Each project is subject to an audit external to the PDD and to a verification of the GHG emissions effectively saved by the project.
For projects conducted in the regulatory framework of Kyoto (CDM) and those following the quality standards referred to above (VCS, Gold Standard…), the validation of the PDD and audit reporting are generally done annually by an institution certified by the UN: Designated Operational Entity (DOE).
For the smaller scale projects (annual reductions in emissions of less than 5000 (tCO2e)) the verification can be done at longer intervals by an external auditor, who is not necessarily certified by the UN (as in the case of Afghanistan, India and Morocco).
How is the Verification Done?
During the audit, the DOE verifies the monitoring reports and evaluates the reductions in emissions. It also verifies if the project is conforming to the methodology and to the monitoring plan of the PDD. The existence of standard methodologies for each type of project enables the auditors to evaluate the quality and the efficiency of the implementation of the project.
If the DOE approves the monitoring report, the carbon credits can be paid. The DOE conducts a visit to the field and writes a project report. This report may contain a certain number of requests for corrective action that the project manager must take before the final certified report is issued.
At the time of verification, a project can produce fewer credits than expected or even fail the audit. This leads to a reduction, even the loss, of carbon revenue and, at the same time, of the funding for the project.