“My business is dependent on carbon removal credits for our cashflow, but I’ve heard that I can’t get credits verified and issued on an ongoing basis. How often can I go through credit verification? My biocharBiochar is a carbon-rich material created from biomass decomposition in low-oxygen conditions. It has important applications in environmental remediation, soil improvement, agriculture, carbon sequestration, energy storage, and sustainable materials, promoting efficiency and reducing waste in various contexts while addressing climate change challenges. More is constantly flowing, so why can’t I realize credit revenue on an ongoing basis?”

– Carbon Cash Conversion Crisis

Dear Carbon Cash Conversion Crisis,

First off, you’re not alone. Many biochar and CDR developers wrestle with the gap between constant production and the inconsistent timing of revenue. Let’s unpack why verification isn’t instantaneous, how often you can realistically pursue it, and where the industry is headed.

Why Verification Isn’t Real-Time

Verification is the process of having an independent third-party check your monitoring reports, greenhouse gas statements, and project data. This ensures that the credits you’re selling are trustworthy and compliant with the registry’s methodology. Buyers typically won’t touch unverified credits since it provides them with a third-party stamp of assurance.

However, every round of verification carries a cost. Depending on the registry, you’ll either pay a contracted verification body directly or pay indirectly through per-credit fees that are baked into the registry’s pricing. On average, audits cost between $10,000-$30,000 each depending on the complexity of the project and methodology.

Your biochar may be continuously flowing, but the credit revenue follows a “batching” model. Until enough volume and value accumulate from biochar production to justify verification costs, it’s financially inefficient to go through a verification period.

How Often Can You Go Through Verification?

The frequency of verification depends on the registry and the scale of your project. While each registry sets its own rules, larger projects, measured by the volume of carbon credits produced, can justify going through verification more frequently. There are two common structures that registries employ:

• Direct-contract verification (Climate Action Reserve, Verra): The developer contracts directly with the registry AND a third-party verification body, meaning the registry and verification cost are separate. Since you as the developer are paying for the verification, you can technically go through verification as often as you’d like, but since each cycle carries fees you may eat up your margins just on audit costs alone. The larger the project, the more financially efficient this is. For instance, let’s compare annual versus quarterly verification costs per credit assuming the audit cost stays the same:

Annual verification cost: 

• $10,000 / 1,000 credits = $10 per verified credit
• $10,000 / 10,000 credits = $1 per credit

Quarterly verification cost: 

• ($10,000 x 4) / 1,000 credits = $40 per verified credit
• ($10,000 x 4) / 10,000 credits = $4 per verified credit

Economies of scale are incredibly important when considering verification costs.

• Registry-managed verification (Isometric, Puro, Carbon Standards International): In this case, the developer contracts directly with the registry, and then the registry then contracts with the third-party verification body, meaning the registry and verification costs are combined and charged directly by the registry. Since the verification cost is baked into the per-credit cost charged by the registry, these registries typically have stricter rules for how often you can go through verification since they need to ensure that their unit economics pencil out.
  • Puro’s per-credit rate starts at €10 per credit and scales down based on size. Developers are allowed to pursue verification every time they produce at least 1,000 credits over the given reporting period. This means credits could be verified on a monthly basis if the volume produced exceeds 1,000 credits per month.
  • Isometric’s per-credit rate starts at $10 and reduces after a project produces >100,000 credits. One caveat on Isometric’s pricing is that they charge the buyer for the verification cost, not the developer. Isometric has not put limits on how often developers can go through verification and state that developers can go through verification on a monthly basis.

Most developers verify quarterly, semi-annually, or annually based on project size, but this is shifting as the industry recognizes the need for more frequent, consistent issuances to support scaling.

Change Is Coming

The industry knows this is a problem. Standards and verification bodies are investing in technological tools, including digital Monitoring, Reporting, and Verification software (dMRV) with AI-enabled data validation, streamlined workflows, API integrations to certification portals, and even near-real-time monitoring platforms. The aim is to reduce both the cost and the lag time of verification so developers like you can access credit revenue more smoothly and consistently.

In the meantime, planning your production, verification, and sales cycles together will help stabilize your cash flow.

Sources:

• Climate Action Reserve Program Manual
• “VCS (Verra) Program Details” Webpage
• “Puro.earth Fee” Structure Webpage
• “Pricing at Isometric” Webpage

Have a question for Annie? Submit it here.