Verra announced an update on the ongoing compensation process for carbon credits linked to the 37 rice cultivation projects in China that were rejected in August 2024. The news sheds light on the progress made toward compensating over-issued Verified Carbon Units (VCUs). It also details the remaining steps needed to rectify the situation.
Inside Verra’s Actions to Rectify Carbon Credit Discrepancies
In August 2024, Verra, a leading organization in the voluntary carbon market (VCM), decided to reject 37 rice cultivation projects in China. The rejection followed a thorough review that raised concerns about how these projects were being managed.
Verra found that the projects did not follow proper methods, and there were problems with the audits done by validation and verification bodies (VVBs). These issues led to more carbon credits being issued than were actually earned by the projects.
Of the 37 rejected projects, 25 were found to have over-issued VCUs, which are critical units in the carbon offsetting market. These credits are used by companies and organizations to offset their carbon emissions.
Any discrepancies in the issuance of these credits undermine the integrity of the entire carbon market. In other words, when too many credits are issued, it makes the carbon offset market less trustworthy.
As a result, Verra took swift action, imposing sanctions on the companies involved and VVBs to ensure accountability and maintain the credibility of its registry.

4.56 Million Credits at Stake: Compensation for Issued VCUs
As of January 2025, Verra confirmed that compensation has been made for the first set of over-issued VCUs. A total of 480,000 VCUs from 5 of the affected projects have been compensated by two of the project proponents:
- Vitol (China) Energy Co. Ltd. and
- Timing Carbon Asset Management Co. Ltd.
These companies have worked directly with Verra to ensure that the over-issued VCUs were fully compensated for. This is an important step in fixing the issue and making sure the carbon credits are correct.
However, there are still 4,080,000 VCUs that have not yet been compensated. These credits are linked to two main groups of projects managed by:
- Search CO2 (Shanghai) Environmental Science & Technology Co. Ltd., and
- Hefei Luyu Agriculture Technology Co. Ltd.
Sanctions and Next Steps
Verra has taken a firm stance against the non-complying parties. Search CO2, which is responsible for 10 rejected projects and 2,220,000 outstanding VCUs, has had its registry account suspended.
If the company does not compensate for the over-issued VCUs, Verra will permanently close its account. This shows Verra’s commitment to holding companies accountable and ensuring the integrity of the carbon credit market.
The remaining 1,860,000 VCU credits are linked to projects managed by Hefei Luyu Agriculture Technology Co. Ltd.
Hefei had an agreement with Shell Energy (China) Limited to manage these projects, but in September 2024, they ended their agreement. This left the projects without an active account holder on Verra’s registry.
As a result, Verra moved these projects to an administrative account and is now requiring Hefei to resolve the issue before they can open a new account or register new projects.
Integrity First: How Verra Is Shaping the Future of Carbon Markets
Verra’s actions in response to the rejected rice cultivation projects are a direct reflection of its commitment to maintaining the integrity, transparency, and quality of the VCM. According to Justin Wheler, Verra’s Chief Program Management Officer,
“This was the first time Verra imposed such sanctions, demonstrating Verra’s commitment to greater integrity, transparency, and quality in the voluntary carbon market. Verra took decisive action at every level at which concerns were identified. Verra is committed to continual improvement of its standards programs, particularly as we address issues arising from inappropriate marketplace conduct.”
In addition to its work with the project proponents, Verra is also finalizing its review of the responses received from the four VVBs that were involved in the rice cultivation projects.
The largest carbon registry issued non-conformity reports to these VVBs. Depending on the findings of the review, further sanctions may be imposed. These could include suspending the VVBs’ ability to validate or verify projects in the future, which would have significant implications for their operations in the carbon market.
The outcome of this review will be crucial in determining the long-term credibility of the VVBs involved. It will send a strong message about the importance of ensuring quality audits and transparency in issuing carbon credits.
Verra’s handling of rejected rice projects in China shows its commitment to carbon market integrity. How the carbon standard manages this situation will have a big impact on the future of the carbon credit market, especially as more and more companies turn to carbon credits to help meet their decarbonization targets.
