The use of carbon credits to finance forest restoration projects is often a hotly debated topic. While the Voluntary Carbon Market (VCM) has the potential to play a significant role in mitigating climate change, misunderstandings about how these credits work and what they represent have led to widespread skepticism. In this article, we explore some of the main misconceptions about financing carbon credits for forest restoration, what people say, and the broader perspective we need to understand the full picture.
"Carbon credits are just an excuse for companies to keep polluting."
The Claim:
Many people believe that carbon credits are nothing more than a “license to pollute,” allowing companies to buy their way out of reducing their emissions.
The Reality:
Carbon credits are meant to be a complement to emission reductions, not a substitute. The idea is that companies should first reduce their emissions as much as possible and then use carbon credits to offset emissions that are difficult or impossible to eliminate immediately. Data shows that companies using carbon credits often reduce their emissions faster than those that don't, indicating that credits are part of a broader “Reduce & Invest” strategy rather than an excuse to avoid action.
Moreover, companies are still legally required to report their actual emissions, even if they are offsetting voluntarily. In countries with regulatory carbon markets, such as the EU, companies cannot use voluntary offsets to avoid their mandated reductions. This means that offsets are additional efforts, not a way to avoid regulatory requirements.
"Carbon credits do not lead to real climate action because the projects would have happened anyway."
The Claim:
Critics argue that many carbon credit projects lack "additionality," meaning they would have been implemented regardless of the revenue from selling credits, thus questioning whether they represent real climate action.
The Reality:
The concept of "additionality" is indeed crucial. For a project to be eligible for carbon credit financing, it should demonstrate that it wouldn't have occurred without that funding. While additionality remains a challenge for some projects, many forest restoration initiatives do genuinely rely on carbon credit revenues to proceed. These credits provide the financial incentive necessary to scale up restoration, create community benefits, and contribute to broader sustainability goals.
That said, ongoing improvement in the verification and transparency of projects is needed to ensure that the additionality criterion is met consistently. The market is evolving, with stricter standards and better assessment methodologies being introduced to ensure that only high-quality projects are certified.
"Carbon credits lead to double counting of emissions reductions."
The Claim:
Some people believe that carbon credits lead to double counting because both the country hosting the project and the company buying the credits claim the same emission reduction.
The Reality:
Double counting can occur, but efforts are being made to mitigate it. In the case of domestic offsets, companies follow "nested" reporting, where the emissions reductions are clearly tracked and reported alongside the country’s overall climate commitments. Countries report their total emissions and their progress toward climate targets, which includes both regulated reductions and voluntary efforts, ensuring that emissions reductions are not counted twice.
It’s important to differentiate between "double counting" and "double claiming." While double counting means counting the same reduction more than once, double claiming is when two entities claim the same reduction in their reports. This is a separate discussion, but one that highlights the need for better accounting frameworks and transparency in the VCM.
"Forest restoration projects funded by carbon credits are just about planting trees."
The Claim:
A common oversimplification is that forest restoration projects funded by carbon credits are only about planting trees, often without considering the broader ecological or social context.
The Reality:
More and more forest restoration projects, implemented by MORFO but also by other companies, encompass much more than just planting trees. They focus on restoring ecosystems, enhancing biodiversity, preventing soil erosion, and supporting the livelihoods of local communities. By financing these projects, companies contribute to broader environmental and social goals, such as improving water quality, creating habitat for wildlife, and supporting sustainable agricultural practices. By doing so, projects can achieve better rankings from certifiers and command higher prices.
The VCM has also seen a strong movement toward developing more holistic projects that include these co-benefits and ensuring that they are adequately accounted for in the crediting process.
"Carbon credits are just greenwashing."
The Claim:
Critics often label carbon credits as "greenwashing," suggesting that companies are using them solely to improve their image without making meaningful changes to their operations.
The Reality:
Greenwashing is a genuine risk, especially if companies use cheap, low-quality credits that do not provide real emissions reductions. However, this is not an inherent issue with carbon credits themselves but rather with the transparency and quality of the projects. High-quality carbon credits, verified through strict standards, contribute to genuine emissions reductions and bring additional environmental and social benefits.
The solution to this misconception lies in enhancing transparency, setting stricter quality standards, and improving accountability across the market. It is essential to differentiate between companies that are genuinely committed to meaningful climate action and those using carbon credits superficially. Encouraging the development of robust standards, such as those from the ICVCM, helps ensure that carbon credits are being used responsibly and effectively.
To learn more about high-quality standards, please read our report “Defining quality criteria for forest restoration”.
"Carbon credits are a small and insignificant part of climate solutions."
The Claim:
Some argue that the VCM is too small to make a meaningful impact on global emissions, especially compared to the magnitude of the climate crisis.
The Reality:
It’s true that the VCM is small compared to the scale of the problem—it was valued at $2.4 billion in 2023, which is much less than many other global markets. However, every contribution counts, and carbon credits are an important part of a multifaceted approach to climate change. They help finance projects that otherwise might not receive funding, support local communities, and contribute to broader sustainability efforts.
Carbon credits should be seen as one tool in a larger toolkit. They are not the sole solution to the climate crisis but rather a way to fund important projects and incentivize climate action in areas where direct emissions reductions are challenging. In a time when the window of opportunity to slow global warming is rapidly closing, we need all available tools—including carbon credits—to meet our climate goals.
"The VCM is flawed and therefore useless."
The Claim:
Some critics believe that the imperfections of the VCM make it an ineffective or even counterproductive tool for climate action.
The Reality:
The VCM, like any market, is not without its flaws. It has gone through—and continues to go through—a learning curve. But this does not mean it is useless. All emissions trading systems, including regulated ones like the EU ETS, have required years of adjustments to improve their effectiveness. The VCM is no different, and it is evolving with new standards, methodologies, and scientific insights to address its shortcomings.
Instead of dismissing the VCM entirely, we should focus on improving it—ensuring transparency, enhancing the quality of projects, and encouraging participation in genuinely impactful initiatives. The market's capacity to adapt and refine itself is precisely what makes it a valuable tool in addressing the complex challenge of climate change.
Conclusion: Let’s see the bigger picture… and improve the quality
The financing of carbon credits for forest restoration projects is a complex but important element of the fight against climate change. Misconceptions arise from misunderstandings about how these credits work, their role in corporate sustainability, and the broader impacts they have beyond carbon sequestration.
While the VCM has its flaws, dismissing it as mere greenwashing or an ineffective tool overlooks its significant contributions to both environmental and social sustainability. Carbon credits should be part of a holistic approach to climate action, where direct emission reductions, transparency, and high-quality standards are prioritized. In a world facing an urgent climate crisis, we need every viable solution—carbon credits included—to make a meaningful difference. It’s time to move beyond misconceptions and focus on improving and scaling the positive potential of the VCM to support the transition to a more sustainable future.
Do you want to learn more about how high-quality forest restoration projects ensure sustainable ecosystems, maximize biodiversity, and enhance climate resilience, securing long-term environmental and economic benefits ? Access MORFO's paper entitled: “Defining Forest Restoration Quality Criteria."
MORFO is a forest restoration implementer, providing end-to-end solutions for carbon project developers. Our advanced technology and expertise help restore resilient forest ecosystems at scale. From land diagnostics and drone planting to continuous monitoring via our Forest Intelligence system, we offer the full range of services needed to ensure successful and sustainable reforestation projects. MORFO also manages seed sourcing, encapsulation, and data-driven strategies to maximize the efficiency and impact of each restoration initiative.
