Verra -- the world's largest voluntary carbon credit issuer -- anticipates the review by the Integrity Council for the Voluntary Carbon Market (ICVCM) to be finalized by "next month or so," which will determine its eligibility for the Core Carbon Principles, or CCP, label that signifies high integrity, Verra Chief Legal, Policy and Markets Officer Robin Rix told S&P Global Commodity Insights on April 16.
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Register NowEarlier in April, carbon crediting programs managed by three registries -- including the American Carbon Registry, Climate Action Reserve and Gold Standard -- were approved as CCP-eligible by ICVCM. Market participants are keen to know whether and when Verra will get the program-level CCP label, given its much larger pool of methodologies and carbon issuance volumes.
Rix said ICVCM has sent Verra a list of requests for clarifications and that it has responded.
"And we expect that this process should be, hopefully, finalized within the next month or so," Rix added.
"They [ICVCM] are doing such an important, big job. And I think that they just realized [that] these are the stakes, and this is the immensity of what they have to do."
"I mean, they are processing a lot, whether it's in terms of public comments, whether it's in terms of submissions by standards, and so forth. The delay -- it doesn't worry us, to be honest. We're confident in that process."
After assessing the program-level CCP eligibility, ICVCM will proceed to assess the CCP eligibility for specific carbon crediting methodologies. Market participants are also eager to learn which methodologies Verra submitted and prioritized for the CCP-eligibility review.
"We've put forward most of our methodologies [for the review]. I wouldn't say that, for us, there're priorities within those. It's simply [that] we've put them forward, and we hope that ICVCM proceeds in a thoughtful and logical way," Rix said.
Paving the way for CORSIA
Another key move to be made by Verra is to ensure some carbon credits in its basket meet the latest requirements under the Carbon Offsetting and Reduction Scheme for International Aviation, or CORSIA -- a key initiative to decarbonize the international aviation sector and a key demand driver for the voluntary carbon market.
Rix said Verra is working with the International Civil Aviation Organization (ICAO) to pave the way to being fully eligible for CORSIA, adding that Verra will make its next submission to ICAO by April 30 to address additional requirements for CORSIA-related assessments.
Verra has been conditionally approved to issue carbon credits for airlines to meet their emission reduction targets in the 2024-26 compliance period. One additional and critical condition to be met is to have Article 6 authorization and corresponding adjustment, which means project host countries need to authorize using these carbon credits for CORSIA and give up using them to meet their own national climate targets.
Rix added that Verra is currently working through the latest CORSIA guidance and exploring potential ways to address the revocation of an authorization from project host countries, without disclosing the detailed solutions that Verra plans to adopt to address this challenge.
The current rules at the UN level give project host countries the flexibility to revoke their authorization for the cross-border transfer of carbon credits generated from their territories under the Article 6 framework. In such cases, ICAO expects project developers to find new carbon credits for replacement.
"It [the revocation issue] presents a risk, but I think that there are ways to mitigate and address that risk," Rix said when asked if such requirements would amplify risks for carbon investments.
The revocation issue will be addressed in Verra's next submission to ICAO by April 30, Rix added.
COP29 expectations
Rix anticipates that independent carbon crediting programs such as Verra can gain approval from the UN to facilitate cross-border transfer of emission reductions under Article 6.2, sharing his expectations for the 2024 UN Climate Change Conference, commonly known as COP29, scheduled for November in Baku, Azerbaijan.
"We're very hopeful that Paris will deliver a comprehensive accounting rulebook. That includes any rules that may be necessary for Article 6.2. And it's our view that independent crediting programs like Verra can be a source or a vehicle for Article 6.2 transfers."
Article 6.2 allows countries to sign bilateral agreements to transfer emission reductions in a bespoke way. Even without complete policy clarity at the UN level, some countries, such as Singapore, have already approved the use of some carbon credits issued by Verra to offset liable emissions under domestic carbon tax or compliance emission trading regimes.
"It's an interesting question, right, as to whether or not [Article] 6.2 provides everything that's necessary and whether countries have the 'sovereignty.' I think it's a live debate, an interesting question that needs resolution within the UNFCCC [UN Framework Convention on Climate Change] process."
"If you look at what Singapore has done, look at what Chili has done, in terms of allowing Verra's VCS [Verified Carbon Standard] credits to be used to meet domestic policy, we think that other countries may be looking at independent crediting programs as providing that infrastructure already. And we'll see where that leads, ultimately, to jurisdiction-by-jurisdiction decisions."