Verra has launched a public consultation on two new tools in the Verified Carbon Standard (VCS) Program to assess the additionality of project activities, M0310 Additionality Assessment and M0331 Combined Baseline and Additionality Assessment. The consultation runs until September 23, 2024.
These tools align with the Core Carbon Principles (CCPs) Assessment Framework of the Integrity Council for the Voluntary Carbon Market (ICVCM) and provide procedures and requirements for conducting the investment, barrier, and common practice analyses, and identifying the baseline scenario where applicable.
The proposed tools would replace Clean Development Mechanism (CDM) TOOL01 Tool for the demonstration and assessment of additionality (external) and CDM TOOL 02 Combined tool to identify the baseline scenario and demonstrate additionality (external) for projects using VCS and CDM methodologies in the VCS Program.
The new tools would also replace the following CDM tools and guidelines in the VCS Program by consolidating them and including further updates to ensure compliance with the most recent version of the VCS Methodology Requirements and the CCP requirements for additionality:
- TOOL24 Common practice (external)
- TOOL27 Investment analysis (external)
- Guidelines for Objective Demonstration and Assessment of Barriers (external)
The ICVCM had identified concerns with the CDM tools in its recent methodology decisions and “encourages CCP-Eligible programs using the above CDM Additionality Tools to consider reviewing and/or updating their methodologies/tools to be in line with Assessment Framework requirements on additionality.” [1]
Specifically, the updates in the new VCS tools include the following:
- A new requirement for the benchmark analysis to demonstrate that carbon credit revenues decisively increase the economic performance of the project and raise the financial indicator (such as Internal Rate of Return) to or above the required financial benchmark
- A new requirement that assumptions, data, and conclusions in the investment analysis must be consistent with information presented to the entities financing and implementing the project.
- The removal of the “simple cost analysis” which was a simplified option used to demonstrate that at least one alternative is less costly than the project activity in the absence of financial or economic benefits other than carbon credit revenues. Going forward, projects should apply an investment comparison analysis.
- A new requirement to provide verifiable evidence to demonstrate each identified barrier to the implementation of the project and proof that that carbon credit revenues are the decisive element in overcoming each identified barrier
- The removal of the “technological barriers”, such as lack of infrastructure for implementation and logistics for maintenance of the technology
- The removal of the “first-of-its-kind” additionality test according to which a project additional if it introduces a new technology or practice in the host country, eliminating the need for barrier or investment analysis.
- Additional improvements and edits to enhance clarity
Implications for VCS Projects
New projects using a methodology relying on the CDM additionality tools would be required to apply the new VCS additionality tools instead, once they are finalized and after the grace period ends. If the ICVCM approves the methodologies relying on the new VCS tools, Verified Carbon Units (VCUs) from projects using them will qualify for CCP labels.
Projects using a small-scale methodology will also have the option to use the new VCS tools instead of the CDM TOOL21 Demonstration of additionality of small-scale project activities (external) to meet the CCP requirements for additionality.
Per Verra’s new Methodology Change and Requantification Procedure, currently under consultation, existing projects from affected methodologies may also update to use the new tools to demonstrate additionality and, once the methodologies are approved by the ICVCM, obtain the CCP label for past and future VCU issuances.
To provide feedback on the proposed VCS additionality tools, please complete the M0310 and M0331 Comment Template (xlsx) and email it to methodologies@verra.org by September 23, 2024.