What does it take to rate a carbon project?

Your company has an ambitious net zero strategy, and it’s your job to keep your decarbonisation targets on track - a challenging but exciting opportunity.

You’ve recognised the important role that high-quality carbon credits can play in helping you deliver immediate climate action, and enhance your decarbonisation pathway.

You’ve screened and shortlisted some impactful-looking nature and technology based projects – a mix of mangrove reforestation, improved forest management and landfill gas credits. Great!

Naturally, your stakeholders might ask if these projects really are delivering their promised climate impact. The more savvy ones might ask:

• How have you assessed the effects of sea level rise on the permanence of the coastal mangrove projects you’ve selected?

• How do local timber market dynamics affect the risk of emissions leaking outside these forestry projects’ boundaries?

• Does domestic policy on methane reduction justify the role of carbon finance in your chosen landfill gas projects?

No single person realistically knows the answer to all these questions. The truth is, carbon project analysis is incredibly complex. The sheer range of data to collect and interpret across thousands of projects around the world requires a wealth of knowledge.

And even with the right information and models in place, you need specialists in climate and geospatial science, environmental policy, and financial research to make sense of it all.

Fortunately, this expertise underpins third-party carbon ratings. This explainer outlines what it takes to assess carbon projects: robust data and models, specialists from across disciplines, and strong governance.

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Collected, cleaned, and codified project data

Dependable data forms the foundation of robust project analysis.

Our process begins by collecting the data that projects themselves are reporting. This is not as straightforward as one might expect. 

Projects report on their activities and carbon claims through standards bodies’ registries. The data on these registries are typically unstructured, often embedded in numerous PDFs, and are highly variable in their format and completeness. 

Extracting these disparate data points, codifying them in BeZero's digital accounting templates and geospatial formats, and cross-checking them against issuance data and other sources, is a mammoth task.

BeZero’s data team sits at the nexus of deep carbon markets knowledge and data science, and is constantly innovating new ways to professionalise, accelerate, and automate this process. To date, the team has cleaned and structured around 7 billion data points, and independently validated and/or reconstructed more than 350 project boundaries.

Evidenced claims

The aim of a carbon rating is to determine whether a project’s carbon avoidance or removal claims hold up. If a claim isn’t evidenced, the credit shouldn’t be rated.

For this reason, before analysis can even begin, BeZero requires a project to:

• Evidence its additionality claims, i.e. its purported dependency on carbon finance

• Ensure sufficient information is available in order to assess its claims

• Demonstrate it has been audited by a third party (e.g. a validation/verification body)

Before the rating process starts, BeZero’s Developer Engagement team reaches out to the project developer to let them know their project is going to be rated. If the above eligibility criteria aren’t being met, the team will also ask the developer to fill any information gaps.

Given the variety of methodologies and techniques available to operate different project types, it’s not surprising that project data can be hard to access, and is rarely standardised. As such, BeZero fulfils an essential role by providing developers with guidance on disclosure, as well as education on ratings and their potential to unlock finance.

So far, BeZero has engaged with developers of over 400 projects, creating unique two-way learning opportunities.

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Eyes in the sky, feet on the ground

Access to geospatial data, which relates to information about Earth’s surface, is an essential component of effective project analysis. BeZero conducts field visits - from the Brazilian Amazon, to the mountains of Uganda, to forestry management sites in the United States - but having eyes and ears on the ground everywhere at all times isn’t realistic.

For that reason, BeZero’s ratings are enriched by global partnerships. Our in-house geospatial team uses satellite imagery and other remote sensing techniques to monitor projects in near real-time, in collaboration with national space agencies, commercial satellite operators, and environmental intelligence companies.

But views from above only tell half the story. Partnerships with local research institutions provide valuable information from the ground that even the most cutting-edge satellite technology can’t discern. This field research, for example with research institutions in Brazil and with Uganda Wildlife Authority, is helping us to validate satellite-derived models and advance understanding of forest carbon dynamics.

Data from sampling areas such as these feed into the BeZero Carbon Plots Database, which provides a unique overview of ground-measured forest carbon and tree diversity spanning thousands of sites all around the world.

‘Ground truth’ data paired with satellite imagery and other geospatial data feed into analytical models built by BeZero’s specialists in climate science, geostatistical analysis, and machine learning. One example is a statistical matching technique called ‘dynamic baselines’ which acts as an independent assessment of a project’s baseline emissions scenario.

These curated datasets and proprietary models give BeZero’s ratings analysts a unique edge, and are an essential input into our scientists’ expert judgement. Interrogating project claims can now begin.

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A (multi)disciplined approach

Overreliance on models can lead to false conclusions, so we don’t stop at satellite images and tree databases. Every piece of evidence relating to a given project is interrogated by a world-class team of scientists.

BeZero’s global team come from all walks of life: champions of conservation, climate and Earth scientists, physicists, engineers, pioneers in geospatial analysis and artificial intelligence, veterans of environmental policy and financial research - the list goes on.

Analysts use a universal, publicly available methodology to assess carbon efficacy, focusing on key drivers of carbon quality such as additionality, carbon accounting, and permanence. Early-stage projects are also assessed for execution risk, which examines their likelihood of reaching operational stage.

