ICVCM’s global initiative aims to support the growth and increase the transparency of the $2 billion carbon offsets market. While demand for carbon credits – or offsets – is expected to increase amid growing corporate net zero targets, the market remains unregulated. The different standards and approaches make it difficult for companies to determine quality credits and critics have concerns and doubts about the transparency and environmental impact of the projects.
The new standards “set a global threshold for quality which aims to unlock finance at speed and scale for projects to reduce and remove billions of tonnes of emissions that would not otherwise be viable,” said Integrity Council Chair Annette Nazareth.
Currently, the offsets standards most widely traded are those meeting the eligibility criteria established by the CORSIA scheme, specifically designed for the global airline industry. In order to obtain CCP approval, projects will need to fulfill several similar requirements to those of CORSIA, including having quantified monitoring, reporting, and verification standards for the project.
Yet CCP credits will also need more measures in some areas, such as additional governance checks. Thus, probably not all CORSIA credits will attain CCP status.
“We do expect this will have a significant impact on the market, but we can’t prejudge the pre-designed assessment process we are about to start,” ICVCM COO William McDonnell told Reuters.
Carbon capture and storage technology with oil recovery and projects that include coal-fired generation of power will be excluded from the CCP standards.
According to ICVCM, there may be cases where projects developing new gas plants could be considered for inclusion, provided they satisfy all other criteria, are part of a jurisdiction or country-led initiative, and lead to evident reductions in emissions.
“The Core Carbon Principles Assessment Framework published today is a positive step towards the Voluntary Carbon Market coalescing around common standards and setting a minimum bar for quality in the market,” said Sebastien Cross, Chief Innovation Officer and co-founder of BeZero Carbon. “But the CCPs alone are not a silver bullet that can solve the challenge of carbon credit quality. Criticism about the VCM has largely, and rightly, focussed on notable failures to deliver at a project level. Although assessment frameworks may increase overall quality, ultimately some projects will still be more effective than others – a spectrum of quality will always exist. Assessing credit quality does not stop at the CCPs, but requires the project-level approach that ratings provide as a tool. We look forward to the two evolving together to build trust in the VCM as an effective mechanism to reach Net Zero.”
At present, there is no obligation for a company retiring a carbon credit to reveal their identity. However, under the upcoming standards, registries handling the retirement of CCP credits will be required to disclose the entity on whose behalf the credits have been retired. Once a CO2 credit has been retired, it will be ineligible for further trading or utilization by another company to fulfill its climate targets.
Verra said it welcomes the news standards, as they set clear quality thresholds to increase confidence in the Voluntary Carbon Market. “The world needs immediate and ambitious action on climate change, and the private sector and governments are increasingly recognizing their responsibility to help deliver that,” said Verra President and Interim CEO Judith Simon. “We believe ICVCM’s guidance will further support the delivery of quality credits from across the voluntary carbon market that buyers can trust.” The organization is currently reviewing ICVCM’s framework and will issue a new update to its Verified Carbon Standard Program in August.
According to Samuel Gill, president and co-founder of Sylvera, “today’s guidance is another important step for building confidence and transparency in the carbon markets to help this critical net zero investment mechanism thrive. When it comes down to it, most carbon market participants want to maximize impact, and setting a threshold for credit integrity should be a boon to developers standing up projects and for buyers seeking high-quality investments. Combining ratings and the ICVCM assessments will offer a more robust means of ensuring project quality and we’ll continue to work closely with the ICVCM to raise the bar across the market.”
Ana Haurie, Respira CEO and founder, also commented on the announcement by saying: “While we welcome the latest development of the ICVCM’s CCPs, we recognise that there will be a lag until any carbon crediting programs, including those that cover natural climate solutions are accredited. In the meantime, nature can’t wait, we need to fund the vital conservation and restoration projects that are mitigating climate change right now. Deforestation and forest degradation is happening at an increasingly alarming rate, and we won’t reach our climate goals unless we urgently mobilise sufficient finance to halt and reverse nature loss by 2030.
“Our high-quality REDD+ projects have been working closely with standards towards nesting within jurisdictional and improved-methodology REDD+ programs. Respira conducts a high level of due diligence for projects in its portfolio. To avoid loss of momentum at this critical time for climate, and for the Indigenous people and local communities on the front line of protecting and restoring nature – and a time at which we need to be accelerating implementation of high-integrity NCS – we strongly encourage buyers to continue to invest in NCS projects and programs that have robust quantification methods. In this way companies can invest in low-risk action on climate and nature while they wait for formalised CCP accreditation.”