ICVCM: Due diligence made simple

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What is the ICVCM?

One of the significant challenges in the Voluntary Carbon Market (VCM) is the need for clear guidance on assessing the quality of carbon credits. For this reason, companies and financial institutions have been reluctant to support emerging carbon credit projects due to the lack of credible information and structured assessment frameworks. Indeed, the lack of clear guidance on credit quality has increased potential risks of negative outcomes within the VCM.

The two major issues that have held institutions back from investing in carbon credits can be summed up as:

  • What defines a high-quality carbon credit?
  • How to assess high-quality carbon credits?

To address these urgent questions, the Integrity Council for the Voluntary Carbon Market (Integrity Council) was founded as an independent governing body that oversees the voluntary carbon market. Its primary objective is to establish and enforce universally recognised standards that define high-quality carbon credits globally.

On March 30, 2024, the ICVCM published two major tools to establish quality within the VCM space: the Core Carbon Principles (CCPs) and the Program-level Assessment Framework and Procedures.

The CCPs, comprising 10 requirements based on the latest science and best practices, list the fundamental criteria that define high-quality carbon credits. They develop a sort of ‘checklist’ of what defines a high-quality carbon credit, allowing companies and project developers to achieve verifiable climate impact.

The Assessment Framework complements the CCPs by providing clear guidance to support carbon-crediting programs in evaluating high-quality carbon credits and ensuring that the standards set forth by the CCPs are met.

The ICVCM aims to promote integrity and high quality within the VCM by providing clear guidance on what defines a high-quality credit and how to evaluate it.

For whom is the ICVCM intended?

The CCP:

  • For suppliers to develop projects likely to produce high-quality credits that achieve the expected climate impact and comply with certification standards (such as Verra, The Gold Standard, etc.).
  • For organisations, The CCP provides a powerful tool for choosing only high-quality carbon credits that align with internal net zero strategies and reporting requirements and reduce financial and environmental risks.

The Assessment Framework:

  • For Carbon Crediting Programs: to quickly assess if carbon credit programs and categories can effectively achieve the desired environmental impact by complying with the CCPs.

What defines a high quality carbon credit?

The Core Carbon Principles (CCPs) constitute a set of 10 specific principles that serve as fundamental criteria for defining high-quality carbon credits. They have been meticulously developed by drawing insights from reputable resources such as the IPCC, UNFCCC, CORSIA, etc., and through multi-stakeholder consultations involving carbon-crediting programs, NGOs, Indigenous Peoples, policymakers, academics, buyers, and investors.

The principles are grouped into three key domains: Governance, Emissions Impact, and Sustainable Development.

The Emission Impact category primarily focuses on establishing industry-standard verification and transparency practices for carbon-crediting programs. It includes basic credit requirements such as additionality and permanence. The Governance domain encompasses aspects related to credit management, from tracking to transparency and third-party verifications. The Sustainable Development category of CCPs aims to ensure that carbon-crediting programs adhere to guidance, tools, and compliance procedures that foster positive sustainable development outcomes. Additionally, they aim to avoid practices that hinder progress towards achieving net-zero GHG emissions by 2050.

The core carbon principles explained

How to assess high quality carbon credits?

The Assessment Framework provides a detailed structure for carbon-crediting programs on how to assess whether a carbon credit is to be defined as high quality by complying with the Core Carbon Principles (CCPs). It delineates the specific parameters that the Integrity Council for the Voluntary Carbon Market (ICVCM) will employ to assess the compliance of carbon-crediting programs and various types of carbon credits, such as forestry projects, with the requirements outlined in the CCPs.

The assessment is structured into two different levels:

Program Level

  • Through a specialised ‘Assessment Platform,’ the ICVCM allows crediting programs (such as Verra, the Gold Standard, etc.) to comply with CCP eligibility.
  • Example: A reforestation project following Verra's VM0047 methodology complies with the CCPs and is likely to deliver high-quality credits.

Carbon Credit Category Level

  • Currently, the Category Working Group is still defining which categories should receive priority approval, identifying those requiring further evaluation, and determining which carbon credits do not meet the criteria for the CCP label.
  • As outlined in the framework, carbon credits are required to support carbon projects that are aligned with principles of net-zero emissions, additionality, permanence, and robust quantification.
  • Example: Biochar projects are likely to gain priority approval as they are more likely to comply with the CCP requirements than innovative technologies that might currently fail to address the CCPs.
How the integrity council for the voluntary carbon market assesses carbon credit projects

What does all of this mean?

With the release of the Core Carbon Principles and the Assessment Framework, the ICVCM has reached a milestone within the VCM, enabling project developers, organisations, and carbon crediting programs to recognise a set of fundamental requirements for high-quality carbon credits.

The CCPs, by establishing a list of 10 fundamental features of carbon credits, allow interested parties to conduct preliminary due diligence, setting a benchmark for the existing supply.

Thanks to the ICVCM, interested parties can conduct preliminary due diligence and assess high-quality carbon credits that comply with science-based targets and align with Net Zero strategies.

Through the implementation and continuous improvement of the Assessment Framework, the ICVCM will enable the current supply to meet high-quality standards and strive for increased transparency and credibility within the VCM, ultimately reducing risks related to low-quality credits.

Currently, CCP approvals are being released on a rolling basis, following the CCP-Eligible carbon-crediting programs and CCP-Approved carbon credit categories. To stay up-to-date with future developments and follow the next steps, visit ICVCM.

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