Can AI make carbon credits more … credible?

One of the biggest issues facing the global carbon credits industry is a lack of transparency in supply chains with regard to Scope 3 emissions. Tracking the real carbon impact of an organisation’s supply chain is a challenging and murky process. As regulations in regions like the EU (the world’s biggest market for carbon credits) become stricter, organisations are turning to Artificial Intelligence (AI) as a way to improve the credibility of their carbon credits. 

The carbon markets are a dirty place

Amid unrelenting reports of a worsening climate crisis, a pro-fossil fuel administration in the White House, and the increasing quietude of tech giants on the subject of their sustainability targets, it’s hard to feel positively about the fact the global carbon trading market is worth about close to a trillion dollars per year.

In cold, hard figures, the total value of traded global markets for carbon dioxide (CO2) permits reached an all time high of $948.75 billion in 2023. Selling sustainability gains for profit to companies looking to absolve themselves for irreparable environmental harm is big, big business. So were indulgences in the 13th century.

The case for carbon credits is that they provide a stepping stone for companies to balance their emissions chequebooks. A large manufacturer, for example, might invest billions in reducing its carbon footprint, but at the end of the day, it requires metal dug from the earth and power from the grid to operate. Discussions with carbon market advocates often revolve around using them to bridge the last few percent of an organisation’s emissions — the irremovable impact — after an operation has been decarbonised as much as possible. 

However, critics of carbon credits argue that carbon markets are a way for large polluters to buy permission to pollute. What’s worse is that many credits fail to achieve the offsets or reductions that they promise. Studies show that most offsets available on the market don’t reliably reduce emissions, and instead function as a way for the worst polluters to launder their reputations, while robbing the race for net zero of much needed urgency.

Could AI be part of the solution?

Jonathan Horn, CEO and Co-founder, Treefera — a data platform that aims to help businesses decarbonise their supply chains — argues that AI is “fundamentally reshaping the way supply chain organisations approach carbon credits.”

“Previously, the process of verifying offsets was slow and prone to error, relying on outdated systems. By applying advanced models, AI can synthesise vast datasets to measure, verify, and monitor offsets with unparalleled accuracy and precision,” he says. If it works, it could be an essential step in taking carbon credits from where they are — murky, unverifiable, and often a lot less green than they look — to where they need to be. “Carbon credits that are credible and backed by robust, transparent data help businesses meet regulatory requirements, build trust with stakeholders, and support decarbonisation goals,” Horn argues, citing the idea that “trust is critical for scaling sustainability initiatives and maintaining reputational integrity.”

A-eye in the sky — How does integrating satellite, drone, and ground data enhance supply chain sustainability strategies?

Horn proposes a “synthesis of satellite, drone, and ground-level data” fed into AI. By leveraging multiple high-level image and data gathering methods, AI could provide supply chains with “a multi-layered view of risks. This, Horn continues, is vital for supply chain leaders managing risks like flooding, deforestation, or biodiversity loss.

“These diverse and comprehensive data inputs offer the ability to monitor changes at the first mile validating findings and providing precision where needed,” he says. Also, he notes that as regulations such as the EUDR require stricter environmental reporting, these tools enable companies to deliver more verifiable data than before, allowing them to remain compliant in a stricter regulatory environment.

Read the full Supply Chain Strategy article here