Each rating is also powered by sector-specific models and methodologies to capture the nuances of different project types. Dedicated sector leads with expertise in areas such as blue carbon,  cookstoves, energy, engineered carbon removals, forestry, and soil science oversee the design and maintenance of these sectoral frameworks.

In addition to evaluating project data from the bottom-up, BeZero’s analysts leverage jurisdictional and sector-level macro data, including peer-reviewed academic papers, industry research reports, and public datasets from global, national, and non-governmental entities. In total, over 20,000 data sources inform their analysis - and the list is growing.

Analysts from a wide range of disciplines work together to unpack the layers of risk that result from the large variety of project types, the local intricacies of government policy and regulation, the financial assumptions behind credit issuance, and a host of other factors.

To illustrate this multidisciplinary approach in action, let's look at the extensive work that went into the rating of a regenerative agriculture project, which aims to avoid emissions and sequester carbon by implementing regenerative farming activities, including changes in crop planting, tillage, and fertiliser application. Here's what happened:

• BeZero's Data team examined the available project information and flagged missing data that could have impacted the project’s eligibility or our analysis.

• Our Developer Engagement team set up calls with the project developer. Because some of the missing information was sensitive, including specific farm locations, BeZero worked with the developer to obtain semi-anonymised data for analytical purposes.

• Our Geospatial & Earth Observation team checked the field boundaries, and provided satellite monitoring over time of regenerative practices such as cover cropping and natural hazards such as drought, inside and outside the project areas. 

• Carbon ratings scientists with PhDs in Earth sciences, sustainable agriculture, and ecological risk then assessed carbon risks across a myriad of project activities. This included a detailed analysis of financial, policy, and agroeconomic drivers of risk.

• Finally, following peer review and deliberation with the combined interdisciplinary knowledge of the Rating Committee, the rating was assigned. 

This level of collaboration between experts in different fields left no stone unturned. As the largest project with issued credits in this space, it also resulted in a first-of-its-kind quality reference for the entire regenerative agriculture sector.

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A seasoned committee

Assigning a project rating isn’t a decision taken lightly. It can potentially impact the flow of carbon finance towards projects and their local communities, with real-world consequences. For that reason, project analysis is formally discussed with senior members of BeZero’s Ratings team in a forum known as a Rating Committee Meeting (RCM).

Experts with hundreds of years worth of combined experience in climate, geospatial and data science, environmental policy, and financial research get into a room to debate and deliberate the findings. For a rating to pass, a unanimous decision has to be made by the Rating Committee. To date, BeZero has run over 350 RCMs, with more than 450 projects rated in every major sector, and at both pre- and post-issuance stage.

When a rating is assigned, the work doesn’t stop there. Just like climate projects themselves, ratings are dynamic and can be updated at any time if material new information comes to light. Examples could include forest loss events we detect from satellite imagery, changes in laws and regulations linked to a project’s carbon rights, or the publication of new documentation on the registry.

Projects rated by BeZero are continuously monitored and up to date. If new information has a significant impact on carbon credit quality, you’ll be the first to know. 

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Acting with integrity

Dependable data and scientific rigour are essential to rating projects. But only with sound governance can a carbon rating truly be relied upon. 

BeZero practises the transparency it preaches. Every rating assigned and every methodology used is open to public scrutiny. 

Unlike ‘black box’ approaches, the analysis and underlying assumptions can be interrogated by other stakeholders in the market. This kind of open dialogue is important because it helps increase the robustness of BeZero’s analytical approach.

Another marker for integrity is independence. As a carbon ratings agency, BeZero must remain 100% free of conflicts of interest. This means rating actions come with no vested interests in either the rating outcome, the size of the project, or any transactions linked to the project. Learn more about why independence matters here.

At BeZero, assigning ratings is a full-time job; we do not rely on part-time advisors for our ratings. The Ratings team’s continual commitment underpins the rigour of BeZero’s governance.

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Analysis valued by thousands

Climate-conscious companies around the world trust BeZero’s robust process and expert analysis to accelerate their due diligence and build carbon portfolios with credible impact claims.

Demand for highly-rated carbon credits is on the rise, and quality is commanding a price premium. Sustainability leaders are looking for defensibility and need to mitigate reputational risk, and a worthy BeZero Carbon Rating is becoming a common expectation for many purchasers.

Building a robust decarbonisation strategy is complex, requiring dedicated expertise and ongoing headspace. Independent ratings ultimately empower sustainability leaders - and the consultancies and brokers advising them - with the most valuable commodity: time.

By evaluating carbon credits through an independent team of full-time ratings analysts, companies can accelerate their due diligence. This means companies can focus their attention on the greater challenge: lowering emissions within their value chain.

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‘Working with BeZero is a huge asset to our team. Their rigorous ratings approach and in-depth project analysis was a major factor helping us decide which credits to buy, saving us hundreds of hours of due diligence!’

- Wren, a carbon offsetting platform.

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As the most wid‎ely adopted risk metric in the market, the BeZero Carbon Rating makes it easier than ever to enhance your climate strategy through immediate, credible, and defensible climate action. Start your journey by accessing BeZero’s ratings, and explore thousands of project listings and hundreds of insights on all things carbon.

In the next article in our carbon credit explainer series, we introduce BeZero’s ‘AAA’ team, lifting the veil on the uncompromising care and diligence behind their work. Read more here.