Verra has supported the ICVCM and the development of both the Core Carbon Principles (CCPs) and the Assessment Framework (AF). If done well, the CCPs and AF can drive high integrity across the full range of carbon crediting programs in the voluntary carbon market and help realize the rapid scaling of climate action that the world needs. The integrity of carbon credits is fundamental if this market is to contribute to halving emissions by 2030 and harness much needed investment to reduce emissions, finance removals, and pursue a just transition.
In this post, we set out our conceptual concerns with the current CCPs and AF in advance of submitting detailed comments next week as part of the ongoing public consultation.
Our Core Message
While we welcome scrutiny of crediting programs and the need to be held accountable, we are very concerned with the draft CCPs and AF. We especially fear that the principles-based review of programs has been supplanted with a blunt, one-size-fits-all approach that seeks to directly set the scope and rules of the market. Furthermore, the CCPs set out a long list of requirements, many of which are far too prescriptive and infeasible and, if forced upon the market, would drastically limit the amount of carbon finance that could flow to activities on the ground.
Underlying the ICVCM’s approach is the assumption that a limited set of individuals can create the rules for a broad and emerging market, rather than relying on robust processes that seek input from a range of stakeholders to identify solutions that both ensure integrity and are practical to implement. Initial analyses of the draft CCPs and AF suggest that few, if any, credits would pass the test, which will satisfy purists but do nothing to drive investment at the scale needed around the world to combat the climate crisis. In short, the proposed approach will not only fail to create a workable pathway to achieve the ICVCM’s goals, but significantly harm the voluntary carbon market by enshrining a process that sets impossible requirements, is impervious to input from a range of stakeholders, and is unworkable from an administrative standpoint.
The Proposed Approach Is Off Track
The ICVCM’s proposed approach will not provide effective oversight to the voluntary carbon market because it essentially proposes to replace the work of crediting programs. Specifically:
- Unnecessary replication. By seeking to make its own determinations at a global level on what project types are additional and which methodologies are adequate, the proposed CCPs and AF seek to replicate key roles of crediting programs and override the standards and processes they have developed. These determinations will be generic and will be undermined by the diversity of local circumstances, the lack of appropriate data and the extensive need for specialized and localized input and expertise. The ICVCM should instead focus on assessing programs’ standards and processes, which have been developed over two decades through careful consideration of the latest scientific evidence and best practice, and have undergone extensive public consultation.
- Administratively difficult and slow. Approving every project type and methodology, as well as the frequent updates that are under continual development, will be resource-intensive, complicated to manage, supremely slow, and create unnecessary bottlenecks that will undermine market confidence and stymy mitigation. The sheer impossibility of undertaking such assessments thoroughly and objectively in a reasonable timeframe makes this wholly unrealistic for any process that seeks to scale the market and mobilize finance.
- Failure to identify and prioritize the big issues. The draft CCPs and AF demand almost immediate compliance with a full range of requirements that bear no relation to the risks different projects present or the feasibility and cost of demonstrating they are met. Putting everything into question creates unnecessary uncertainty for projects and investors. A much more surgical approach could address the key concerns that currently hold back confidence in the market and target limited resources thoughtfully to achieve the biggest impact.
Charting a New Course
An alternative approach is urgently needed for the assessment of the CCPs. It must build on current programs and initiatives, rather than sweep aside past judgements or assume that the ICVCM’s assessments are superior to those honed over many years by the programs themselves or by thorough reviews conducted by third parties who have spent considerable time and resources. As most concerns affecting the voluntary market relate to a relatively small number of issues and project types, the assessment needs to prioritize these, while accepting that the assessment framework and process will need to ratchet up over time. This can support an effective and workable level of assessment, with the outcome of assessments being addressed at the level of programs and ensuring requirements are responsive to risk and grounded in what is measurable.
We propose an alternative vision of the ICVCM process:
- Focus on standards and processes established at the program level. Instead of making global assessments of what project types are additional and which methodologies are adequate, the ICVCM needs to draw itself back to a level of assessing programs on whether they appropriately determine additionality, create robust accounting methodologies, properly oversee auditors, and have transparent and robust registries. Concretely, this means the outcome of assessments should only be issued at the program level. The assessment could of course still examine a lower tier of information on programs, but this should be done in a targeted manner to inform whether standards and processes applied at the program level are adequate. A focus on program-level assessments would support improvements in programs’ processes while reducing the assessment burden on the ICVCM. Two key implications of this approach for the ICVCM would be:
- The ICVCM should not attempt a global additionality assessment of project types but instead allow programs the scope to take account of local circumstances and expertise. This should include a requirement for programs to undertake a regular review of the allowable scope of activities within their programs, which includes consideration of additionality for project types.
