Navigating the Core Carbon Principles and the Landscape of Guidance Toward a High-Integrity Carbon Market
By Jordan Faires and Pedro Barata
The voluntary carbon market is an essential tool to advance net zero progress. The market can help us channel much-needed finance to drive climate action, conserve vital ecosystems, and support sustainable development and livelihoods in local communities. However, one of the leading challenges for companies is differentiating high-integrity carbon credits in a crowded marketplace. New integrity guidance is shedding light on how companies can make the highest impact investments to complement their sustainability commitments.
Why is the conversation around carbon credits so complex and polarized? For good reason. For too long, the market has operated without overarching guidance to ensure these carbon credits truly deliver on their climate promises, and don’t cause any unintended harm to people or nature. Intense media scrutiny has revealed bad actors and flawed practices, which has bruised public confidence in the market’s capacity for positive climate action.
The integrity of carbon credits is essential for the voluntary carbon market to be effective in addressing climate change. Low-quality or fraudulent carbon credits could undermine the market and prevent it from delivering real climate benefits, not to mention potentially harm communities or ecosystems.
Luckily, the voluntary carbon market is at a potential turning point. New guidance and resources released this year aim to ensure carbon credits deliver the positive impacts they promise. Recently, the Integrity Council for the Voluntary Carbon Market (ICVCM) released its Core Carbon Principles (CCPs), an anticipated set of principles that set a global threshold to define what a high-integrity carbon credit looks like.
What should companies and carbon credit buyers take away from the CCPs?
- Already in 2023, the ICVCM will use its Assessment Framework to assess whether types of carbon credits meet the high-integrity CCP criteria, and will start issuing CCP labels to credits in the market. To qualify for the CCP label credits must fund projects to reduce and remove emissions that are:
- Compatible with a transition to net zero. The framework rules out projects that lock in fossil fuel emissions or technologies.
- Permanent. Projects must compensate for any reversals that happen within 40 years.
- Additional. Reductions and removals would not have happened without carbon credits.
- Robustly Quantified. The emissions impact must be measured conservatively to minimize the risk of overestimation.
- All new projects will have to put in place robust social and environmental safeguards that deliver positive sustainable development impacts.
- CCP compliance is a starting point, not a finish line, for high integrity. Further effort is needed to ensure the voluntary carbon market delivers on its potential for climate action, while benefiting communities and ecosystems. While the CCP’s can serve as a starting point for identifying credit quality, it will still be up to companies and carbon credit buyers to continue due diligence efforts to ensure their carbon credits deliver the true impact they claim.
- The next phase of the voluntary carbon market’s journey must focus on inclusion, particularly for Indigenous Peoples and Local Communities. Indigenous People and Local Communities are key partners in the VCM, and should be involved in decision-making and governance processes as partners, not solely beneficiaries. Some progress has been made to consult and engage Indigenous Peoples and Local Communities in multi-stakeholder efforts like the ICVCM. However, these efforts must be strengthened to ensure IPLC stakeholders hold power in processes to develop standards and governance to drive higher integrity.
- We need a clear pathway for high-quality credits from natural climate solutions (NCS) to direct private sector finance to these integral climate projects. High-quality NCS projects such as tropical forest conservation are critical to providing the near-term mitigation needed to meet global climate goals. As the ICVCM continues to refine the CCPs, it is critical that ICVCM appropriate market signals on high quality NCS credits.
However, the Integrity Council is not the only group making progress in guiding the way to high integrity. There are a number of resources available to help companies and other carbon credit buyers identify high-integrity carbon credits and make transparent claims around those credits.
- The CCQI is a global initiative that sets standards for carbon credit quality. The CCQI’s standards cover a range of factors, including the project’s environmental benefits, social and economic impacts, and governance. Users can explore the score of a carbon credit type using CCQI’s interactive scoring tool to evaluate it across multiple quality considerations.
- guide: Eight norm-setting and Indigenous organizations produced the TFCI to help companies differentiate tropical forest credits by impact, quality, and scale. This resource is designed to provide companies with guidance on what high-quality tropical forest carbon credits look like so that they can participate in the voluntary carbon market with confidence and integrity.
- The Voluntary Carbon Market Initiative’s (VCMI) Claims Code of Practice: The recently updated VCMI Claims Code is a set of guidelines for making credible claims about the climate benefits of carbon credits. The Claims Code lays out a step-by-step process for making claims and identifies a set of consistent claims that companies can make with carbon credits. VCMI requires that companies purchase CCP-labeled carbon credits to back their climate claims, when these CCP-labeled credits become available.
- The Science Based Targets initiative (SBTi): The SBTi is an organization that develops standards for, and validates, science-aligned corporate climate targets. The SBTi strongly recommends that companies go above and beyond internal emissions reductions to engage in “beyond value chain mitigation” (BVCM), including through the purchase of high-integrity carbon credits. The SBTi recently concluded a public consultation to guide their approach to BVCM, and will produce additional guidance on corporate BVCM approaches later this year.
All of these should be part of a buyer’s consideration and due diligence process when using carbon credits in their climate strategy.
The need for carbon credit quality and integrity in the voluntary carbon market is clear. By using the resources and guidance that are available, companies and other carbon credit buyers can help to ensure that they are investing in high-quality carbon credits that truly achieve their climate goals and make a real difference for the climate.
Want more info? Read EDF’s full statement in response to the release of the Core Carbon Principles here.