The Integrity Council for the Voluntary Carbon Market (ICVCM), an initiative aim to grow the $2 billion market for carbon offsets, outlined criteria for new voluntary standards on July 27. They hope to issue labelled credits by the end of the year to bring transparency to the unregulated marketplace.
Demand for carbon offsets, which are credits for emissions-reducing activity that can be generated through projects such as tree planting, is predicted to grow as firms with net zero goals buy these offsets to cancel out emissions elsewhere.
But the market is unregulated, with many different standards and approaches, making it difficult for companies to assess which credits they should use.
Critics of the voluntary carbon market cite concerns, including poor transparency and questions over the environmental quality of projects.
As an independent governance body for the market, ICVCM has published its criteria for projects to achieve its new Core Carbon Principle (CCP) standards.
Annette Nazareth, Chair of ICVCM, said in a statement that the criteria "set a global threshold for quality which aims to unlock finance at speed and scale for projects to reduce and remove billions of tons of emissions that would not otherwise be viable."
The most widely traded offsets standards are those deemed eligible under the CORISA scheme set up for the global airline industry.
CCP approval will require many of the same features as CORISA, such as a project with quantified monitoring, reporting and verification (MRV) standards, or being unable to proceed without the revenue from the sale of carbon credits.
However, CCP credits will need additional measures for some areas, such as further governance checks. That means not all CORISA credits will likely gain CCP status.
"We do expect this will have a significant impact on the market, but we can't prejudge the pre-designed assessment process we are about to start," ICVCM COO William McDonnell said in an interview.
Technology to capture and store carbon emissions at projects will be excluded from CCP, as will any projects involving coal-fired power generation.
There could be instances where projects developing new gas plants might be included if they meet all the other requirements and are part of jurisdiction or country-led initiative, and result in clear emissions reductions.
At present, it is not mandatory for a company retiring a carbon credit to disclose their name but under the new standards registries retiring CCP credits will need to identify on whose behalf the credits have been retired.
Once a credit has been retired, it cannot be traded or used to by another company to meet their climate targets.