A recent report by the Integrity Council for the Voluntary Carbon Market (ICVCM) revealed that around a third of current carbon credits have not met the criteria for a new standard that aims to become the global benchmark for the voluntary carbon market.
In the voluntary carbon market, companies can purchase credits from projects like wind farms or reforestation schemes worldwide to help meet their internal carbon reduction goals. However, all the credits that did not meet the benchmark were associated with renewable energy projects.
Last year, demand for offsets declined due to concerns about their effectiveness in reducing emissions. To address integrity concerns, the ICVCM introduced the Core Carbon Principle (CCP) standards and is evaluating the validity of projects.
According to the ICVCM, eight renewable power methodologies, representing about 236 million unretired carbon credits (32% of the market), failed to meet the additionality requirements of the standard. Additionality assesses whether a project required revenue from carbon credit sales to proceed. Projects that would have been implemented regardless undermine the argument that they have led to emissions reductions.
Amy Merrill, the CEO of the ICVCM, stated that renewable projects can still participate in the voluntary carbon market, and new methodologies can be submitted for review.
Renewable energy offset prices dropped by 69% last year to an average of $3.88 per metric ton, according to a report by the non-profit Ecosystems Marketplace in May. Analysts predict that failure to meet the CCP standard could further decrease renewable offset prices this year.
“We aim to establish an integrity threshold in the market. While not all projects may pass, we are focused on maintaining standards,” Merrill stated in an interview with Reuters.
—Susanna Twidale, Reuters