INSIGHT by the Integrity Council for the Voluntary Carbon Market
〉Integrity Council publishes full criteria for assessing categories of credits and crediting methodologies
〉Assessment phase begins with goal of introducing CCP label in 2023
〉Work programs on key market issues will feed into next version of CCPs
The Integrity Council for the Voluntary Carbon Market today released its full global benchmark for high-integrity carbon credits, with the goal of maximizing the ability of the voluntary carbon market to support delivery of global climate targets.
Following consultation with hundreds of organizations throughout the voluntary carbon market and advice from scientific and carbon-crediting experts, the Integrity Council has completed the framework it will use to assess whether carbon credits meet its high-integrity Core Carbon Principles (CCPs).
Carbon-crediting programs can now apply for assessment by submitting evidence that they meet the CCPs through the Integrity Council’s application portal. Once approved as CCP-Eligible, programs will be able to use the CCP label on specific categories of credits that have been approved as meeting the CCPs.
The Integrity Council is also establishing expert Multi-Stakeholder Working Groups to assess different categories of carbon credits and associated crediting methodologies against the CCP criteria and recommend those which meet the threshold. It aims to announce the first CCP-Eligible programs and CCP-Approved credit categories in time for CCP-labelled credits to be available to buyers by the end of 2023.
The Integrity Council aims to ratchet up ambition in successive versions of the CCP Assessment Framework. It is announcing a series of Continuous Improvement Work Programs to review and strengthen key requirements and explore complex topics of importance to the future of the voluntary carbon market such as satellite monitoring of projects and price transparency. They will start later this year and inform the next version, due for implementation in 2026.
“The voluntary carbon market can play a key role in mobilizing private capital to support the 1.5-degree Paris climate target. Our CCPs and assessment criteria 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.
“We know there is strong demand for high-integrity credits and the CCP label will give more companies confidence to invest. We expect high-integrity credits to trade at a premium, which will incentivize the market to adopt CCP criteria. Greater confidence in the voluntary carbon market will unlock additional investment and create a market that is highly liquid and scalable.”
–Annette Nazareth, Integrity Council Chair
In March 2023, the Integrity Council published its CCPs, its Assessment Procedure, and the criteria it will use to assess whether programs are CCP-Eligible, including stringent governance and transparency requirements. The document published today incorporates and replaces the earlier documents, and it also adds criteria for assessing which categories of credits issued by CCP-Eligible programs should be approved to use the CCP label.
The Core Carbon Principles set out ten fundamental principles for high-quality carbon credits, based on the latest science and best practice (see Notes to Editors). They require carbon credits to make a real, verifiable impact on emissions and also make a positive impact on sustainable development, and they must be issued by programs that have robust governance.
The criteria for assessing credit categories, published today, focus on emissions impact, setting a robust, achievable threshold that will raise standards to a consistent and comparable level of quality. To qualify for the CCP label carbon credits must fund activities to reduce and remove emissions that are:
〉Compatible with a transition to net zero. The framework rules out projects that lock in fossil fuel emissions or technologies, including: enhanced oil recovery using carbon capture and storage; road transport powered solely by fossil fuels; and all electricity generation from coal or other unabated fossil fuels except new gas power as part of increased zero emissions generation supporting a national low-carbon transition plan.
〉Permanent. Projects will have to monitor and report on emissions reductions and removals for at least 40 years where there is a risk they may be reversed – for example through wildfires – and maintain a risk-based “buffer pool” of carbon credits that can be cancelled to compensate for any reversals. This includes projects that protect and restore forests, wetlands and marine ecosystems, and that store carbon in farm soil. A Continuous Improvement Work Program will study how to further strengthen criteria in the next version of the CCPs.
〉Additional. Programs must ensure that the emissions reductions or removals would not have happened without carbon credit incentives and that they were not enforced by law. They must show credits were a consideration in developing the project, and that it would not be viable without them. Carbon-crediting programs have already introduced restrictions on some activities to ensure they remain additional, notably certain types of renewable energy and energy efficiency projects, and the Integrity Council will take these into account.
