The Answer to Carbon Credit Fraud is Supply Chain Management
By Jordan Levine, Founder Dynamic Sky and MIT Supply Chain Management 2011 alumnus
Carbon Credit fraud is ubiquitous and if not managed will destroy the nascent voluntary carbon dioxide removal markets. Look no further than this 2022 John Oliver video or this July 2025 Washington Post article.
While the situation is complex and fraught, the answer is easy. It is simply old-fashioned supply chain management augmented with 21st century technical tools.
My argument is simple.
Every manufacturing process from automobile assembly to consumer-packaged goods packaging has a supply chain management function that matches demand to supply and efficiently allocates capital. This supply chain management function normally comprises 5 – 15% of the cost of goods sold (COGS) of any given manufactured “widget”.
The act of greenhouse gas removal is in itself a manufacturing process. Market participants are creating “pallets” of sequestered greenhouse gas.
Thus, each greenhouse gas removal technology system (the manufacturing asset) will need a supply chain function to provide investors a perspective on sequestered greenhouse against cost, guide direct labor participants, and establish an audit trail to guarantee high quality credits.
Large enterprises, the entities best positioned to leverage novel greenhouse gas removal technology, will be hesitant to build their own supply chain management functions to conduct the associated tasks with managing greenhouse gas removal technology. The rationale is simple; They have their own businesses and processes to manage. As an example, Microsoft should not be in the business of planting trees when it needs to manage its core business of software development and sales.
A third-party technology-based management platform should exist to conduct this management on behalf of greenhouse gas removal investors (both institutions and corporations). The correct solution is a software-based supply chain management system that can match sequestered greenhouse gases against projects and costs. This software must seamlessly integrate via API to all major enterprise ERP systems (e.g., Oracle, Salesforce, IBM, etc.) to provide the requisite visibility to its users.
With this system, investors (institutions and corporations) can fearlessly invest into greenhouse gas removal projects knowing they can track progress, spend, and outcome. Meanwhile, insurance entities can leverage a common framework provided by this system of record to underwrite both delivery risk (think surety bonds for forestry projects) and issued risks (post carbon registry).
While this concept of third-party supply chain management software to support greenhouse gas removal projects probably is not the most glamorous of ideas, without it, this entire industry will not move.
This is the necessary infrastructure to attract high quality capital and enable insurance underwriters to enter the market at scale.
