Global initiative outlines criteria for voluntary carbon market


Global initiative outlines criteria for voluntary carbon market


The Integrity Council for the Voluntary Carbon Market (ICVCM), an independent governance body for the voluntary carbon market, outlined standards on March 30 that it hopes will bring transparency to the $2 billion market, which has struggled for credibility.

ICVCM’s Core Carbon Principles (CCP) aims to help what is currently an unregulated, voluntary market with many different standards and approaches.

ICVCM is made up of project developers, academics, NGOs, policy makers, investors and local communities and credit buyers.

As companies seek to use the credits to help meet net-zero emissions goals, demand for carbon offsets, generated through projects such as tree planting or using cleaner cooking fuel, is expected to grow.

"Criteria we are issuing today are an important step towards a transparent, regulated-like market where buyers can easily identify and price carbon credits that meet consistently high-integrity standards,” ICVCM chair Annette Nazareth said in a statement.

Critics of the market raise concerns including poor transparency, a limited supply of credits and questions over the quality of projects.

To be eligible to meet the CCP, project developers must disclose how each project calculates and quantifies its emissions impact, and how they assess social and environmental impacts.

They must also prove how the project is additional to any activities that would have taken place even without carbon credit finance. They also need to assess the risk of negative social impacts such as those relating to indigenous people, biodiversity or human rights.

An initial assessment phase for carbon crediting programs to gain eligibility will begin in mid-2023 with the first CCP credit approval expected later this year, the Integrity Council said.

The new standards received mixed reaction upon its release.

Non-profit Carbon Market Watch said the standards was an improvement on current practices while called for the concept of offsetting to be abandoned.

“While the new rules help enhance the quality of carbon credits, they do not close all the loopholes of the voluntary carbon market,” said Gilles Dufrasne, its lead expert on global markets.

“More rules are needed and the credibility of the Integrity Council still hangs in the balance as several important criteria still need to be released.”

Significant carbon credits buyers, such as U.S. bank JPMorgan Chase (JPM.N), welcomed the new criteria, saying that it would improve the market's integrity and transparency.

"These principles are the building blocks for a trustworthy voluntary carbon market and a prerequisite for buyers and investors to deliver the capital needed to accelerate its development," said Brian DiMarino, the bank's Head of Operational Sustainability.

Related Topics
European Parliament approves EU’s biggest climate policy
South Korea lowers 2030 industrial emissions reduction targets