Carbon Markets as Outsourced Mitigation: Smart Climate Strategy or Convenient Fiction?

What if voluntary carbon markets are either a vital climate tool... or a polished excuse to delay real decarbonisation?

In this episode of Climate Confident, I’m joined by Dr Jennifer Jenkins, Chief Science Officer at Rubicon Carbon, to unpack one of the most contested questions in climate tech and net zero strategy: what role, if any, should voluntary carbon markets play in real-world emissions reduction? At a time when companies are under pressure to decarbonise, prove integrity, and navigate fast-moving policy shifts, this debate matters more than ever.

We dig into why some firms see carbon credits as a practical way to close the gap between ambition and operational reality, and why others see them as a dangerous distraction. You’ll hear why quality, additionality, MRV, and long-term offtake agreements are becoming central to the future of the market, and why high-integrity supply may be far tighter than many buyers realise.

Jennifer also explains how buyers like Microsoft are shaping demand, how voluntary and compliance markets may be starting to converge, and why policy tools like CBAM could reshape the market faster than most people expect. You might be shocked to learn that one of the clearest ways to think about this space is as outsourced mitigation, a framing that makes the economics easier to grasp, but also exposes the credibility problem at the heart of the whole system.

🎙️ Listen now to hear how Jennifer Jenkins and Rubicon Carbon see the future of decarbonisation, climate tech, policy, and net zero.

Transcript

Jennifer Jenkins: 0:03

And that's gonna be a difficult conversation in the boardroom because you're not gonna be able to meet your targets. At that point, that's where we look and we say maybe there's another entity out there somewhere in the world that might be able to accomplish this emissions reduction in a way that is less costly, And more efficient.

Tom Raftery: 0:28

Good morning, good afternoon, or good evening, wherever you are in the world. Welcome to episode 267 of the Climate Confident Podcast. My name is Tom Raftery. Voluntary carbon markets sit in an awkward space in climate strategy. Supporters see them as a practical way to close the gap between ambition and reality while critics see them as a polished way to delay real decarbonization. Today I am speaking with Jennifer Jenkins, Chief Science Officer at Rubicon Carbon, about where this market is evolving, where trust is still fragile and what business leaders need to understand before treating credits as part of a serious climate plan. If you work in sustainability, energy procurement, or corporate strategy, this episode will help you separate the useful from the dubious and think more clearly about what counts as progress, what counts as avoidance, and why the distinction matters. And if you want more of that kind of analysis, a Climate Confident+ subscription gives you bonus episodes twice a month on the climate and energy stories shaping the market right now. Let's get into it. Jen. Welcome to the podcast. Would you like to introduce yourself?

Jennifer Jenkins: 1:52

Sure. Thank you. It's great to be here. Really appreciate it. I'm, Jen Jenkins. I'm the Chief Science Officer for Rubicon Carbon. Rubicon Carbon is a vertically integrated carbon credit investment and management firm that was started in late 2022, so we've been at this for about three and a half years. We make investments in carbon projects and we sell credits through off takes or on the spot market to our buyers.

Tom Raftery: 2:21

Okay. And who are typical customers, Jen, and where do you operate?

Jennifer Jenkins: 2:27

So we're based in the US. We have physical offices in New York, in San Francisco, and in Los Angeles. But we transact around the world. The carbon market is global. So our projects can be in the US but they can also be, in other countries. So we've got projects right now in Africa, in South America and in, yeah. In Africa and South America are the, two main regions where we operate right now. Our buyers are, you know, the buyers in the market, right? So we sell to the, tech buyers we sell to others that you know of who are in the market for carbon credits.

Tom Raftery: 3:05

And why do you believe markets can protect the environment? What is it that is so special about markets that you think, this is a good idea?

