Verra to Pilot Innovative Approaches to Addressing Durability

Verra is piloting innovative approaches to addressing durability in Agriculture, Forestry, and Other Land Use (AFOLU) and Geological Carbon Storage (GCS) projects registered in the Verified Carbon Standard (VCS) Program.

To date, nature-based projects have contributed a risk-based number of credits to the AFOLU pooled buffer account to address their risk of reversals. In response to stakeholder demand, Verra is piloting a three-year process that will allow projects to utilize either insurance or a fund-based approach to address such risk.

Insurance is a well-known and highly regulated risk management mechanism common in most financial markets. Verra is therefore offering an insurance option, where proponents would purchase an insurance policy that will be triggered upon the confirmed occurrence of a reversal. The policy must have a minimum liability coverage equal to the total number or value of Verified Carbon Units (VCUs) issued while the policy is in effect.

For the fund-based approach, proponents would sell VCUs and set aside a portion of the proceeds in a fund that could be used in the event of a confirmed reversal. The fund may be managed by the project proponent, a group of project proponents, or other market actors.

Using one of these novel approaches instead of contributing to the pooled buffer account may help projects decrease upfront costs and diversify options for managing reversals. This can, in turn, drive demand for VCUs from buyers who are familiar with how these mechanisms operate in other established markets and unlock higher levels of carbon finance for projects.

VCUs issued to projects using one of the above approaches in the pilot phase will be marked with an Innovation label to transparently disclose the innovative approach that the project is piloting.

If a project experiences a reversal during the piloting phase, Verra will mark the affected VCUs as reversed until the insurance or fund-based approach enables the replacement of the reversed units. Where replacement does not occur, the VCUs will continue to be marked as reversed.

In a recent Continuous Improvement Work Program report on permanence, the Integrity Council for the Voluntary Carbon Markets (ICVCM) has indicated that it may accept such an approach as meeting the Core Carbon Principles (CCPs).

Through the piloting process, Verra is committed to learning, refining, and engaging with stakeholders to ensure any future evolution strengthens both trust in the system and the climate impact it delivers.

Any projects interested in participating in this pilot can find detailed requirements about the pilot and the application process in the following document:

This pilot is part of version 5 of the Verified Carbon Standard (VCS) Program. See the related program notice:

If you have any questions, please contact secretariat@verra.org.