What went wrong in carbon markets and what happens next
Marc Maleika is founder of Sylva, a forest restoration company working across the Amazon, Southern Africa, and Europe. He spoke to AfricaLive about how he saw the carbon credit crisis coming, why media coverage of the problems triggered market collapse that hurt communities rather than bad actors, and what the next generation of conservation finance looks like.
Key Points
- ✓ Before even entering the sector, Marc Maleika discovered problems with how carbon credit projects were assigned value and how the REDD+ system could work. Developers could set their own baselines, meaning the true value of the projects was questionable. He co-founded Sylva to do it right.
- ✓ When 2023 media reporting claimed 90% of credits were worthless, prices crashed, particularly for credits linked to REDD+ projects. A land owner who invested $1 million in Amazon conservation now considers cutting 6,000 hectares for cattle. Money moved on. Communities could not.
- ✓ The solution lies in creating projects with real value. Sylva uses satellite imagery and drones to measure exactly what's happening, proves accountability through monitoring, and lets communities decide how funds are spent. The media reporting failed to distinguish good projects from bad, and now the fight is on to restore confidence in the sector.
- ✓ UN Article 6 and EU policies merging voluntary and compliance markets will bring liquidity to scale millions of hectares. Sub-Saharan Africa offers massive opportunity: Congo Basin restoration, silvopastoral systems that can triple cattle yields, grassland restoration, rotational grazing, rewilding megafauna, and stacking carbon with biodiversity credits.
What Went Wrong in Carbon Markets
In early 2023, the Guardian and other outlets published reports claiming over 90% of rainforest carbon offset credits were essentially "worthless". The voluntary carbon market crashed. Avoidance credit prices fell from $15 per ton to $1. Some companies abandoned their commitments entirely, others postponed or scaled back their projections. Many corporates stuck to their climate targets but shifted investment from avoidance projects to removal projects, particularly afforestation, reforestation and revegetation (ARR). The damage was not only felt by project developers, Verra the carbon standard organisation, or investors. Communities and forests bore the cost.
I know a land owner in the Amazon who invested a million dollars into forest conservation. He hired a project developer, did everything by the book, spent years building infrastructure and supporting communities so his 30,000 hectares could generate carbon credits. When the market crashed and his project got downgraded, he began seriously considering cutting down 6,000 hectares for cattle farming to recover his investment. Under Brazilian forest code, he has the right to do so.
Another person I know with 180,000 hectares in Latin America nearly abandoned their project entirely. They were still struggling to sell credits.
Money moves on. People take their loss and shift to the next opportunity. But people in these regions cannot move on.
The scrutiny was important and something had to be done. But my criticism is of how some Western media treat carbon credits. Some journalists look at a market mechanism and immediately decide it is problematic, without understanding the technicalities, without discriminating between good and bad projects. They could have said there are some projects that are really bad, but the mechanism is valuable and needs support. Instead, some media outlets said it is all nonsense, a big scandal, everything needs to be banned. The bow snapped a bit too much now.
This Was a Scandal About to Explode
I discovered these problems during COVID lockdown, before even entering this line of work. With nothing else to do in the evenings but read, I came across carbon credits and became interested. I started reading project design documents on Verra, the main carbon standard organisation, digging into REDD+ project PDDs (project design documents). My first job after university was at the World Bank on the Community-Driven Development team, reviewing project documents and learning how projects are structured. I had an idea how a PDD should look, theoretically and practically. What I sometimes saw on Verra was not what good looks like.
The problem is the baseline. By protecting a forest, a REDD+ project claims to prevent CO2 that would otherwise be emitted through deforestation. It is a hypothetical situation. Prior to changes that Verra implemented, how you created that scenario was up to the developer to decide.
If you draw a circle around the project area and that area is completely in forest, historical deforestation is basically zero. But if you include a city or road in your boundary, because deforestation always happens along infrastructure, then deforestation spikes. I looked at some projects. People were very generous with their baseline. It is an invitation to print your own money. If you have the invitation and every incentive, everybody will do so.
