The Integrity Council for the Voluntary Carbon Market urges carbon-crediting programs to elevate their standards and create enhanced methodologies for renewable energy projects

Author： Hits：63 Date：2024-08-10 source：Renewable Energy Credits Do Not Meet High-Integrity Assessment (icvcm.org)

On August 6th, The Integrity Council for the Voluntary Carbon Market announced that carbon credits issued under current renewable energy methodologies, which constitute nearly a third of the voluntary carbon market, will not qualify for its high-integrity CCP® (Core Carbon Principles) label.

Integrity Council is an independent, non-profit governance body for the voluntary carbon market, dedicated to ensuring that the market accelerates a just transition to a 1.5°C world.

Integrity Council aims to establish and uphold a voluntary global quality threshold standard for the voluntary carbon market. This threshold standard is based on the Core Carbon Principles (CCP) of the Integrity Council and is implemented through an assessment framework that clarifies the meaning of high quality by referencing these principles. The result is a threshold standard and label that provides a credible, rigorous, and accessible method for identifying high-quality carbon credits.

The Core Carbon Principles (CCP) are ten science-based fundamental principles used to identify high-quality carbon credits that can generate real and verifiable climate impacts.

A. Governance

1. Effective Governance:

The carbon-crediting program must have robust governance to ensure transparency, accountability, continuous improvement, and the overall quality of carbon credits.

2. Tracking:  

The program must operate or utilize a registry to uniquely identify, record, and track mitigation activities and issued carbon credits, ensuring secure and unambiguous identification.

3. Transparency:

Comprehensive and transparent information on all credited mitigation activities must be provided by the program. This information should be publicly available in electronic format and accessible to non-specialized audiences, enabling scrutiny of the activities.

4. Robust Independent Third-Party Validation and Verification:  

The program must have requirements for robust independent third-party validation and verification of mitigation activities at the program level.

B. Emissions Impact

5. Additionality:

The GHG emission reductions or removals from the mitigation activity must be additional, meaning they would not occur without the incentive created by carbon credit revenues.

6. Permanence:

The GHG emission reductions or removals must be permanent. If there is a risk of reversal, measures must be in place to address and compensate for these risks.

7. Robust Quantification of Emission Reductions and Removals:

Emission reductions or removals must be robustly quantified using conservative approaches, completeness, and sound scientific methods.

8. No Double Counting:

Emission reductions or removals must not be double counted. They should be counted only once towards achieving mitigation targets or goals, covering double issuance, double claiming, and double use.

C. Sustainable Development

9. Sustainable Development Benefits and Safeguards:

The program must have clear guidance, tools, and compliance procedures to ensure mitigation activities conform to or exceed widely established industry best practices on social and environmental safeguards while delivering positive sustainable development impacts.

10. Contribution to Net Zero Transition:

Mitigation activities must avoid locking in levels of GHG emissions, technologies, or carbon-intensive practices that are incompatible with the objective of achieving net zero GHG emissions by mid-century.

On August 6th, the council decided that eight methodologies used for designing and implementing renewable energy projects failed to meet the Commodity Commission's assessment framework requirements for additionality. These methodologies were not stringent enough in assessing whether the projects would proceed without the incentive of carbon credit revenues. These methodologies cover approximately 236 million unretired credits, accounting for 32% of the voluntary carbon market.

The latest set of assessment decisions revealed that the total number of unretired credits approved for the CCP label is estimated at 27 million, representing 3.6% of the market. The board also:

- Approved a project methodology for detecting and repairing methane leaks in the natural gas industry, covering about 19 million unretired carbon credits, representing 2.6% of the market.

- Approved further versions of a previously approved project methodology for capturing methane from landfills.

- Rejected a project methodology for reducing sulfur hexafluoride (SF6) emissions in the magnesium industry because it did not meet additionality requirements. This methodology is used by a relatively small number of unretired credits.

