EDITORIAL: Cookstoves sector in the spotlight once again, as IC-VCM approves three methodologies

Quantum Commodity Intelligence - The cleaner cookstoves sector has been in the news once again in recent weeks, with developments on moves to avoid claims of over-crediting and improve integrity, as well as one prominent player in the market filing for bankruptcy.

The biggest news came last week when the  Integrity Council for the Voluntary Carbon Market (IC-VCM) approved three methodologies for its Core Carbon Principles (CCPs) quality labels. Two methodologies under Switzerland-based registry Gold Standard and one from US-headquartered Verra are now eligible for the CCP labels, although two other methods were rejected by IC-VCM.

The move that comes after years of work by standards and industry bodies to revise key metrics blamed for huge levels of over-crediting and depressed prices in the sector after integrity concerns became widely amplified by researchers. But the conditions required by the IC-VCM, and the standards themselves, are likely to mean that some "high-quality" projects won't make the CCP threshold.

Currently no CCP-approved credits have yet been issued under the approved methodologies, but IC-VCM's statement said it expects several hundred thousand tonnes of approved credits to become available this year. And the body is still working on other versions of cookstoves methodologies submitted to it for assessment.

Meanwhile, the Methodologies Panel (MP) of the Clean Development Mechanism, which has major input into a key determinant of supply from clean cookstoves projects, has recommended a compromise proposal to reduce the risk of over-crediting in the sector. The MP's proposal takes into account localised data from an external model, while requesting a mandate to factor in a "marginality" concept to prevent the pendulum swinging too much the other way.

The intention of the marginality concept is to more accurately reflect the greenhouse gas emissions impact of firewood consumption from the unsustainable portion of the harvest. This is as an alternative to the current application of the fraction non-renewable biomass — percentage of wood that is unsustainably harvested in a given area — which assumes that every tonne of wood saved is the same proportion, renewable and non-renewable.

Meeting

The decision on whether to proceed with the marginal approach recommended by the MP will ultimately be taken by the CDM Executive Board (EB), which meets several times a year and has its next meeting later this month. And once the CDM EB has agreed an alternative, it will submit this for consideration by the expert panel in charge of the Paris Agreement Crediting Mechanism (PACM), the  project-based market under Article 6.4 of the Paris Agreement.

Given cookstoves projects have been one of the main sectors receiving approval letters for Article 6 from host countries, the next few months are going to be crucial to developers in the sector looking for a boost under PACM.

One name with a history in the cookstoves sector that is unlikely to play a role in the Article 6 market is C-Quest Capital (CQC). The scandal-hit company has filed for bankruptcy in a US court, with documents showing that the company's private-equity owners Vision Ridge are seeking $110 million in damages related to fraud indictments made against the developer's co-founder Ken Newcombe.

The legal documents filed in a Delaware court state that the company, which in its heyday was one of the biggest suppliers of carbon credits from cookstoves projects, has filed for Chapter 7. Chapter 7 effectively winds up the company's operations, and sells any remaining assets to pay its creditors.

Vision Ridge has already started transitioning some of CQC's assets to a new company, known as Bridge Carbon, but only projects that could meet the new entity's raised threshold on integrity and transparency.

Bridge Carbon has undertaken to use much more modern stoves, the 'best-in-class' Clear methodology, and digital measurement, reporting and verification techniques that will yield publicly accessible data. But it remains to be seen if the new entity can sell its credits amid a general oversupply in the market for credits from cookstoves projects, and overall weak demand.