Jennifer Jenkins: 3:15

Markets are a great way to sort of efficiently solve problems, right? Generally, we've, sort of seen that throughout history. In terms of the carbon market, the voluntary carbon market. This market is populated by buyers who are seeking to meet their aggressive climate targets through a combination of mechanisms. And they might be doing that through internal decarbonisation, right? That's the first lever that most, corporations are gonna look for. But in many cases, the technologies or the innovative uses of materials that might be needed by, for example, a manufacturing firm, they simply can't be accomplished today because the technology doesn't yet exist. Right. Let me give you an example. Say you are, automotive company making cars. You set a target, you're trying to reach that target. You will, as part of that target, you will set, you'll do an inventory of all of the emissions that occur in your supply chain. And let's keep in mind that we have built, we have sort of 200 years of industrial development have been created now on fossil fuels. right? So there are going to be inevitably multiple fossil fuel sort of sources in your supply chain. You're going to arrange them, you're gonna look into how much it would cost to abate each one of those tons of carbon dioxide or CO2e in your supply chain. And you're gonna arrange them in order from least to most costly, And you're gonna first, as that company trying to meet your targets, you're gonna first do the things that are least costly. Some of them might even save you money, They might be like swapping out the light bulbs in the warehouse is a great example of an action that can often save money at the back end. You're gonna do those things first, right? Then you're gonna get to a point where. You might do the ones that are just, you know, cost a little bit, right? And then you might sort of say, that's worth doing. It's a, it's an important thing for us to do for the environment. We can share the information about what we've done with our stakeholders and our shareholders. Then you're gonna get to a point where that next least expensive abatement option is too expensive, right? The technology doesn't exist for you to actually carry out that decarbonisation action in your own supply chain, in a way that is gonna be responsible financially to your shareholders and sort of allow you to maintain your fiduciary responsibility to those shareholders. And that's gonna be a difficult conversation in the boardroom because you're not gonna be able to meet your targets. At that point, that's where we look and we say maybe there's another entity out there somewhere in the world that might be able to accomplish this emissions reduction in a way that is less costly, And more efficient. And at that point, maybe we say what if we were to outsource that emissions reduction to another entity. And so, businesses outsource things all the time, right? You might outsource your accounting to somebody who can do it cheaper and faster and more cost effectively, right? You might outsource another function to another company. Maybe you don't wanna make tires. Maybe you should have someone else make tires, right? So you outsource that manufacturing because somebody else can do it better and easier, faster, and cheaper. The same thing is true in the, with the carbon market, right? The, the companies want to, meet their decarbonisation goals. They want to sort of meet those climate targets, but somebody else has a less expensive mitigation option out there. And if that's the case that's where markets really come in. They can make the process of reaching one's targets much more cost effective, much more affordable. And so as long as the environmental effectiveness is there, and I'm sure we'll get to that, then there's no reason for that company to have to mitigate inside its own supply chain, especially if if the technology doesn't yet exist for that particular manufacturing process or if the next, you know, least costly option is just gonna sort of break the bank for that company.

Tom Raftery: 7:23

Carbon markets though, have taken some reputational hits lately. What, what would you say is broken in today's voluntary carbon market?

Jennifer Jenkins: 7:33

Yeah, that, that definitely has taken some reputational hits. I'm gonna push back gently on, is there something broken today? Because I do think that there has been quite a bit of evolution and change right, over the last five to 10 years. We really need to keep in mind that, you know, the first carbon project was created and developed in, you know, 1988, right? So that was the last, that was the last century. So this is not your grandmother's carbon market, right? This is a market that has been grappling, I would say over the last, well, five to 10 years, probably more like five years with the reputational harm caused by some projects and some methodologies that maybe were not quite as tight as they should have been. And so over the last two years, since January, 2023, when the sort of bombshell guardian article came out, there has been a real reckoning publicly in the market with quality. And the, focus has been on updating the methodologies so that loopholes do not exist and the over crediting that we saw in some of those other methodologies has been eliminated. Ratings agencies have cropped up to provide excellent project by project evaluations of quality in the projects and also in, making sure that the developers are carrying out the projects in ways that are appropriate and consistent with expectations. The Integrity Council for the Voluntary Carbon Market was stood up two or three years ago. And that organisation is a nonprofit that is staffed by volunteers and experts in the industry who are reviewing methodologies to ensure that those methodologies are fit for purpose, and are meeting the absolute highest standards, I will say. So the ICVCM's quality benchmark is called the Core Carbon Principles and so registries and methodologies that are seeking to demonstrate and prove their quality, are sort of applying to the ICVCM for what's called a CCP tag or a Core Carbon Principles tag, and a a CCP tag denotes quality, right? That this methodology, if it is followed appropriately is likely to lead to a very high quality project and credits that can be traded and assumed to be effective. Now, the ICVCM's CCP tagging process, it evaluates methodologies, right? So just because a methodology has been, given a CCP tag, you still need to, as part of your quality process and part of your due diligence as a buyer, ensure that the project is carrying out that methodology in a way that's appropriate. So that's an important distinction to make. But yeah, overall, I mean, I think we're seeing the CCP tags and the evolution and the sort of the integrity renaissance that we've seen over the last three or four years has really led to much more confidence in the market. And, there's a clear relationship actually between price and quality. Which is something that, is a welcome movement in the market generally.

