MRV process (monitoring, reporting, and verification) often depended on manual surveys, infrequent audits, and subjective assumptions. The next generation, dubbed digital MRV, integrates satellite data, remote sensing, and blockchain-based registries to track emission reductions in near-real time. Verra, one of the world’s largest carbon registries, has partnered with the tech firm Pachama to pilot a digital MRV platform for forest carbon projects, using remote sensing and machine learning to automate verification and improve transparency.
In clean cooking, Nexleaf Analytics has pioneered the use of smart sensors embedded in cookstoves to collect real-time data on stove usage and fuel savings. This offers verifiable, continuous monitoring of emissions avoided through behavioural change. In biochar, WasteX has introduced an Android-based digital MRV application that allows producers to record biochar production, monitor application, and calculate corresponding carbon credits directly. In Pakistan, a digital MRV platform is being developed for the rice sector to monitor methane reduction more transparently. Experts are also calling for such systems to become the backbone of the country’s climate finance strategy.
The questions on the credibility of carbon markets have come at a critical time. Pakistan is among the countries most vulnerable to climate disasters, incurring USD 30 billion in losses during the 2022 floods that displaced more than 33 million people. In the years since, erratic monsoons, glacial melt, and record-breaking heatwaves have further exposed the country’s adaptation gap of over 565 billion dollars by 2035, according to NDCs 3.0.
Despite this enormous need, Pakistan still lags behind its regional peers in attracting climate finance and registering credible carbon projects. India counts more than 1,600 projects under global standards; Pakistan has so few you could count them on your fingers. If implemented with integrity, carbon projects could help reshape Pakistan’s climate landscape. Reforestation, cleaner cooking, smarter rice cultivation, and biochar production can generate verifiable credits and real community benefits.
The deeper you dig into the carbon credit debate, you start to realise nothing is binary between greenwashing and salvation. It is a struggle between the old and new, between opacity and transparency, complacency and accountability. Carbon markets were born from the idea that capitalism could help save the climate. They will survive only if they can prove that profit and integrity can coexist.
