Designing effective post-2020 carbon markets will require a comprehensive approach to avoiding double counting. While the issues of double counting in the UNFCCC context are frequently discussed, other markets that must also grapple with double counting have received considerably less attention. We’ve already talked about how the International Civil Aviation Organisation’s (ICAO) Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) has the potential to shape future carbon markets. Now, we’ll look at the role it could play in addressing double counting and the risks and rewards of trying to do so within CORSIA.
Defining Terms on Double Counting May Fall to Standards Programs
The UNFCCC has set out broad frameworks for trading carbon credits (internationally transferred mitigation outcomes, ITMOs), but has not yet developed specific rules and guidance for them, including how to avoid multiple claims on credits, leaving many country actors stymied on a path forward. Meanwhile, early action under ICAO’s CORSIA could happen before official UNFCCC rules are finalized. In this event, those entities looking to trade in CORSIA may need to have rules around double counting well in advance of any official UNFCCC decision.
It’s unlikely that ICAO will offer a centralized solution to double counting, as doing so is outside the purview of that institution. Though developing double counting solutions is also not the purpose or purview of voluntary market carbon certification programs, such programs have enough depth of experience that they could identify issues and safeguards to avoid double counting. Carbon certification bodies participating in CORISA might therefore need to come up with double counting guidelines themselves. This challenge poses a key risk within the CORSIA framework, but there are paths forward that can address that risk and even lead to potential opportunities.
The Risk of Leaving Design to Standards Programs
As we covered previously, CORSIA is operating via an ‘open architecture’ design, wherein airlines can purchase and retire for compliance carbon credits issued by carbon certification programs that meet the Emissions Unit Criteria (EUC) set forth by ICAO, which are centralized guidelines designed to maintain the environmental integrity of the scheme. While this open architecture approach is mostly a boon, providing for competition, specialization and innovation, it poses a risk when it comes to double counting.
If carbon certification programs each submit their own proposals for double counting, a single proposal from a program not committed to rigor and environmental integrity could undermine the whole system. Furthermore, the introduction of lax double counting standards could initiate a ‘race to the bottom’ among carbon certification programs. Such a situation could undermine the CORSIA scheme altogether. Fortunately, this situation can be avoided if participating programs are open to working together.
A Possible Path Forward through Cooperation
If programs are willing to work together, they can coordinate to develop and deliver unified double counting rules that meet the needs of countries and programs and maintain environmental integrity. Though doing so would be challenging and require significant technical expertise, it can be done. Other schemes for international trading can be drawn upon. In addition, players in the space already understand the general risks associated with double counting, such as the need for countries to make ‘corresponding adjustments’ and the issues around how one interprets different kinds of NDCs and targets, even if solutions for these risks have not yet been proposed.
Coordination is not only possible, it also stands to benefit CORSIA and perhaps even emissions trading more broadly. A unified effort to tackle double counting would allow carbon certification programs to not be limited by their own in-house expertise, but to draw on each other, reducing the burden of each having to develop their own set of rules. Coordination would ensure that all projects are following the same double counting rules regardless of the certification standard used, reducing friction and confusion for countries and airlines participating in CORSIA. Finally, strong double counting guidelines for CORSIA could provide a benchmark for the UNFCCC as they refine their own rules.
Even if carbon certification programs develop unified rules on double counting, they are not in a position to create the centralized systems needed to track the flow of carbon credits internationally and, in particular, the related corresponding adjustments. Thus, while an important contribution, a unified set of rules on double counting will still need additional infrastructure in order to be truly effective.
Avoiding double counting is a challenging issue but one that must be addressed. Though it will require a lot of hard work and coordination, carbon certification programs can do their part to manage this issue within CORSIA. While carbon certification programs will not unilaterally achieve the transparency and double counting aims of the Paris Agreement, the task of developing rules for CORSIA provides an important opportunity to influence them and potentially contribute towards solving the larger issue of double counting worldwide.