By addressing discrepancies, ensuring carbon credit accuracy, and holding VVBs accountable, Verra aims to build trust. Its focus on transparency and quality will shape carbon credit standards, supporting global climate goals and the transition to a low-carbon future.
The post Verra Updates on 4.5 Million Over-Issued Carbon Credits from Rejected Rice Projects in China appeared first on Carbon Credits.
Carbon Footprint
The Strategic Case for Nature-Based Carbon Investments
Nature-based carbon investments deserve consideration when they address a specific business dependency and produce outcomes you can measure. Imagine Moonbucks, a global coffee roaster planning next season’s espresso blend. It is considering natural Grade 4 coffee from Jimma, in southwestern Oromia, Ethiopia. Its sourcing decisions affect the roasting schedule and the cash tied up in coffee purchases. Moonbucks needs to understand which measures could protect that supply, what they would cost and how it would judge the results.
1. Define the sourcing problem before choosing a project
Moonbucks needs a dependable component for its espresso blend. Its procurement team wants continuity of volume and an agreed cup profile. Replacing a shipment at short notice could require new sample approval and changes to the blend, and given the schedules for cultivation, processing, and freight delivery, is practically impossible. Moonbucks needs to get this right, and its initial concern is inconsistent deliveries. It commissions an assessment of the supplying farms and post-harvest chain. The questions cover land condition, harvest availability and whether drying or storage problems are affecting saleable lots.
This distinction changes the investment brief. A tree-planting proposal cannot be assumed to fix drying problems. Better storage cannot restore eroded land. The team must establish which problem exists before selecting the response.
CCC’s guide to finding nature-based solutions in your supply chain explains where to look. Here, the next task is to turn a broad concern into a testable proposal.
2. Develop nature-based carbon investments around the actual supply chain
The assessment would trace Moonbucks’ purchases back through the exporter and supplying producer groups. Which farms supply the contracted lots? Who controls land-management decisions? How long does the buyer expect to maintain the purchasing relationship?
Furthermore, Jimma natural Grade 4 cannot be treated as interchangeable with every Ethiopian coffee. Moonbucks would need to test any substitute against its own blend and quality requirements.
Suppose Moonbucks’ assessment identifies an opportunity to maintain shade trees and restore vegetation along exposed streambanks. The IPCC describes agroforestry as a way to store carbon in vegetation and soil, with potential benefits for erosion control and water quality.1 Moonbucks would need local advice on species, growing conditions and maintenance before deciding how these measures fit its sourcing plan.
The proposal now has a defined sourcing connection and a candidate intervention. The next steps are to test its effect on production, assess carbon eligibility and build the financial case.
3. Compare the proposal with other ways to protect supply
WBCSD’s Nature-based Solutions Blueprint recommends comparing nature-based options with other responses across their benefits and costs.2 For Moonbucks, that means evaluating the landscape proposal alongside drying improvements, storage controls and alternative sourcing arrangements.
The product’s natural-process designation matters. Moonbucks should examine the drying and dry-milling chain alongside land conditions. Its team would check storage practices, contamination risks and incoming-lot quality to see whether problems arise before or after the coffee leaves the farms.
The revised proposal might combine land stewardship with separate post-harvest controls. Each component needs its own purpose and budget. A sustainability label should not obscure which activity is expected to solve which problem.
The project develops as the evidence improves. Its scope should follow the diagnosis rather than preserve the first idea unchanged.
4. Establish what the carbon outcome could count toward
Moonbucks’ sustainability team now tests the proposed carbon case separately from the sourcing case. Is the objective a measurable change in Moonbucks’ value-chain emissions, verified credits for separate voluntary use, or distinct outcomes under carefully defined arrangements?
Scope 3 covers value-chain emissions. A purchasing relationship alone does not prove that a farm intervention can be included in Moonbucks’ inventory. The team needs an applicable accounting method, defensible boundaries and evidence supporting attribution.
