The tech giants play a disproportionate role in shaping carbon markets. Microsoft, Alphabet and Meta, for example, have all made headline-grabbing investments in early-stage carbon removal technologies. By contrast, Amazon has spent the past few years working to build new systems for protecting and restoring forests.
The strategy comes with risks, because forest projects have been the subject of several recent carbon market controversies. Yet Amazon has staked a large part of its considerable carbon credit budget and expertise on fixing these problems.
When Trellis sat down recently with Jamey Mulligan, the company’s head of carbon neutralization science and strategy, one motivation for this focus came up again and again: the potential for catalytic change. Mulligan believes Amazon’s investments, if targeted correctly, can reshape the political economy of forest countries. Here’s what he told us about the company’s plans.
How the strategy was developed
After joining Amazon from the World Resources Institute in May 2020, Mulligan got some advice from a senior leader at the company: “You’re not going to do everything well. So you should really try to focus on a few things you can come to understand deeply, so you can do those things well.” In the context of carbon credits, that meant eschewing a diversified portfolio in favor of focus and depth.
Mulligan also knew that he did not want to simply offset emissions. Rather, his goal was to take Amazon’s investment and “wield it in a way that mobilizes action by others.” A final motivation was the need to protect forests. IPCC net-zero pathways require forest loss to bottom out around 2030, after which global forest cover must increase. “We couldn’t ignore deforestation,” said Mulligan.
The team entrusted to turn those ideas into action sits under Kara Hurst, Amazon’s chief sustainability officer. Although Mulligan wouldn’t reveal its size or budget, he described it as “one of the largest in terms of our capacity and expertise.”
A better way to protect forests
Carbon markets have long been used to fund forest protection, but the framework for such projects, known as Reducing Emissions from Deforestation and Forest Degradation (REDD), has been much criticized. Problems include a tendency for project developers to “protect” forests that are under little risk of deforestation. “Current REDD+ methodologies generate credits that represent a small fraction of their claimed climate benefit,” concluded a team of academics in 2023.
To build a better alternative, Amazon partnered with other companies and several countries, including the U.K. and Norway, to found the LEAF Coalition in 2021. Instead of funding a patchwork of small projects, the coalition funnels money to national and regional governments, which use it to enact policies that reduce deforestation — an approach known as Jurisdictional REDD (J-REDD). These include stronger enforcement of existing laws and economic support for indigenous groups whose livelihoods depend on forests. “All the most effective levers for dealing with deforestation are public sector mechanisms,” said Mulligan.
The coalition’s first biggest deal to date, announced in September, was with the Brazilian state of Pará, which contains around a quarter of the Brazilian Amazon. The agreement will generate 12 million credits, worth a total of $180 million, in exchange for Pará’s reducing deforestation within its borders. Ecuador, Costa Rica and Ghana have also signed deals.
The long-term goal, as Mulligan sees it, is not to protect specific areas of forest but to change the local economy so that forest protection becomes the best economic outcome for everyone involved. “We’re not here to get credits,” he said. “We’re here to use credits to try to catalyze systems change.”
Turning a new LEAF
Amazon’s decision to focus on J-REDD puts the company in the middle of a debate about whether the approach will avoid the problems that have bedeviled project-based REDD. Three methodologies for jurisdictional projects, including the one used by LEAF, were approved last year by the Integrity Council for the Voluntary Carbon Market (ICVCM), a key arbiter of carbon credit quality. But shortly after, four current and former ICVCM advisers called the decision flawed.
Topping their list of concerns was the potential for governments to exaggerate historic rates of deforestation, making any decrease look more significant than it really is. Projects might also earn credits for changes in deforestation driven by outside factors. If the price of beef or soy falls, for example, deforestation will likely drop because there is less incentive for forests to be cleared for agriculture. That’s good news for forests, but not something critics believe a government should earn credits for given that the change wasn’t driven by policy,.
Mulligan argued that, in this situation, perfect should not be the enemy of the good. Under the methodology that LEAF follows, governments use deforestation rates for the five-year period prior to the project start date as a baseline. That baseline is measured again every five years and governments must keep lowering it in order to generate credits.
Mulligan said that he suggested trying to incorporate these factors into a more sophisticated model for determining how many credits to issue. “We’re not going to spend a gajillion dollars trying to model that,” he concluded. “We’re going to adopt a very simple consistent, conservative approach to doing this. We know what your deforestation rates are. And deforestation rates tend to go up. Certainly they don’t tend to go down unaided. So the crediting mechanism is: you have to bring your deforestation rates below the five-year historical average.”
Putting the credits to use
Mulligan declined to reveal Amazon’s total investment in forest projects or the number of credits the company expects to receive. But credits will certainly be arriving. In addition to forest protection, Amazon purchases credits from projects that restore degraded land and help smallholder farmers implement agroforestry. The company has also purchased 250,000 credits from 1PointFive, a direct air capture company.
Mulligan said it would be premature to discuss details of how these credits will be used, but he did share that the company wants to avoid using the credits to offset emissions from areas of its business that it is struggling to decarbonize. “There’s nothing wrong with that technically or philosophically,” he said. “But it’s kind of a guilt alleviation play.”
Instead, the focus is on areas where the company has made progress and where credits can be used to push projects closer to net zero, such as reducing the amount of carbon generated during construction projects. “We want to celebrate and signpost that progress,” said Mulligan.
