IC-VCM issues first CCP labels, approves seven methodologies
Quantum Commodity Intelligence – The main supply-side carbon quality initiative for carbon offsets on Thursday announced it had approved seven carbon crediting methodologies, in landfill gas and destructions of refrigerant gases, providing the first batch of credits that can now use the high-integrity 'Core Carbon Principles' (CCP) label.
The decision by the Integrity Council for the Voluntary Carbon Market (IC-VCM) is the third in an ongoing series of assessment decisions intended to restore confidence in the VCM, and provide a quality stamp for the offsets that are counted against corporate greenhouse gas (GHG) emissions targets.
"This is just the beginning. We will be announcing further categories eligible for CCP-labels that meet our criteria as we continue our careful and thorough evaluation of the submitted crediting methodologies and properly consider complex issues with our expert stakeholders," the Integrity Council's chair Annette Nazareth said in a statement.
The announcement means the CCP label can now be used on an estimated 27 million carbon credits issued by projects that reduce potent GHGs by capturing methane from landfill sites, and by destroying ozone-depleting foams and refrigerant gases from discarded equipment such as refrigerators and air conditioners.
The IC-VCM's approval of three methodologies for projects that destroy stockpiles of ozone depleting substances (ODS), applies to an estimated 12 million carbon credits that have been issued for projects that collect and destroy refrigerant gases.
These methodologies are:
• ACR's Destruction of ODS from International Sources version 1.0;
• Climate Action Reserve's (CAR's) Article 5 Ozone Depleting Substances Project Protocol versions 1-2; and
• CAR's U.S. Ozone Depleting Substances Project Protocol versions 1-2.
The supply-side initiative added that its approval of four methodologies for landfill gas (LFG) projects that meet certain conditions covers an estimated 15 million credits issued by projects.
These are:
• ACM0001 – Flaring or use of Landfill Gas versions 15-19, used by Verra and Gold Standard;
• AMS iii G – Landfill Methane Recovery version 10, used by Verra and Gold Standard;
• ACR's Landfill Gas Destruction and Beneficial Use Projects version 1-2; and
• CAR's US Landfill Protocol version 6.
A further 27 categories of carbon credits, which represent around 50% of the market, are still under assessment, the IC-VCM said.
Meanwhile, some other methodologies that apply to LFG, covering an estimated 76 million more issued credits, and ODS, covering an estimated 4 million more issued credits, are still being assessed, the initiative added.
Ever since the CCP initiative was outlined in March 2023, the IC-VCM has been under pressure to churn through the weighty process for assessing various standards and their methodologies, with the companies that develop projects and which have built up portfolios of credits eager for various decisions to get over the line.
Prices for a wide range of credits have generally been weaker compared with 2022 levels following a barrage of controversies that undermined buyer confidence.
A report published last week by Dutch consultancy Ecosystem Marketplace cited the impact of negative academic studies and media reports as one of the main reasons why the volume of demand in the VCM plunged 56% in 2023, with buyers also reticent because they have been waiting for the IC-VCM's assessment process to yield CCP-labelled credits.
The first batch of CCP-labelled credits has come the week after the US executive branch of government launched a concerted push to raise credit quality in the VCM, with political heavyweights, such as Treasury Secretary Janet Yellen, supporting 'nine principles' that draw heavily on IC-VCM assessment criteria.
In Thursday's announcement, the IC-VCM explained that it publishes the results of its assessment decisions as they are reached by the body's governing board.
"The sequence of announcements is due to a range of factors including the availability of information, staggered start times, expert availability and a variety of others, and does not represent any reflection on the relative integrity of different methodologies," it said.
Criteria
To earn CCP labels, credits have to meet several criteria, such as showing they are 'additional' – that they would not have occurred in the absence of the incentive created by carbon credit revenues – and demonstrating that the reductions or removals from the mitigation activity shall be permanent.
In addition, methodologies seeking the IC-VCM's quality stamp have to demonstrate they are being robustly quantified, "based on conservative approaches, completeness and sound scientific methods".
Meanwhile, the activities seeking the labels have to show the emissions reductions they achieve are not double counted.
Standards respond
CCP labels also require that carbon-crediting programmes meet various thresholds that can ensure the quality of projects, be transparent, and require robust independent third-party validation and verification.
In addition, crediting programmes are required to have clear guidance on sustainable development benefits and safeguards.
Verra, one of the standards that has seen its methodologies among the first to get CCP-labelled credits, was understandably welcoming of the IC-VCM announcement.
"The IC-VCM's work to establish a common understanding of credit integrity is crucial to realizing it on the ground – both in established crediting programs like ours and in those of newer market entrants," said Judith Simon, Verra's president and interim chief executive.
Verra's registry has been updated with an 'ICVCM CCP' filter on the 'VCU [Verified Carbon Unit]' tab, to show which projects now qualify for the CCP label.
Around 430 projects are listed as using the ACM0001 methodology and having issued at least some credits that have so far have been the basis of retirements by buyers.
ACR said in a press release it had also updated its registry with an IC-VCM CCP tag, while Gold Standard said it is currently in the process of finalising its labelling functionality for CCP credits on its registry and will begin publicly labelling eligible credits in the coming months.
"Labelling guidance will be published to support this transition," it added.
Xpansiv to tag credits
Environmental markets firm Xpansiv, which owns the main exchange for spot VCM credit trading, said in a note it is "immediately taking steps" to support the CCP tagging regime throughout its global VCM infrastructure.
One London-based broker told Quantum that following the announcement, interest has perked up the the over-the-counter market in trading a standardised CCP spec, as opposed to project-specific.
"Support has been wide for CCPs, including the Biden Administration most recently, yet of course there are limitations to the work the IC-VCM can do here. We are quietly optimistic about CCPs increasing liquidity, standardisation, and integrity," he said.