Evaluations of some of the most popular types of carbon credits, including REDD+ (Reducing Emissions from Deforestation and Forest Degradation), jurisdictional REDD (JREDD), and clean cookstoves, are also underway and will be completed in the coming months.

Annette Nazareth stated, "Renewable energy projects financed by carbon credits still play a crucial role in decarbonizing energy grids, particularly for many least developed countries that struggle to secure necessary investments to transition from fossil fuels. However, it is essential to modernize the design of these carbon projects, a task that carbon-crediting programs can and should undertake. Implementing more robust methodologies would unlock financing for a new wave of renewable energy projects in the regions that need them most."

Pedro Martins Barata, Co-Chair of the Integrity Council Expert Panel, added, "Following this decision, we urge programs to develop methodologies that adopt a more sophisticated approach to evaluating whether renewable energy projects are additional. It would also be immensely beneficial for international agencies focused on improving energy access to support this effort by developing more reliable models and data sets."

The Integrity Council has approved a methodology for projects aimed at detecting and repairing leaks in existing natural gas pipelines (LDAR) for one crediting period. This methodology is applied in lower-income countries, which often have aging infrastructure and lack regulations on gas leaks. It currently covers an estimated 19 million unretired carbon credits from projects in Bangladesh, representing 2.6% of the market.

Amy Merrill remarked, "Methane is a potent greenhouse gas, and its leakage into the atmosphere should be regulated. The Board has approved this methodology as a temporary measure until regulation is widely implemented. Companies responsible for building and maintaining this infrastructure should address these leaks."

In June, the Integrity Council approved four methodologies for projects that capture methane from landfill sites (LFG) and three methodologies for projects that destroy stockpiles of ozone-depleting substances (ODS), covering an estimated eight million unretired carbon credits.

The Core Carbon Principles (CCPs) establish a global benchmark for high-integrity carbon credits. They are designed to build trust in the voluntary carbon market, ensure comparability of credits, and enable the market to maximize its potential to tackle rising greenhouse gas emissions and unlock significant private finance for climate solutions. The CCP label provides assurance that each credit represents a tonne of emissions reduced or removed from the atmosphere. It also indicates that credits from new projects adhere to robust social and environmental safeguards and deliver positive sustainable development impacts.

Governments and regulators are now looking to the CCPs as an international standard for high integrity. The US and UK, as well as the Commodity Futures Trading Commission (CFTC) and the International Swaps and Derivatives Association (ISDA), have endorsed the CCPs or issued principles closely aligned with them.

Under the Integrity Council’s “two-tick” process, carbon credits can only be tagged with the CCP label if the carbon-crediting program is approved as “CCP-Eligible” and the projects that generate the credits use methodologies that are also “CCP-Approved.” The biggest programs, ACR, Climate Action Reserve (CAR), Gold Standard, and Verra (VCS), are all CCP-Eligible and able to apply the CCP label to credits using CCP-Approved LDAR, LFG, and ODS methodologies.

The Integrity Council is continuing to assess some smaller programs and is encouraging others to apply through its program assessment platform before October, when it will close for submission of program applications for six months.

The Integrity Council has grouped more than 100 methodologies into 29 categories for assessment. Most credit categories are being assessed by multi-stakeholder working groups, including experts with relevant knowledge. Assessments of some important credit categories have concluded and will soon come to the Governing Board for decisions, including Improved Forest Management and Afforestation, Reforestation, and Revegetation. Assessments of other popular types of credits are due to be completed in the coming months, including REDD+ (Reducing Emissions from Deforestation and Forest Degradation), Jurisdictional REDD (JREDD), and clean cookstoves.

The Integrity Council will increase ambition in successive versions of the CCP Assessment Framework, released every two to three years. It has established a series of Continuous Improvement Work Programs, expert groups that will study complex topics of importance to the future of the voluntary carbon market. It announced today that it will convene a new group to study how to improve existing methods of assessing whether renewable energy projects are genuinely additional and how they account for emission reductions.