Integrity Council calls on carbon-crediting programs to raise the bar and develop improved methodologies for renewable energy projects.
The Integrity Council for the Voluntary Carbon Market announced recently that carbon credits issued under existing renewable energy methodologies, which account for nearly a third of the voluntary carbon market, will not be able to use its high-integrity CCP® (Core Carbon Principles) label.
The Governing Board decided that eight methodologies used to design and implement renewable energy projects fail to meet the CCP Assessment Framework requirements on additionality because they are insufficiently rigorous in assessing whether the projects would have gone ahead without the incentive of carbon credit revenues. These methodologies cover approximately 236 million unretired credits, making up 32% of the voluntary carbon market.
The latest set of assessment decisions take the total number of unretired credits approved to use the CCP label to an estimated 27 million – 3.6% of the market. The Board has also:
- approved a methodology for projects that detect and repair methane leaks in the gas industry that covers an estimated 19 million unretired carbon credits, accounting for 2.6% of the market;
- approved a further version of a previously approved methodology for projects that capture methane from landfill sites;
- rejected a methodology for projects in the magnesium industry that reduce the release of sulphur hexafluoride (SF6) because it did not meet additionality requirements. A relatively small number of unretired credits use this methodology.
Multi-stakeholder assessments of some of the most popular types of carbon credits – REDD+ (Reducing Emissions from Deforestation and Forest Degradation), Jurisdictional REDD (JREDD and clean cookstoves are also underway and due to be completed in the coming months.
Annette Nazareth, Integrity Council Chair, said: “We are taking the tough decisions necessary to build a high-integrity voluntary carbon market that can be scaled to meaningfully fund climate solutions and channel material amounts of finance to the Global South. While companies’ first priority must always be to decarbonise their own value chains, carbon credits can be an important supplement, allowing them to go further and take responsibility for emissions they cannot yet cut.”
Amy Merrill, Integrity Council CEO, said: “Our rigorous, science-based assessments are well underway and will give buyers confidence that CCP-labelled carbon credits deliver genuine emissions reductions and bring positive social and environmental benefits that support Indigenous Peoples and local communities. These decisions will shape the development of the market and all participants will benefit over time, as CCP-labelled credits unlock greater investment flows and drive innovation.”
The Intergovernmental Panel on Climate Change is clear that use of renewable energy must be scaled up rapidly between now and 2030 to deliver on global emission reduction goals. While renewable energy costs have fallen dramatically around the globe over the past decade, they have not fallen evenly across all countries, and high up-front expenses and other barriers mean that there are still many places where it is difficult to deploy renewable capacity. The Integrity Council is ready to review more rigorous renewable energy methodologies once they are developed and calls on carbon-crediting programs to develop updated methodologies that better reflect the rapidly changing and variable circumstances around renewable energy deployment across different geographies and regions.
Annette Nazareth said: “Renewable energy projects financed by carbon credits still have a role to play in the decarbonisation of energy grids because it remains challenging for many least developed countries to secure the investment they need to transition away from fossil fuels. However, we need to modernise the design of these carbon projects, which carbon-crediting programs can and should do. More robust methodologies would unlock finance for a new wave of renewable energy projects in places where they are most needed.”
Pedro Martins Barata, Integrity Council Expert Panel Co-Chair, said: “Following this decision, we encourage programs to develop methodologies that take a much more sophisticated approach to assessing whether renewable energy projects are additional. It would also be enormously beneficial for international agencies concerned with improving energy access for all to support this work and develop more reliable models and data sets to draw from.”
The Integrity Council has approved a methodology for projects to detect and repair leaks in existing natural gas pipelines (LDAR), for just one crediting period. The methodology is used in lower income countries which often have ageing infrastructure and do not yet regulate gas leaks. It currently covers an estimated 19 million unretired carbon credits from projects in Bangladesh, accounting for 2.6% of the market.
Amy Merrill said: “Methane is a potent greenhouse gas and leakage into the atmosphere should be subject to regulation. The Board has approved this methodology as a stop gap before regulation is widely in place. Leaks can and should be addressed by the companies responsible for building and maintaining this infrastructure.”
In June, the Integrity Council approved four methodologies for projects that capture methane from landfill sites (LFG) and three for projects that destroy stockpiles of ozone depleting substances (ODS), covering an estimated eight million unretired carbon credits.
The 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 maximise its potential to tackle rising greenhouse gas emissions and unlock significant private finance for climate solutions. The CCP label will give assurance that each credit represents a tonne of emissions reduced or removed from the atmosphere. It also indicates that credits from new projects have 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 CFTC (Commodity Futures Trading Commission) and ISDA (International Swaps and Derivatives Association), 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 ratchet up ambition in successive versions of the CCP Assessment Framework, released every two to three years. It has established a series of Continuous Improvement Work Programmes, 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 one to study how to improve existing ways of assessing whether renewable energy projects are genuinely additional and how they account for emission reductions.