The voluntary carbon market is not regulated by governments. To give buyers confidence of its intended impact, projects can follow one of the voluntary carbon accounting standards (such as the Verified Carbon Standard and Gold Standard), which lay out the methods to measure and track how much greenhouse gas is removed or avoided from a project – and therefore how many carbon credits each project can produce.
As the voluntary carbon market has grown to new levels over the last few years, so too has the attention it has received from the media and wider society – often challenging the definition of what constitutes a ‘high-integrity’ carbon credit and whether the diversity of standards in the voluntary market is hampering its ability to deliver.
Given this, much of the activity to date in 2023 has therefore seen a continued focus on how to ensure growth is delivered with integrity, with a number of global, voluntary, multi-stakeholder initiatives having now reached significant milestones.
The first of these is the Integrity Council for Voluntary Carbon Markets (ICVCM) – an independent governance body4 – which issued its Core Carbon Principles (CCPs) framework in March 2023.5 The CCP framework outlines the key elements required for “high-integrity carbon credits that create real, verifiable climate impact, based on the latest science and best practice”.6
The ICVCM will provide governance and oversight of standards and their adherence to the CCPs. In doing so, it hopes to provide a single view on what constitutes the threshold for a high integrity carbon credit. This could reduce the complexity for carbon credit buyers and spur on the creation of standardised contracts of CCP-compliant credits, bringing further liquidity and price transparency to the market.
We also saw the publication of the Claims Code by the Voluntary Carbon Market Integrity Initiative (VCMI)7 – an international non-profit organisation that is focussed on the demand-side of the market. The Claims Code aims to clarify when – and how – companies can use carbon credits and the associated claims they can then make. It also includes pre-requisite criteria such as publicly committing to reaching net zero emissions no later than 2050 and demonstrating progress towards near-term greenhouse gas reduction targets.
Having a market-wide standard or benchmark on how companies can make voluntary use of carbon credits as part of net zero decarbonisation pathways could build more trust and confidence in the voluntary carbon market.
Related to this, the first half of 2023 saw the publication of two studies (one by Sylvera, a carbon credit rating and data company, and the other by Trove Research, a voluntary carbon market data and intelligence company) that indicated companies who use carbon credits, on average, decarbonise their own operations at a rate that is twice as fast as those who do not.8,9 That does not, however, mean that every company using carbon credits is also pursuing systematic decarbonisation of their operations. Continued vigilance is, therefore, required to ensure carbon credits are used as an addition to driving down a company’s own GHG emissions. Nonetheless, these studies provide much needed data and analysis to support the view that carbon credits can be part of a more ambitious corporate climate strategy.