The Next Economy
Digital Verification Solutions for Carbon Markets Could Fast-Track Climate Action

The world is seeing rapid automation, thanks to algorithms and artificial intelligence; but in the carbon-offset space, PDFs and spreadsheets are still king. It’s surprising that such an important space still relies on number-crunching to generate offsets. Under this manual process, good verification and issuance is necessarily a tedious process to avoid inaccuracies, but it's also notoriously inefficient.

Thankfully, the emergence of digital monitoring, reporting and verification (DMRV) is creating higher-quality offsets in a fraction of the time. A May 25 Innovate4Climate workshop focused on technology’s role in improving carbon accounting verification processes. Carbon standard certifier SustainCERT and consultants INFRAS and a project developer explored how digitization will revolutionize emissions-reductions verification in both voluntary and compliance markets.

What is DMRV?

The concept behind DMRV is beautifully simple: As long as the data is input correctly into a system that is 100 percent verified, anything that comes out of the verified platform is pure as gold. It’s a process of validating steps, not every single keystroke — thus, vastly increasing efficiency and offset turnaround.

“The goal here is to get as close as possible to real-time verification and issuance of carbon credits,” said SustainCERT CEO Marion Verles. “It shouldn’t take months to generate offsets.”

SustainCERT is moving from a process that is 100 percent manual to one that is 80 percent digital. The remaining 20 percent of the process will be spent verifying the system itself. This will shift the industry away from project-by-project verification to platform verification — a process that feeds data directly into a verifier, which automatically ensures the data meets offset standards. If it does, a digital offset is automatically generated.

Under manual verification, one officer can verify 100-150 projects a year, Verles said. With DMRV, one officer can verify 10 projects a day. SustainCERT expects to see its first digital offset generated by the end of the year.

Verra, Gold Standard, SustainCERT and INFRAS are actively working to bring DMRV to market at scale. While Verra and Gold Standard write the rules for what makes a great carbon offset, SustainCERT ensures projects comply with the rules. The old carbon market did a good job providing separation between developers, verifiers and issuers. That division needs to be maintained in the new digital carbon economy, providing the key to solving the climate crisis: Trust.

“Climate action is about trust; and that’s what we provide as an independent verification partner — proving that progress is being achieved as it’s being claimed,” Verles said. “Without trust, we’re not going to be able to deliver that transformational change that is required.”

Billions are being poured into the climate solutions space, and Verles wants to see robust verification ensuring every one of those dollars’ impact can be verified. And that will require a fundamental transformation of the verification sector.

“This is the future, we think — of more robust, transparent, automated processes,” said Toby Janson-Smith, Chief Program Development & Innovation Officer at Verra.

This technology is already working in the field. Seshagiri Rao with India-based renewable energy company Greenko Group said these platforms help integrate data from renewables projects across India. Projects are monitored from a central location — providing benefits such as a digital paper trail, reduced travel time, energy conservation, faster turnaround times, and cost savings.

Verra plans to have operational DMRV platforms within the year, starting with proof-of-concept projects in forestry and renewable energy. An internal working group is collaborating with numerous stakeholders — including SustainCERT — to develop protocols, guidance and frameworks enabling third parties to develop DMRV platforms for use in various projects and regions.

Janson-Smith is particularly excited about DMRV’s potential to eliminate the need to verify individual projects. IoT and remote sensing provide nearly infallible data points to the platform — so, if the platform is verified, the offsets it generates from remote/IoT data are verified, too. Multiple steps in the verification process, including triangulation with different data sources, help to ensure all is on the up-and-up.

The new role of the verifier

“Technology isn’t making the verification bodies irrelevant; it’s just requiring them to be able to technologically interface with a new generation of players,” Verles said.

If there’s an incongruity or a gap in the automated verification process, the verifier steps in to resolve the discrepancy. Good old manual labor will still be needed for smaller, more nuanced projects or those that lack resources for remote sensing or IoT.

The offset space has been theorizing about digital verification for years, said Owen Hewlett, Chief Technical Officer at Gold Standard. From startups to established national frameworks, DMRV is applicable to almost everyone.

But there’s a caveat: While efficiency and a short gap between credit verification and issuance are good reasons to progress, Hewlett doesn’t want to create a barrier to entry for others who can’t access the needed tech.

“That can be tricky,” Hewlett said. “It’s not just a case of replacing a traditional methodology with a [new] platform.”

It’s a balancing act between real-world limitations and the limitless potential of digital accounting. Hewlett suspects DMRVs will put the entire carbon economy on its head; and good data governance will be required to make a smooth, just transition. It’s the verifiers’ job to make sure no one falls through the cracks in a new digital carbon economy.

DMRV method 2

Manual inputs could allow unscrupulous parties to cook the books to their advantage, especially when selling more offsets means greater profit. With the combined qualifying/verifying platform, this becomes almost impossible. A second version of DMRV protects against potential corruption by integrating data entry and data verification under one platform. Key in this process is the independent party’s disinvested interest in the verification outcome.

With this method, project developers send IoT/remote data into a digital, independent qualification and verification platform where data is algorithmically checked against other data points.

The platform also has merit in less predictable modeling platforms, such as forestry or regenerative agriculture. It’s also optimal for smaller developers who lack the resources to provide data qualification/verification, freeing up time for developers to focus on carbon removal.

DMRV beyond carbon offsets

Last week’s discussion related specifically to the carbon offset market, but Verles told Sustainable Brands™ afterward that SustainCERT sees digital verification platforms scaling into other sectors requiring robust, automated verification. DMRV can be utilized to quantify scope emissions and climate-benefit claims of goods and services. Carbon accounting on a truly global scale necessitates completely automated, digital, real-time data verification. Less than four percent of emissions are subject to carbon pricing, but Verles sees a near future where 80 percent of emissions are accounted for and independently verified.

Regulatory changes in the EU confirm that sustainability reporting and commitments are inevitable — with a raised bar in terms of quality of reporting, verification, and transparency.

“There is going to be a very high demand for verified data,” Verles said.

Heavy investments in climate tech break records every year, and she sees the final capstone as a robust rehab of the verification sector.

“There’s consensus on the fact that, if it’s not verified, it’s just not true,” she said. “Everyone should be able to access verified information — information they can trust.”

Verra and Gold Standard expect DMRV to unlock other sectors that can’t currently be served by manual systems. Both are working with SustainCERT to create nimble DMRV platforms that can migrate across the private and public, voluntary and compliance.

The digital clock spins quickly, so the human learning curve is alarmingly steep. But addressing the climate crisis needs to happen now, begging the question how the rapidly changing digital carbon economy can be governed effectively to ensure accurate verification without burdensome regulatory hurdles.

Co-creating good governance across sectors is essential, Verles said. Both Verra and Gold Standard are looking to implement rapid thinking in tandem with respecting the nuance of individual projects, with governance centered on clear expectations.

“We need to be super clear in our expectations,” Hewlett said. “Our aim is to get out of the way as much as possible after that.”

With barriers cleared, the world is opened to a digital transformation in the carbon economy, creating unfettered opportunities for rapid scaling of climate solutions the world desperately needs.