〉Robustly Quantified. Programs must ensure that projects measure their impact on emissions conservatively to minimize the risk of overestimation. They must set clear physical boundaries to the project, consider its impact on all carbon sources and sinks within the boundary, as well as knock-on effects on emissions outside its boundary, and review this regularly.
All new projects will have to put in place robust social and environmental safeguards that deliver positive sustainable development impacts. Amongst other requirements programs will have to assess and mitigate risks to Indigenous Peoples and local communities (IPs & LCs), including land acquisition and human rights; assess and mitigate risks to biodiversity and sustainable management of natural resources; ensure free, prior informed consent from IPs & LCs; and be transparent about how they share project benefits with IPs & LCs. A Continuous Improvement Work Program will advise on how to further strengthen criteria in the next version of the CCPs.
“We need to respond to the climate emergency with ambitious action that will maximize the potential of the voluntary carbon market. While there are many good efforts, they are not all of consistent quality and this has damaged trust. The CCPs set a robust, achievable benchmark for high-integrity which will provide the guidance programs need to restore confidence, deliver impact, and attract increased investment for urgently needed climate solutions.”
–Daniel Ortega-Pacheco, Director of BIOCARBON and Co-Chair of the Integrity Council’s Expert Panel
| No path to 1.5 degrees without nature-based solutions
Nature has a critical role in addressing climate change. The Assessment Framework is designed to ensure that nature-based projects continue to make a meaningful contribution to reducing and removing emissions while also delivering robust and credible environmental outcomes. In the voluntary carbon market REDD+ projects, which reduce emissions from deforestation and forest degradation in developing countries, are under intense scrutiny. When assessing REDD+ at both the project and jurisdictional levels, the Integrity Council and its Multi-Stakeholder Working Groups will carefully consider recent market developments and new methodologies.
The Integrity Council has responded to growing interest in large-scale forest programs at the national or sub-national level, known as jurisdictional REDD+ (JREDD+), which have the potential to greatly increase the emissions impact of the voluntary carbon market. The Integrity Council has developed specific criteria for JREDD+ to guide this emerging field along a high-integrity pathway, while also recognizing and respecting the rights, nature resource management systems, traditions, and culture of IPs & LCs. It has also signposted areas where it intends to raise ambition in the next version of the CCPs and is establishing a Continuous Improvement Work Program to study this further.
Methodologies for other nature-based solutions will be assessed separately from REDD+, such as Improved Forest Management, Afforestation and Reforestation, Improved Agricultural Land Management, and categories of Blue Carbon.
“It is critical that the voluntary carbon market mobilizes funds to support nature-based solutions, because there is no path to 1.5 degrees without protecting and restoring our forests, mangroves and other natural carbon sinks. By adopting best practices, we can ensure the market continues to grow, supporting Indigenous Peoples and local communities and channeling finance to projects in the Global South.”
-Kavita Prakash-Mani, Founder of Dragonfly Advisory and Integrity Council Board member
“Indigenous Peoples and local communities manage and protect approximately 40% of the planet’s ecologically intact landscape so they play a critical role in achieving net zero. The CCPs will encourage the development of high-integrity climate projects that protect our forests and other natural resources, and generate increased finance to support our livelihoods and needs, while also respecting our rights, traditions, cultures and knowledge.”
–Dr Francisco Souza, Managing Director of the FSC Indigenous Foundation and Integrity Council Board member
The Foundation recently issued a joint letter with other Indigenous organizations worldwide in support of REDD+ and the role of high-integrity, inclusive carbon markets to fight deforestation.
| Experts will advise Board on whether programs and credit categories meet CCPs
The Integrity Council will convene internal and external experts to conduct an initial review of categories of credits against the CCP criteria. The Categories Working Group will make recommendations on which categories should be fast-tracked for approval, which categories raise more complex issues and require deeper assessment, and which categories should not be considered for the CCP label.
The Integrity Council is establishing Multi-Stakeholder Working Groups to assess the categories that raise more complex issues, consisting of internal and external experts with specialized knowledge. They will recommend whether categories should be approved. Categories with the largest current or expected market share will be prioritized for assessment.