Tom Raftery: 11:08

So what would you define as a high quality credit?

Jennifer Jenkins: 11:13

We make investments in projects and we buy credits sort of on the spot market. I would say in both cases, there are a series of things that we look for. The Rubicon Carbon Integrity Framework is the, structured way that we approach credits that we are considering adding to our balance sheet. And that RCIF speaks to the various sort of elements of quality such as additionality, leakage, ensuring that there's no double counting, to some extent durability. These are the things that, we're looking to ensure as we look at a project and I can, you can sort of look, you know, look online, right? Google, our RCIF Rubicon Carbon Integrity Framework, and it'll tell you there's a whole user's guide and A PDF that'll sort of walk you through all the, all the various details. I won't, I won't bore you here uh, with, with what that all is. Another important element that we have found as we're thinking about making investments and speaking directly with developers, like any investment, an investor is always going to look at the people and the sort of institution that they're investing in. And so we've also found that, our individual conversations with the developers are really, really important. There's sort of a level of, professionalism and responsiveness. That's really key. And so that's another thing that we look at and that is especially important when you're looking at early stage projects on the investment side.

Tom Raftery: 12:44

And where do most projects fail quality tests?

Jennifer Jenkins: 12:50

That's a great question. Sort of where are the, I think what you're asking is sort of where are the biggest risks? And it depends on the type of project. Different project types are going to have different kinds of risks. And so as a buyer what the buyers need to understand is, the kind of credit that they're looking at and what the market for that credit type, looks like. Here's an example. Additionality basically means this project relies on carbon finance to go, right? In other words, this thing wouldn't have happened it were not for the carbon finance, right? And the reason that's important is because if it would've happened anyway, then it's kind of already baked into our projections. What we're trying to do is bend the curve away from what those projections were at the beginning. So if we're just getting money to do something that's already baked into the system, that's not actually changing what we expect to happen. So that's what additionality means. We're looking at a landfill project for example, a landfill project will destroy methane, and methane has a much higher global warming potential than CO2. So, the process of destroying methane, really flaring it turns a molecule of methane, which is CH4, into a molecule of CO2. And then that reduces its global warming potential by quite a bit. And if that action were not going to happen anyway, then then that's a measurable additional impact. That's an additional project. There's a concept called regulatory additionality that basically says if the action taken by the project developer is required by law, then by definition, that action is not additional, right? Because if it's required by law, it was going to happen anyway. So, there are some situations and some jurisdictions where the law and sort of legal frameworks are moving us toward, mitigating methane emissions from landfills. And in that case, those projects are, sort of no longer additional from a regulatory perspective. So then the tricky thing becomes, if a project credit was issued before that law became effective. Right then maybe it was additional that year, but if you know, so maybe last year it was issued and it was additional. This year the rule was changed and so now it's required. Okay, so then next year's credits may actually not be characterised as additional if we're thinking about it that way. So then the question becomes as you are looking at your credits and if regulatory additionality is a thing, then it becomes important to look at what vintage you're considering buying because the additionality case may be different from year to year.

Tom Raftery: 15:58

Moving from theory to capital, what changed when buyers like Microsoft started signing long-term

Jennifer Jenkins: 16:06

offtake

Tom Raftery: 16:07

deals?

