European policymakers are quietly turning to a new kind of referee in the climate race: carbon rating agencies. As the European Union reopens the door to carbon credits to help firms offset emissions, BeZero Carbon — a London-based agency founded in 2020 — argues that rating these credits could separate real climate gains from mere greenwashing. BeZero does not certify projects; it evaluates the likelihood that a credit truly corresponds to one tonne of carbon removed or avoided. This distinction between rating and accrediting is crucial as governments seek a transparent way to gauge credit quality under Article 6 of the Paris Agreement and within the EU’s broader emissions framework.
The carbon economy sits on two tracks. The compliance market is run by governments, where firms must hold permits to emit CO2. The voluntary market lets companies buy credits to offset residual emissions, funding projects such as forests, renewables, or carbon capture. The EU’s renewed openness to credits, including permanent removals, raises questions about how these credits will interact with the Emissions Trading Scheme (ETS). BeZero’s co-founder Sebastien Cross notes that higher carbon prices are essential to preserve incentives to decarbonise domestically; importing cheaper foreign credits could depress prices and undermine domestic investments. The EU’s ambition to push the ETS price higher is tied to ensuring credits actually motivate real reductions at home rather than simply offsetting them abroad.
Cross also highlights a core risk: the line between a credited intervention and its actual impact is inherently uncertain. For nature-based projects—like afforestation or mangrove protection—t establishing a counterfactual baseline (what would have happened without the project) is especially tricky. Non-nature-based credits, including carbon capture and storage, face similar validation challenges. The lack of perfect data means a credit’s “true” impact can be difficult to observe, a problem that has fueled past criticisms of over-crediting and misrepresentation in earlier CDM programs. Yet new tools—satellite imagery and advanced data analytics—give buyers more information to interrogate project-level results and inform the headline ratings agencies publish.
Cross emphasizes that rating agencies are stepping into a maturing market. Five years ago, carbon markets had little in the way of risk metrics; today, investors and governments are demanding them. There is growing political interest in harnessing ratings to design compliance systems, and a global push toward a coordinated carbon price — a posture echoed at COP30 by EU, Brazil, China, France, Germany, and the UK. However, the shift also carries caveats: if credits are used to satisfy targets without strengthening domestic decarbonisation, the ultimate goal of cutting emissions could be sidelined. The EU’s openness to the Paris Agreement’s Article 6 and the prospect of permanent removals entering the ETS will require robust, transparent, and verifiable data to avoid price distortions and maintain trust across markets.