The Integrity Council for the Voluntary Carbon Market will complete by the end of 2024 its reviews of renewable, nature-based and cookstove methodologies under its Core Carbon Principles to identify high-quality carbon credits that align with the CCP's requirements and restore market liquidity, Mark Kenber, ICVCM board member, told S&P Global Commodity Insights in an interview.
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Register NowKenber is also executive director of the Voluntary Carbon Markets Integrity Initiative, a UN-backed international organization that sets rules for companies to use carbon credits and make carbon emission mitigation claims in a legitimate way. The ICVCM will issue CCP labels for carbon crediting programs and methodologies that meet certain quality and integrity standards.
"There will be decisions on all of the major categories by the end of this year," Kenber said. "Obviously, there's pressure from the market to make these decisions quickly, because there is finance ready to be deployed and projects to issue credits, but there's also pressure to get it right."
He expected the completion of CCP assessments of these major project categories to provide clear signals to corporate buyers in terms of which carbon credits are high integrity, with information transparency and proper benefit sharing with local communities in project host countries.
"That would be the basis for [carbon] market expansion in 2025, 2026, 2027, which is, I think, what we all want," he said.
CCP updates
Kenber said, he cannot predict where the ICVCM will land on different project categories, "but undoubtedly there will be some methodologies that are no longer considered good enough." International carbon registries, such as Verra and Gold Standard, are updating their methodologies to align with CCP requirements, so some projects will no longer meet the updated standards, he said.
Some methodologies may be fast-tracked to get CCP labels, and some methodologies will be directly eliminated for CCP assessments, with these only accounting for a small share of the market, he said.
Projects for landfill gas management and direct air capture [of greenhouse gases] have the potential to be fast-tracked because of their obvious additionality and evident need for carbon finance, he said.
More time will be needed to assess the CCP-eligibility for "the big chunk of the market," namely renewable energy, cookstove, reducing emissions from deforestation and forest degradation (REDD+), afforestation and reforestation, improved forest management and agriculture, Kenber said. "They're probably all in that middle group of not fast-tracked, not eliminated, but need work on them."
'Stranded' projects
"There is a risk, of course, that some projects will be stranded," Kenber said, referring to projects that are not aligned with the CCP-labeled methodologies. "It's hoped that organizations like Verra, Gold Standard, ACR [American Carbon Registry], have a transition for those methodologies that are not accepted, so these projects can transition to new methodologies."
Kenber said renewable energy projects that were established in some countries 10-15 years ago may not meet the "additionality" requirement, because they have already become commercially profitable and no longer need financial supports from carbon markets.
Nature-based and household cookstove projects need to have more accurate estimates for emission mitigations and implement monitoring, reporting and verification or MRV technologies to prevent over crediting of carbon credits, he said.
He said advanced notices will be given to inform market participants about the CCP assessment process and the frequency of updating methodologies by carbon registries.
"This is where both ICVCM and VCMI put an emphasis on transparency, so we're not changing the rules from one day to another without telling people."
Science Based Targets initiative
Kenber also shared his views on a recent statement by Science Based Targets initiative, or SBTi, a UN-backed international organization that guides companies to set and fulfil their climate targets. In the statement, SBTi signaled companies to use carbon credits to offset scope 3 emissions, namely indirect emissions from the upstream and downstream sections of their supply chains.
The statement has triggered fierce debates about whether carbon credits can represent genuine emission reductions and whether allowing carbon offsets will lure companies to make less efforts to cut their own emissions.
Kenber said the VCMI welcomed SBTi's statement, adding that over 60% companies were not on track to meet their scope 3-related targets, and allowing them to use carbon credits could help fill the gap as well as scale up the carbon market by two-three times the current size.
"It's important to find this balance between scrutinizing and making sure that projects really are high integrity, but not making the assumption that, if there are a few [projects] that aren't working, the market is a disaster," he said.
"I don't think there's any question that all of us who are involved in this space want companies to decarbonize internally as much as possible and invest in carbon markets. It's not one-or-the-other. It's both-and."
In July, SBTi is expected to finalize its guidance for the potential use of environmental attribute certificates such as carbon credits for abatement purposes of scope 3 emissions.
"My guess is that it's only three months away, so it's likely to be quite high level," Kenber said, adding that SBTi will not define what constitutes a high-quality carbon credit because that is part of the ICVCM's work.
The VCMI will also publish its finalized guidance for companies to make scope 3-related claims this September at the Climate Week in New York that is expected to align with SBTi's rules, he said.