I am an economist by training. Show me the incentive and I show you the outcome. It did not need much imagination to realize this was a scandal about to explode. I called up a consultant who is very good with Earth Observation and Data Analysis and said I think we can do a better job. These documents are really bad and the whole thing does not make sense, lets improve this. That is how Sylva started.
Why We Focus on Restoration
We decided against REDD+ projects. Not because they are bad—there are very good ones—but because it lacks substance compared to reforestation. Economically, it is money on trees. Easy come, easy go. If something can be easily capitalized and financialized, there will always be problems around it. Forest conservation should come before restoration, absolutely. But we thought, let us do forest restoration. How difficult can it be? It turns out it is not an easy feat.
We talked to a land owner in the Amazon who bought his land 20 years ago with the idea that one day there must be a system rewarding forest protection. That was his vision two decades ago. I asked if he had degraded land. He did. That became our main project: 6,000 hectares in the Amazon at two locations, with 3,600 hectares of degraded pasture.
Land titles are such a challenge, especially in the Amazon. The Brazilian side of the Amazon basin is the size of the EU, an area ungoverned by formal structures until maybe 60 or 70 years ago. Land titles are very patchy. There is a difference between land rights and land use rights, something most Westerners do not understand. You can have land use rights but not land rights, and vice versa. You need to align both because a carbon project runs for 40 years.
There is substantial legal work involved. Due diligence is, next to the technology of reforestation, probably the most important part. Without proper legal footing, a project is worthless. That is one of the core skills a developer needs. And every country is different.
The moment you have indigenous communities or First Nations communities bordering land, possible land disputes become something people do not want to touch. You never know what happened historically. Then some dispute emerges, the media covers it, and investors see a nightmare. People shy away. Everybody talks about working with communities, and that is our preference and focus as well, but getting projects funded requires very clear legal situations.
Doing It Right: Technology and Transparency
I often explain what we do by comparing it to real estate development. A developer stands in front of an empty plot in a city centre and sees value nobody else sees. They measure everything, draw up plans, get tenants to sign leases before the building exists. Then they approach an investor with permits, agreements, and plans, and the investor provides capital. Conceptually we are doing the same but in less mature market. We see value where others only see degraded pasture.
How Technology Enables Verification
Technology is essential to proving project value and accountability. Satellite imagery captures data across multiple spectral bands. When a machine is trained to interpret what these wavelengths represent, patterns become readable. Overlay this with topography, hydrology, species occurrences, and biomass potential, and multiple dimensions of analysis become available.
For monitoring, Sylva works with drones. The team maps entire areas, identifying soil conditions, topography and individual flora species. From that they can infer biodiversity and determine what needs planting. They measure over time.
Monitoring is always accountability. You state what you will do, then measure it. We have done this and achieved this, or we have not and here is why.
The project owners receive 10% of the credits. Sylva is setting up a community fund. There are a few communities living 5 to 10 kilometres away with mixed populations. The team will analyze what they need through a complete diagnostic and participatory process: who lives there, how they live, where they get their livelihood from, what their challenges are, who is marginalised and how they can be empowered. The community fund will finance those priorities.
It is not for us to decide what they do with the money. We are only advisers and facilitators.
African Opportunities in Landscape Restoration
There are positive developments where compliance markets are merging with the voluntary market. When that happens, supply in the voluntary market can fold into compliance. Reforestation is substantially cheaper than technological removals and comes with many additional benefits. This will bring significant demand and liquidity.
This is happening under Article 6.2 and 6.4 of the Paris Agreement. The EU wants 5% of their compliance market sourced from the voluntary market. Ghana is working with Switzerland, Senegal with Singapore. These are positive developments because people realize that whilst it is a molecule of carbon, what carbon credits represent is the life they support: monkeys jumping from tree to tree in a restored forest on one side of the world, children being taken to school in a bus on the other side, bridges being fixed and new jobs being created.
At COP in Brazil, I visited six or seven sub-Saharan African countries to discuss identifying areas we can restore. I would very much like to work in the Congo Basin. The Congo Basin is politically more challenging than Tanzania, where we are also in discussions. We are prioritizing tropical wet areas and then tropical dry regions for reforestation to achieve carbon plus biodiversity outcomes.