Final decisions will be made by the Integrity Council Board. New and existing credits issued under methodologies from approved categories will be able to use the CCP label.
| Integrity Council starting work on next version of CCPsto further raise ambition
The Integrity Council will also convene experts to study key areas where it intends to raise ambition further in the next version of the CCPs. It announced seven new Continuous Improvement Work Programs in addition to three announced in March (see Notes to Editors). They will focus on:
〉how best to ensure the integrity of jurisdictional programs at national and sub-national level;
〉how to further strengthen the permanence requirements, including developing and stress testing pooled buffer reserves and lengthening the compensation period;
〉developing universal data standards for digital and remote sensing technologies that can verify, monitor and report on projects, such as satellite imagery and machine learning;
〉developing standards for disclosing credit pricing and revenue, standardized contracts and the market infrastructure needed to support this;
〉how best to align projects with host country climate commitments;
〉strengthening oversight of companies that verify and validate carbon-crediting projects;
〉simplifying paths to CCP-Approval for small projects, while avoiding loopholes.
“We will continue to consult and collaborate widely to improve, strengthen and update the Assessment Framework over time and progressively ratchet up ambition in the market. We are already planning for the next version by setting up work programs to ensure that important and technically complex areas receive dedicated and focused attention from experts. We will encourage the market to learn lessons from experience, innovate and reflect scientific and technological advances.”
-William McDonnell, Chief Operating Officer of the Integrity Council
| CCP-labelled credits will support credible corporate climate claims
The CCP label is designed to build trust, unlock investment and channel it at speed and scale to effective climate solutions by providing a readily identifiable benchmark for high-integrity carbon credits, no matter which program issued them, what kind of credits they are, or where they are generated. This will reduce confusion, overcome market fragmentation, and give buyers confidence they are funding projects making a genuine impact on emissions.
The Integrity Council’s work to set a benchmark for integrity in the supply of carbon credits is complemented by work to ensure integrity in the way they are used, led by the Voluntary Carbon Markets Initiative (VCMI). The VCMI’s Claims Code of Practice, published in June, gives guidance to companies on how to use credits to make credible claims about their progress towards net zero commitments, and states that they should buy credits that meet the CCP quality threshold.
“Voluntary carbon markets are a critical tool to finance climate transition that will help to achieve the goals of the Paris agreement. But they can only fulfil this role if high-quality credits are used correctly by companies as part of credible net-zero pathways. VCMI and the Integrity Council have a shared goal of delivering end-to-end integrity across the voluntary carbon market, ensuring that carbon credits meet the highest quality threshold and that they are correctly used by the companies that purchase them.”
-Mark Kenber, Executive Director, VCMI
| Overseeing the market
The Integrity Council’s approach to building a high-integrity, transparent voluntary carbon market is similar to one a financial regulator would take.
〉It has consulted extensively to develop the CCPs, Assessment Framework and Assessment Procedure and ensure they reflect the insights and experience of hundreds of organizations, including programs and project developers, academics, environmental NGOs, Indigenous Peoples and Local Communities, policy makers, buyers and investors.
〉It will assess programs and categories of credits against its framework but it will not assess individual projects. CCP-Eligible programs will be responsible for ensuring that they only use the CCP label on credits issued by projects from CCP-Approved categories of credits.
〉It will oversee the market to ensure integrity by auditing programs, making spot checks and responding to complaints. It will have the power to review a program or category if there are concerns about its adherence to the CCPs. If it finds material failings it will be able to suspend or terminate the eligibility of the program or category.
Read the full insight here
| about
The Integrity Council for the Voluntary Carbon Market (Integrity Council) is an independent governance body for the voluntary carbon market, which aims to ensure the voluntary carbon market accelerates a just transition to 1.5°C.
The Integrity Council aims to set and maintain a voluntary global threshold standard for quality in the voluntary carbon market. The threshold standard is based on the Integrity Council’s Core Carbon Principles (CCPs) and is implemented through an Assessment Framework that sets out what high quality means by reference to those principles. The result is a threshold standard and label that provide a credible, rigorous, and readily accessible means of identifying high-quality carbon credits.
| All opinions expressed are those of the author and/or quoted sources. investESG.eu is an independent and neutral platform dedicated to generating debate around ESG investing topics.