- The ICVCM should not issue approvals for individual or groups of methodologies but instead focus on requirements and approval processes applied by programs. In practice, many of the requirements set out in the assessment framework are already either applied at the program level or are applied consistently across a program’s methodologies, and the objective of the AF should be to ensure programs are fulfilling those requirements, not superseding the work of the programs.
- Stage the development of the Assessment Framework. Specifying requirements at the outset with no expectation they will be met for some time will undermine confidence in programs and the market as it implies that they are deficient until such full requirements are met. The nature of standards is in fact that the benchmark of integrity is set by the requirements prevailing at a particular point of time, with a process for continual improvement. For any standard elaborated at the level of detail of the draft AF, it is not realistic to suggest that any current formulation of “full” requirements can be final; there will be a need for revisions to both the initial and full requirements over time. A clearer approach would define the requirements of version 1 of the CCPs and AF now and, going forward, identify areas of work to develop further requirements and improvements that would be published and become applicable through subsequent versions of the framework, making sure to provide a pathway for projects to move from one version to the next.
- Leverage and supplement existing assessment initiatives. In particular, at least for version 1 of the framework, the ICVCM should leverage the assessment undertaken in the GHG program review of the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). This is the most comprehensive review of crediting programs to date and has considerable overlap with the AF for the CCPs. To date, CORSIA has approved eight GHG programs of the 23 that have applied (slightly more than a third), which suggests the approach has been quite effective at excluding programs that do not sufficiently ensure integrity. If the ICVCM determines that the CORSIA process has shortcomings relative to the CCPs, the ICVCM may supplement CORSIA’s assessment with targeted assessment of its own. These could, for example, focus on:
- Permanence. Due to CORSIA’s relatively short timeframe (through 2036), the assessment of permanence for AFOLU projects has not been sufficient for assessing this critical element. While ensuring the permanence of issued credits is challenging, each program should have the opportunity to demonstrate that its approach is credible and ensures integrity, with the ICVCM applying reasonable oversight of these approaches.
- AFOLU projects. CORSIA’s restrictions on AFOLU projects is a blunt tool that has prevented consideration of credible approaches, including those with reasonable guardrails. As AFOLU projects represent a significant share of the actions needed to meet global climate goals, the ICVCM should take a more considered approach to the assessment of AFOLU approaches under the relevant crediting programs.
- Large-scale renewable energy. CORSIA was not able to comprehensively address how programs determine the scope of their allowable projects, particularly in relation to large-scale (or grid-connected) renewable energy. Given that the additionality of these projects with today’s economics is a source of much concern, programs should be assessed on how they establish and update project scope to ensure that this provides a useful supplement to other tools for additionality assessment.
- Establish a longer-term CCP work program. This should present the structure and timelines for the further elaboration of subsequent versions of the assessment framework and identify issues needing to be addressed in further detail or new issues to be integrated. The ICVCM and all market participants will learn a lot from the first round of assessments, and there should be a plan to apply these learnings to future versions rather than assuming it can be designed perfectly up front. A critical element of the ICVCM’s work program will include the cadence of reviews and spot checks necessary to keep crediting programs accountable.
Our support for the ICVCM has been shaken. That said, we plan to continue engaging in this process to ensure that carbon finance can drive increasing amounts of investment for real climate action. We intend to continue to engage directly with the ICVCM and our stakeholders, and as mentioned above, plan to publish our detailed comments on the full list of requirements set out under the draft CCPs and AF.
As it stands, though, we believe that the ICVCM’s goals are poorly served by the current approach because it leaves too many decisions to too few individuals, creates an administratively difficult system to manage, and would undermine confidence in the market. If it is to work, the ICVCM must instead correct course and chart a feasible pathway that does not usurp the work of the crediting programs, but rather ensures integrity of the credits in the market by providing robust oversight of crediting programs and focusing on key improvements that should be made over time.