No high integrity label for carbon credits based on current renewable energy methodologies: ICVCM

The decision, made on the basis of additionality, affects nearly a third of all credits currently traded on the voluntary carbon market. Certifiers cautioned against a blanket methodology-level approach.

EDC binary geothermal power plant
A binary geothermal power plant in Mindanao, Philippines. Methodologies for the displacement of fossil fuels via geothermal-based heating are among those rejected by the Integrity Council for the Voluntary Carbon Markets for its high-integrity label. Image: EDC

Eight renewable energy methodologies used to issue carbon credits have been deemed ineligible for the high-integrity Core Carbon Principles (CCP) label issued by industry governance group, Integrity Council for the Voluntary Carbon Markets (ICVCM).

ICVCM said today that carbon credits issued under existing renewable energy methodologies were “insufficiently rigorous” in proving additionality, which is whether the projects would have gone ahead without the incentive of carbon credit revenues.

“We are taking the tough decisions necessary to build a high-integrity voluntary carbon market that can be scaled to meaningfully fund climate solutions and channel material amounts of finance to the Global South,” said ICVCM chair Annette Nazareth.

The decision affects 236 million unretired credits on the voluntary carbon market, almost a third of all unretired credits, said the council. It brings the total number of unretired credits which can use the CCP label to an estimated 27 million, 3.6 per cent of the market.

The rejected methodologies, which were created under the United Nations-run Clean Development Mechanism, include those related to grid-connected electricity from renewable sources, electricity and heat generated from biomass, as well as the displacement of fossil fuels by geothermal-based heating [see box]. They have been used by carbon credit certifiers Verra and Gold Standard.

In a response to the council’s decision, Verra explained that while it did not develop the methodologies and tools, it accepted the methodologies “created decades ago” under the CDM, which it has long recognised as an eligible programme.

“[These are] methodologies that in their time did indeed kickstart the global energy transition we are seeing today,” a spokesperson Verra for told Eco-Business.

The certifier stopped accepting new renewable energy projects in 2021 when in most countries, the renewables market had evolved so that grid-scale projects no longer required climate finance. However, Verra still makes an exception for renewable energy projects in least developed countries, “where carbon credits can still make the difference between new coal and new clean energy,” it said.

Gold Standard in their response to the council’s decision also pointed to the needs of regions which still face financial and technical barriers to renewable energy projects. “There are still a significant number of locations where carbon market funding for these project types is additional,” they said in a statement shared with Eco-Business. “Therefore, while we welcome further assessment by governing bodies such as the ICVCM, we believe additionality assessment should be applied at a project-level and not a blanket methodology-level evaluation.”

Furthermore, carbon credits which were issued before the 2023 publication of ICVCM’s high-integrity assessment framework should only be held to the highest standard evaluation markers existing at the time of their certification, Gold Standard stressed.

ICVCM’s rejected methodologies

The eight renewable energy methodologies being rejected by the Integrity Council for the Voluntary Carbon Markets cover:

  • Grid-connected electricity generation from renewable sources

  • Electricity and heat generation from biomass

  • Electricity generation from biomass in power-only plants

  • Use of biomass in heat generation equipment

  • Fossil fuel displacement by geothermal resources for space heating 

  • Grid connected renewable electricity generation

  • Electrification of rural communities using renewable energy

  • Electricity generation by the user

The council also rejected the following methodology for projects in the magnesium industry that reduce the release of sulphur hexafluoride (SF6), a greenhouse gas:

  • Replacement of SF6 with alternative cover gas in the magnesium industry

Approved methodologies

ICVCM said that it practises a “two-tick” process for the CCP label, meaning that the carbon-crediting programme must be deemed eligible and project methodologies approved by the council.

“The biggest [carbon crediting] programmes – American Carbon Registry, Climate Action Reserve, Gold Standard and Verra – are all eligible and able to apply the CCP label to credits using approved methodologies,” ICVCM said.

The council approved a new methodology today for projects to detect and repair leaks in existing natural gas pipelines, which is used for carbon credits in lower-income countries which have ageing infrastructure and do not yet regulate gas leaks. The methodology is currently used for an estimated 19 million unretired carbon credits from projects in Bangladesh, said ICVCM.

This brings the total of its approved methodologies to eight, after the council in June approved four methodologies for projects that capture methane from landfill sites and three for projects that destroy stockpiles of ozone-depleting substances. Other methodologies have been grouped into 29 categories for assessment by multi-stakeholder working groups, ICVCM said.

“Assessments of some important credit categories have concluded and will soon come to the [council’s] governing board for decisions, including improved forest management and afforestation, reforestation and revegetation,” it said.

ICVCM also said that it is still assessing two other grid-connected renewables methodologies and other mini-grid methodologies with low market share.

Going forward, Gold Standard said that as it works to bring higher integrity and meaningful sustainable development to carbon markets, it would continue to encourage engagement and collaboration with governance bodies. “We look forward to engaging with the ICVCM on the topic of renewable energy projects, through their working programmes or otherwise,” said Gold Standard.

Verra, meanwhile, said that it would be revising its tools for assessing additionality and electricity emissions. “Existing projects will have the option to update their projects to demonstrate that they met the requirements of the updated tools and thereby qualify for CCP labels,” their spokesperson said.

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