SBTi’s FLAG Guidance (forest, land and agriculture), version 1.2, says purchased credits used as offsets cannot meet near-term FLAG or energy and industry targets. Eligible land-based removals are subject to accounting requirements.3 Moonbucks needs to test its proposal against those rules before including an outcome in its targets.
For Moonbucks’ Jimma proposal, maintaining existing trees and establishing new vegetation could involve different carbon questions. Specialists must examine the baseline and additionality, meaning what changes because the project proceeds. They must also assess measurement and the risk that stored carbon is lost. CCC’s MRV and additionality article introduces those tests.
Until that work is complete, Moonbucks should not budget an assumed Scope 3 reduction or credit-sale receipt. Direct emissions reductions remain the priority.
5. Build a financial case that survives weaker assumptions
Moonbucks’ finance team would now build a multi-year budget. UNEP’s State of Finance for Nature 2023 compares current finance with the investment needed to meet climate, biodiversity and land-restoration goals.4 The company would cost its proposed activities, farmer participation and ongoing monitoring. Verification, where required, is a separate expense. Maintenance and responsibility for replacing failed plantings must remain visible after the initial establishment budget ends.
Operational benefits need equally careful treatment. If fewer rejected lots reduce emergency purchasing, count that saving once. Do not add “supply resilience” as another financial benefit when it represents the same avoided cost.
Moonbucks should compare a base case with slower benefits, higher implementation costs and no carbon revenue. It should also distinguish production outcomes from quality and shipment outcomes. A single good harvest would not prove that the landscape intervention caused better delivery performance.
A project can remain worth funding even when its carbon case needs more work. That decision must rest on the operational evidence and the company’s objectives, without unsupported environmental claims.
6. Fund a pilot with a clear expansion decision
Moonbucks’ first approval would fund a bounded pilot, rather than commit the entire sourcing program. Before spending, Moonbucks would agree on participating farms, responsibilities and the evidence needed at review.
Its scorecard could track farmer participation, implementation costs and plant survival, alongside accepted coffee volumes and lot-quality results. Carbon measurements would follow the selected method. Farm-level traceability must connect the intervention to the actual sourcing relationship.
Suppose Moonbucks’ review later finds that storage changes explain most quality improvements, while the land measures need longer observation. Those findings would shape the next decision: expand the proven component, adjust the landscape work or pause further spending. They would not justify crediting all improvements to tree planting.
This gives nature-based carbon investments a practical place in a multi-year strategy. Funding increases as the evidence supports it, and the project can change direction before a larger commitment.
Discuss a sourcing opportunity with CCC
Carbon Credit Capital’s nature-based supply-chain investment service uses its Dual-Value Model to examine supply-chain economics alongside potential sustainability outcomes.
Schedule a consultation to discuss your sourcing exposure and the questions to resolve before allocating capital.
Sources
- Intergovernmental Panel on Climate Change (IPCC), Climate Change 2022: Mitigation of Climate Change, Chapter 7, Agriculture, Forestry and Other Land Uses, section 7.4.3.3 (Agroforestry).
- World Business Council for Sustainable Development (WBCSD), Nature-based Solutions Blueprint, 5 June 2024.
- Science Based Targets initiative (SBTi), Forest, Land and Agriculture Science-Based Target-Setting Guidance, version 1.2, March 2026, section 3.1.4, pp. 37–38.
- United Nations Environment Programme (UNEP), State of Finance for Nature 2023, 2023.
Carbon Footprint
How to buy plastic credits, and what to check before you do
A plastic credit funds the collection of plastic waste in places where no formal system exists to collect it. Each credit represents a measured, independently audited quantity of plastic taken out of the environment or returned to use, tracked on a public registry.
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Carbon Footprint
EU carbon credit claims after 27 September 2026
EU carbon credit claims changed on 27 September 2026, the day the Directive (EU) 2024/825 began to apply across the European Union. The change is narrow. It changes how a company can talk about the credits it buys. A product can no longer be called neutral on the strength of compensation alone; however, every specific, evidenced statement about what a company measured, reduced, and funded stays fully available.
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