Jennifer Jenkins: 16:08

Yeah, so Microsoft is a really important buyer in the market. If you look at the data, they're the biggest buyer, right? And they have been for a while. They're buying removals, right. So I think one impact that Microsoft's purchases have had is to really sort of amp up the market for removals specifically. That's one thing. But they're also entering into long-term off takes with buyers, and that's what you're seeing in their sort of public announcements. Our framework agreement with Microsoft has us committing to deliver to Microsoft over the course of the next, 10 to 20 years, up to 18 million tons of CO2 removal credits from nature-based removal projects, right in the ARR tree planting space. Aforestation, Reforestation, Revegetation. And that's the kind of agreement that I think Microsoft is entering into with, other intermediaries and other developers as well. It's interesting, some of these longer term buyers, Microsoft included, are understanding that the market for high quality projects is very, very tight. And so if what you want is the latest methodology, the highest integrity methodology with a dynamic baseline, that has a CCP tag. There's only a couple of methodologies like that out there, and because they're new, there aren't very many credits that exist on a spot basis. And so a smart buyer today is locking up supply because they know that when they get to 2030, 2040, 2050, when they actually need to meet those, you know, and declare their carbon net zero or you know, whatever target, they've publicised, they're going to need more credits to meet that target. And if they, wanna make sure that they're not paying exorbitant prices due to supply and demand, they're sort of locking those, credits up now as part of an offtake. And so we're, we're seeing many more buyers, maybe buyers that historically might have just been happy to purchase off the spot market. We're now seeing, last year and this year, we're seeing those buyers think hard about maybe I should be thinking about an offtake in this, you know, maybe I should be committing to maybe a five year or 10 year offtake. Because that's how I'm gonna make sure that I lock in the supply at a reasonable price. And so I'll have the credits I need when, when I need them.

Tom Raftery: 18:44

How important is the demand signal that those send?

Jennifer Jenkins: 18:47

Yeah, it's very important. It's absolutely critical. What we're seeing is, one buyer might be willing to commit to an the entire, you know, supply from a project, right? As an offtake. And that's, then that's just a transaction between that seller and that buyer. What is more common is for, or more likely is for, you know, if there's an anchor buyer who might be willing to purchase, a, 50% or maybe 55 or 60% of a project, and then the intermediary and the investor in that, case that would be, Rubicon has sort of some additional credits. That they can then sell to other parties on either an offtake basis or a spot basis, I suppose if, the offtake sort of doesn't materialise in time. But it's critically important for the market as a whole. I just wanna emphasize that it's really, this offtake market is very much limited to the highest quality projects because the supply from those new methodologies is right now so limited.

Tom Raftery: 19:51

And of course this wouldn't be a podcast in 2026 if we didn't mention AI, so

Jennifer Jenkins: 19:57

Mm-hmm.

Tom Raftery: 19:58

is there a role for AI in this particularly, I suppose in the likes of MRV?

Jennifer Jenkins: 21:16

Yeah, that's a great, I, you know, really important. I, we have been playing around a little bit with using AI in our diligence process. I don't know that we've nailed it, right? We're still sort of figuring out what good looks like, what makes sense. I do think there's a way to really leverage AI in the sort of validation and verification process. Which right now is time consuming and riddled with uncertainty and very sort of, fragmented and, it's hard as a project developer to get your project through the validation and verification step today. It feels like there ought to be a role for AI there. I'm sort of optimistic that somebody will step in and make that work. Otherwise, we probably are six to nine months away from really being able to use AI effectively in our own work. I will say I.

Tom Raftery: 22:14

Okay. do you think we're at an inflection point for carbon markets?

