Permanence explained: what happens to the carbon after the credit is sold

Karbuna

3 days ago

4 min read

A carbon credit is issued once, but the carbon behind it has to stay out of the atmosphere for much longer. If a forest burns or a soil is cleared, stored carbon can return to the air, and a credit that has already been sold no longer matches what happened on the ground. Permanence is how carbon markets manage that risk, and the rules are tightening.

Why permanence matters

Credits from land-based and removal projects usually represent carbon held in trees, soils or other stores. If that carbon is later released, the climate benefit behind the credit is undone, even if the buyer has already retired it.

The Integrity Council for the Voluntary Carbon Market (ICVCM) makes permanence one of its ten Core Carbon Principles. The principle states that reductions or removals "shall be permanent or, where there is a risk of reversal, there shall be measures in place to address those risks and compensate reversals."

The issue is sharpest for nature-based projects, where carbon sits in living systems exposed to weather, fire, pests and changes in land use.

What can go wrong

Most programmes separate reversals into two kinds. The Paris Agreement's Article 6.4 mechanism uses this split in its standard on non-permanence and reversals, adopted by its Supervisory Body in October 2025.

Unavoidable reversals come from events outside the project's control, such as fire, drought, storms or other natural disasters.
Avoidable reversals come from how a project is run, such as mismanagement or failure to carry out the project as designed.

The distinction decides who bears the loss. Under the Article 6.4 standard, unavoidable reversals are made good from a shared buffer, while avoidable reversals fall on the project participants.

Australia's ACCU Scheme works in a similar way. A project must notify the Clean Energy Regulator of a significant reversal within 60 days, and may have to relinquish credits if the reversal was deliberate or followed a failure to take reasonable steps to prevent it.

Buffer pools: insurance in kind

Most programmes hold back a share of the credits a project earns and place them in a pooled buffer account. When a covered reversal occurs, buffer credits are cancelled to match the loss, so the credits in circulation still reflect the carbon actually stored.

The size of each project's contribution usually depends on an assessment of its risk. Verra, which runs the Verified Carbon Standard, uses its AFOLU Non-Permanence Risk Tool to set buffer contributions for agriculture, forestry and other land-use projects. The Article 6.4 standard requires methodologies to apply a similar reversal risk assessment to set buffer contributions.

Australia takes a simpler route. The Clean Energy Regulator applies a flat 5% risk of reversal buffer to the credits issued to sequestration projects.

How long is permanent?

No programme asks for forever. Each sets a period over which carbon must be maintained, monitored and, if lost, compensated.

ICVCM: the Core Carbon Principles framework works on a 40-year monitoring and compensation period.
Verra: land-use projects requesting registration from 1 January 2024 need a 40-year project longevity period, with monitoring and compensation agreements to match.
Australia's ACCU Scheme: sequestration projects choose a 25-year or 100-year permanence period. A 25-year period attracts a 20% discount on the credits issued, on top of the 5% buffer. In the regulator's example, 10,000 tonnes of abatement under a 25-year period yields 7,500 credits.
Article 6.4 mechanism: monitoring continues after the last crediting period until participants can show the risk of reversal is negligible over a 100-year horizon. Methodologies set the minimum monitoring period for each activity type.

The choice of period is a design decision with lasting consequences: it affects how many credits a project receives and how long it must be managed.

Where the rules are heading

Permanence is an active area of reform. In May 2025 the ICVCM published a report finding that approaches to permanence across the market "are not standardised or harmonised". Its recommendations included common definitions of avoidable and unavoidable reversals, regular stress testing of buffer pools, clearer liability if monitoring stops, and exploring an extension of the 40-year period.

In February 2026 the ICVCM launched follow-up work on three fronts: stress testing of pooled buffers, standard risk definitions and assessment guidance, and new compensation mechanisms such as permanence trusts and insurance.

Version 5 of Verra's programme, published in December 2025, includes a pilot allowing insurance or fund-based approaches as alternatives to the pooled buffer. Most Version 5 changes take effect on 1 January 2027.

Our view

Permanence is decided less at issuance than in the decades that follow. A project that must hold carbon for 25, 40 or 100 years needs governance, funding and monitoring that last as long as its obligations. It also needs agreements with landholders, and with Indigenous peoples and local communities where they are involved, that remain workable across generations.

Karbuna is a carbon project development and management company based in the GCC. We develop and manage projects for their owners across the region, and we do not buy, sell or broker carbon credits. Our work is to build permanence into a project from the design stage: the choice of permanence period, the risk assessment behind buffer contributions, and the long-term management that keeps the carbon where it is.

This article is general information only. It is not legal, financial or investment advice.