Opinion: The VCM Is Essential To Decarbonizing UK Homes

Opinion: The VCM Is Essential Do Decarbonizing UK Homes - Carbon Herald

by Simon Turek, Managing Director of PNZ Carbon, part of PNZ Group

Homes in the UK are the single largest contributor to carbon emissions from the built environment, accounting for almost a fifth of the UK’s total carbon emissions. They represent the greatest barrier to reaching Net Zero by 2050 – and Government investment alone cannot accelerate the decarbonisation of homes on the scale required to limit climate change. 

This is where the Voluntary Carbon Market (VCM) comes in – carbon credits supporting the funding of activities like retrofit, which couldn’t otherwise be paid for by homeowners, renters or Government, are essential to decarbonise the UK’s housing stock while ensuring households aren’t penalised in the transition. This is why we set up PNZ Group – to fund the retrofit of the UK’s housing stock using localised, transparent carbon credits. 

But the VCM has faced a turbulent few years, and it’s been a challenging time for those of us operating in this space. Confidence in the VCM plummeted early last year, and investor confidence was damaged – leading to 2023 not being the record year for exponential growth that many of us in the market had hoped for. 

Simon Turek, Managing Director of PNZ Carbon

Many in the industry, including PNZ Carbon, as one of the UK’s only project developers, breathed a sigh of relief when the IC-VCM launched the Core Carbon Principles (CCPs) last year. They have rightly been supported by many as a benchmark for carbon integrity.

Treasury Minister Baroness Vere announced at COP28 the UK Government’s intention to endorse the work of the IC- VCM and other bodies like the VCMI, and countless individuals working across the sector have applauded the IC-VCM’s efforts to raise the bar for carbon market integrity. The CCPs go a long way in restoring that all-important confidence in the sector, offering independent integrity labelling so investors can be firmly assured of the quality of their carbon credit purchases. 

However, while the work of the IC-VCM is certainly to be applauded, there remains some apprehension amongst project developers about how the CCPs will be used more widely across the market. Using our own project as an example, PNZ Carbon, is the only project developer in the VCM originating carbon credits for the decarbonisation of homes, and the only developer with projects in local UK communities. But our uniqueness also means that our methodology is likely to be bottom of the pile when issuing CCP labels. 

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Undeniably, it’s right that the IC-VCM takes time to assess categories and methodologies. There are hundreds of different types of projects all across the VCM using different methodologies – from avoided deforestation projects in Asia, to housing retrofit projects in England, to DAC projects in the US. A staggered and considered process, which takes the time to get this right, is the correct way forward. 

But in this modern world, businesses want quick fixes – and may resort to purchasing only CCP-approved credits immediately to implement in their Net Zero plans.

For smaller projects, like ours, we have to take action to prevent this from happening. At this nascent stage of their development, businesses cannot (and should not) rely on CCP labels alone as a hallmark of quality – to do so would be to ignore thousands of innovative and exciting projects enabling not just carbon reduction, but immense co-benefits to communities, like in our case creating warmer, healthier homes. 

Relevant: PNZ Group Launches In UK With Scheme To Decarbonize Homes Using Carbon Credits

Instead, buyers should look to CCPs for guidance, but must be willing to undertake their own due diligence to verify the efficacy of their carbon credit purchasing. The whole process of rolling out CCPs across the entire market could take years – and buyers should take heed not to damage the plethora of incredible, small projects making a real difference as a result of their caution. 

As we move into this new era of transparency, we urge buyers to hold their nerve. Investing in a burgeoning market is always challenging – but if they continue to undertake their own due diligence with project developers about their carbon claims, buyers should be able to confidently make informed carbon credit purchases. The absence of a CCP label does not mean a project is of poor quality – especially at this early stage of development.

Likewise, project developers have a role to play. We must continue to be as open and as transparent as possible about the integrity of our projects to bolster confidence, attract investment, and continue to deliver climate impact for all.

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