The Crisis in Carbon Markets
- • Developers could set their own baseline scenarios for avoided deforestation, creating opportunities for inflated credit values
- • Media reporting failed to distinguish between problematic projects and legitimate conservation work
- • Market collapse caused credit prices to crash from $15 to $1 per ton, devastating project economics
- • Communities and forests bore the cost while investors and bad actors moved on to other opportunities
The Path Forward
- ✓ Use satellite imagery and drone monitoring to verify actual restoration outcomes and prove accountability
- ✓ Focus on restoration projects with measurable substance rather than hypothetical avoided deforestation scenarios
- ✓ Let communities decide how conservation funds are spent through participatory diagnostic processes
- ✓ Leverage Article 6 mechanisms merging voluntary and compliance markets to bring liquidity at scale
When driving through South Africa and Namibia, extensive cattle land becomes visible. You need one cow per 10 hectares because that is the carrying capacity. Land owners operate various activities to supplement income: tourism, hunting, getting licenses to do things like shoot leopards, which I find crazy. There are better ways to do things.
My question is, what can we do to improve their current activities in a sustainable and restorative way? Grassland restoration through rotational grazing and silvopastoral systems: you integrate trees into pasture. Trees provide shade, reducing cattle heat stress. They can also improve soil structure and water infiltration and help pastures stay greener and more resilient during dry periods. You can basically double or even triple the yield of cattle farming according to Brazilian developers. You intensify the productive land and the rest you designate for restoration, which generates carbon credits.
Dennis Minev, CEO of Bemol and UN special envoy, said the largest opportunity of our generation is restoring degraded areas in the Amazon. I agree, and would extend this to Africa.
The minimum for a forest project would be around 4,000 hectares. It does not have to be one consecutive piece of land. For grassland we require approximately 10,000 to 15,000 hectares. These farms exist throughout South Africa, Tanzania, Zambia and Namibia.
Through the conservation finance mechanisms available, we can change hundreds of thousands of hectares, possibly millions and bring positive changes to countless communities. Will that move the needle globally? I do not know with certainty. I remain optimistic about what is possible in restoration and conservation. I remain cautiously optimistic about whether that will produce measurable impact globally on climate change and the biodiversity crisis. For this we need to work on our political and institutional frameworks. Perhaps we are simply trying to do our part within our sphere of influence as effectively as we can. I remain hopeful.
Frequently Asked Questions
What caused the carbon credit market collapse in 2023?
Media reports claimed that over 90% of rainforest carbon offset credits were "worthless," highlighting problems with how REDD+ projects set baseline scenarios for avoided deforestation. The reporting did not distinguish between problematic projects and legitimate conservation work, causing market-wide collapse that particularly hurt communities dependent on conservation funding.
How does Sylva's approach differ from problematic carbon projects?
Sylva focuses on measurable restoration rather than hypothetical avoided deforestation. The company uses satellite imagery and drone monitoring to verify actual outcomes, maintains transparency through rigorous measurement, and ensures communities control how conservation funds are spent through participatory processes.
What are silvopastoral systems and how do they work?
Silvopastoral systems integrate trees into pasture land. Trees provide shade that reduces cattle heat stress, improve soil structure and water infiltration, and help pastures stay greener during dry periods. According to Brazilian developers, these systems can double or triple cattle farming yields while generating carbon credits from restored areas.
What opportunities exist for restoration projects in Africa?
Sub-Saharan Africa offers opportunities in Congo Basin restoration, silvopastoral systems that can improve cattle yields, grassland restoration through rotational grazing, and stacking carbon with biodiversity credits. Forest projects require around 4,000 hectares while grassland projects need approximately 10,000 to 15,000 hectares. These farm sizes exist throughout South Africa, Tanzania, Zambia and Namibia.
How will UN Article 6 and EU policies affect conservation finance?
Article 6 of the Paris Agreement enables compliance markets to merge with voluntary markets, allowing voluntary market supply to fold into compliance frameworks. The EU wants 5% of their compliance market sourced from voluntary markets. This brings liquidity and demand to scale restoration work across millions of hectares, making reforestation financially competitive with technological carbon removal methods.