Jennifer Jenkins: 22:20

Yeah, absolutely. I actually just this morning one of the other hats that I wear is as a co-chair of a market coalition. Sort of a very informal trade association type group called the Business Alliance for Climate Action. And we had a webinar this morning where we were talking about the confluence between the voluntary and the compliance markets, right? So you're familiar probably with a compliance market like the EU ETS, where there's a cap on overall emissions from a sector or from a company. And if that company or that sector emits more than it gets sort of under its cap, you know, needs to emit more than is allowed under its cap, then it has to buy those allowances, right to trade them. Market development is, is proceeding really fast and I think it's really, it's really happening quickly here in 2026. A lot of the compliance markets are allowing credits that might have grown up under the voluntary market. Are allowing corporations and countries to use those credits in sort of a limited volume toward their compliance obligations. In other words, if you're a company subject to, the carbon tax in a certain jurisdiction then you might be able to say, I'm, I'm gonna be taxed on, you know, five tons, but instead of paying the tax, I could instead buy five credits as long as those credits are, accepted by the jurisdiction and viewed as high quality and, you know, are actually a achieving the desired effects in terms of emissions reductions or removals, then that's how I can, use those credits to meet my compliance obligation. I think that's a really interesting trend and that's happening around the world, and I think the EU is actually a leader in doing that. They're right now thinking about putting credits into the EU ETS. Going forward, the EU is about to revisit its whole approach to the ETS over this coming year. And one of the big questions is whether and how carbon credits from the voluntary market will be sort of viewed as interoperable. The other thing that's happening in the EU is that the CBAM or the Carbon Border or Adjustment Mechanism is something that is, you know, it's gonna hit the streets here, in the next couple of years. And because importers to the EU are now aware that they will need to pay some sort of tax, there's a movement afoot in jurisdictions that would be exporters themselves, but would, you know, such that the EU would import their goods, are now thinking about creating their own internal compliance markets in order to prove that they've already sort of paid the tax in a way. So that they, they would reap the rewards rather, you know, rather than someone else. And so, that to me is a really exciting development. I think people are beginning to really appreciate and understand the value and the use of these markets. Especially, again, when you think about, well, why is the EU doing this today? There's a big emphasis today on competitiveness and affordability, brought about, in large part by sort of geopolitical dynamics because there's energy prices are high and member states may need to direct some of their scarce resources and their valuable resources toward, internal defense instead of. figuring out how to, handle and, how to meet the targets that are laid out. So in that setting right, markets really turn out to be a super valuable tool.

Tom Raftery: 25:55

Sure. And what do you think needs to happen in the next three, five years or so for this market to mature?

Jennifer Jenkins: 26:03

Well, standardisation is one, right? And that's gonna allow for voluntary compliance, interoperability that I was just talking about. Standardisation is complicated, right? Because right now there are, numerous registries numerous sort of data structures, right? So. the sort of nuts and bolts of interoperability are gonna need to be sort of built, right? If you think about, the financial markets. We now have interoperability in the financial markets, but that took a while. And the carbon market is really, really small and, In order for it to sort of grow into a grownup market, it's gonna need all of the same kinds of structures, that were important to the financial market as it was growing up, right? We need insurance, we need common understanding of what, variables go into what columns, and how do you pass those variables back and forth between, countries, between registries that kind of thing. Ratings agencies, we have Moody's, we have, you know, S&P in the, financial markets we now have in the voluntary carbon market. We have Silvera, we have B Zero, we have Calyx. It's very, very parallel sort of growth. We need to keep doing what we're doing right and, and building this market into a standardised, interoperable, global market that will, be able to, sort of help us, help us all address, address the climate crisis.

Tom Raftery: 27:27

Should companies buy now to lock supply or wait for stricter standards?

Jennifer Jenkins: 27:31

You know, the standards are always going to evolve, right? I mean, I think that's one thing that that's become clear. So that's gonna be an individual decision right on the part of each company. If you've set your target and you believe that you know what your abatement potential is gonna be internally and there's going to be a delta, yeah, you should lock in those credits now. Because the prices have been climbing and they're, you know, with additional demand they're gonna continue to rise.

Tom Raftery: 28:06

Okay, good. If carbon credits succeed at scale, what do you think will look different in five years that would convince even the skeptics?

Jennifer Jenkins: 28:14

Hmm. I think in five years you will have on the ground a suite of forests that have been planted that are made of native species that are protecting the biodiversity native to those regions, that are lifting up the people that live in those areas and rely on those natural resources, and providing additional, benefit to communities. This is just on the nature based side, right? If enough of these projects are built, and supported. the results will be measurable and visible within the next five years. I do think that. Another way to say that is how will we know we've been successful? And we will have the majority of, the Forbes 500 will be on track. You know, will have set a climate target and will be on track to meet it. That'll be another way for us to know if we've been successful, because companies really do need this flexibility, and we've seen that not having that flexibility is in many ways a reason for companies to stay out of the game of even setting the target in the first place.

