Verra registry data, investigative reporting, and satellite imagery reveal that the voluntary carbon offset market — once valued at billions — has been built on credits from projects that were fraudulent, non-existent, or literally on fire.
The Shell Game
The carbon offset market depends on a simple premise: a company that emits carbon dioxide can “offset” those emissions by paying for projects that remove or prevent an equivalent amount of CO2 elsewhere. Buy enough credits, and you can claim carbon neutrality — regardless of how much you actually emit.
The problem is that many of the projects generating these credits don’t work. In one of the most damaging exposés, Climate Change News revealed that Verra — the world’s largest carbon credit registry, responsible for over half of all global voluntary carbon credits — used nearly 1 million “hot air” carbon credits to compensate for bogus Shell offset projects. Shell had marketed credits from 10 rice-paddy projects in China that were exposed as shams, generating 960,000 junk credits. Verra’s solution was to replace them with equally questionable credits — a shell game of carbon accounting.
The Kariba Collapse
The Kariba hydropower project — one of the highest-profile carbon offset projects in the Verra registry — saw the majority of its carbon credits deemed bogus following a Verra probe in 2025. The project had generated millions of credits purchased by major corporations seeking to demonstrate climate responsibility. When the credits were invalidated, the corporations’ carbon-neutral claims collapsed with them.
In Brazil, the problem extended to criminal fraud. In June 2024, Brazilian federal police raided three carbon credit projects in what was dubbed “Operation Greenwashing,” leading Verra to suspend the projects. The raids revealed systematic misrepresentation of conservation activities — projects that claimed to be protecting forests were, in some cases, protecting forests that were never at risk of being cleared.
The Market Reckoning
These revelations have triggered a crisis of confidence in the voluntary carbon market. Companies that built sustainability strategies around offset purchases are discovering that their climate credentials were purchased with counterfeit currency. The credits looked legitimate on paper — certified by Verra, traded on recognized exchanges, and retired against corporate emissions — but the underlying environmental benefit was illusory.
Satellite imagery has added another dimension to the problem: forest conservation projects that generated carbon credits have been destroyed by wildfires, releasing the very carbon they were supposed to sequester. When a forest burns, the offset vanishes — but the emissions it was supposed to offset remain in the atmosphere. The accounting fails because the atmosphere doesn’t recognize accounting conventions.
The Accountability Gap
Verra’s governance model creates a structural conflict of interest: the organization earns revenue from credit issuance, which creates an incentive to approve projects and issue credits rather than to reject them. When the projects fail — through fraud, fire, or simple ineffectiveness — Verra faces no financial consequences. The buyers lose their climate claims. The atmosphere gets the CO2. And the offset market moves on to the next project.
The carbon credit collapse should be a cautionary tale for any climate policy built on market mechanisms that lack independent verification, enforceable standards, and real consequences for fraud. The intent was noble. The execution was a disaster. And the corporations that bought these credits — many of them the same companies that loudly proclaim their climate virtue — were either complicit in the fiction or too credulous to question it.
Eduardo Bacci is an investigative journalist at The Investigative Journal. Data sources include Verra VCS registry data, Mongabay investigative reporting, and LA Times offset investigations.