Tom Raftery: 29:47

Hmm. Okay. Time now for a lightning round. So, got a couple of quick questions for you. Just one sentence answers one word or one sentence at most. Okay?

Jennifer Jenkins: 30:00

I'll try

Tom Raftery: 30:00

So, first one, cut methane fast or plant trees slowly?

Jennifer Jenkins: 30:06

Cut methane fast.

Tom Raftery: 30:08

Okay, good. Buy credits now or wait for tougher rules?

Jennifer Jenkins: 30:11

I'll buy credits now.

Tom Raftery: 30:13

I thought you might say that government rules are private market standards?

Jennifer Jenkins: 30:19

Private market standards that are incorporated into government rules.

Tom Raftery: 30:25

Okay. Fewer perfect projects or more good enough ones?

Jennifer Jenkins: 30:33

It depends on the buyer. I think the world, the globe, the planet needs as many projects as possible and let's make them all perfect.

Tom Raftery: 30:43

Eliminate 90% first or offset earlier?

Jennifer Jenkins: 30:48

Do it at the same time. It's, that's a false choice.

Tom Raftery: 30:52

Scale quickly or move cautiously?

Jennifer Jenkins: 30:55

Just go quickly

Tom Raftery: 30:57

Okay.

Jennifer Jenkins: 30:57

and cautiously.

Tom Raftery: 30:59

Okay, and left field question, if you could have any person or character, alive or dead, real or fictional as a champion for voluntary markets, who would it be and why?

Jennifer Jenkins: 31:16

You know what? We already have the person that we need as a champion for carbon markets, and that is this. This may be this. You're gonna laugh. Mark Carney is the Prime Minister of Canada.

Tom Raftery: 31:29

Sure.

Jennifer Jenkins: 31:29

And he was one of the very first champions of the carbon market. He put together the task force on scaling the voluntary carbon market. And so he's an important figure,

Tom Raftery: 31:41

Hmm.

Jennifer Jenkins: 31:42

and I think a very strong advocate. He's busy right now, you,

Tom Raftery: 31:47

A little bit.

Jennifer Jenkins: 31:47

but , I'm glad to see him sort of on the world stage. He's a, he's a strong advocate.

Tom Raftery: 31:53

Fantastic. Fantastic. We're coming towards the end of the podcast now, Jen. Is there any question that I didn't ask that you wish I did or aspect of this we haven't touched on that you think it's important for people to think about?

Jennifer Jenkins: 32:06

You know, I would just repeat the importance of thinking about the VCM as a way to outsource one's, action on climate along with internal decarbonisation. It's an important concept. And let's keep in mind two things, CO2 is well mixed in the atmosphere. And we all share the same goal which is global mitigation of atmospheric emissions to reach net zero by 2050 to avoid the worst consequences of climate change. That still is true. That was true in 2015 with the Paris Agreement, and it's still true today. Okay.

Tom Raftery: 32:43

Yeah. Great. Jen, if people would like to know more about yourself or any of the things we discussed on the podcast today, where would you have me direct them?

Jennifer Jenkins: 32:53

They should go to the Rubicon carbon website, www.rubiconcarbon.com.

Tom Raftery: 32:59

Fantastic. Great. Jen, that's been fascinating. Thanks a million for coming on the podcast today.

Jennifer Jenkins: 33:03

Okay. Yeah. Thanks. It's been my pleasure. Really appreciate it.

Tom Raftery: 33:06

Okay, we've come to the end of the show. Thanks everyone for listening. If you'd like to know more about the Climate Confident podcast, feel free to drop me an email to tomraftery at outlook. com or message me on LinkedIn or Twitter. If you like the show, please don't forget to click follow on it in your podcast application of choice to get new episodes as soon as they're published. Also, please don't forget to rate and review the podcast. It really does help new people to find the show. Thanks. Catch you all next time.