Carbon Credits from Renewable Energy Projects Denied High-Integrity Label by Integrity Council

LONDON, August 10, 2024 – The Integrity Council for the Voluntary Carbon Market (ICVCM) has announced that carbon credits issued under existing renewable energy methodologies will not be eligible for the prestigious CCP® (Core Carbon Principles) label, signaling a significant shift in the voluntary carbon market. These methodologies currently account for nearly a third of the market, covering approximately 236 million unretired credits.

The Council’s Governing Board determined that eight methodologies used in renewable energy projects failed to meet the CCP Assessment Framework’s standards, particularly concerning additionality. The board found these methodologies insufficiently rigorous in proving that the projects would not have proceeded without the financial incentive provided by carbon credits.

This decision is a major one, as it reduces the number of approved unretired credits eligible for the CCP label to an estimated 27 million, representing just 3.6% of the voluntary carbon market.

The board also made decisions on several other methodologies:

Approved: A methodology for detecting and repairing methane leaks in the gas industry, covering an estimated 19 million unretired credits (2.6% of the market).

Approved: An additional version of an existing methodology for methane capture from landfill sites.

Rejected: A methodology for the magnesium industry aimed at reducing sulphur hexafluoride (SF6) emissions, which failed to meet additionality requirements.

Stricter Standards for High-Integrity Carbon Credits

Annette Nazareth, Chair of the Integrity Council, emphasized the importance of these decisions in building a high-integrity voluntary carbon market capable of scaling to fund meaningful climate solutions. “While companies must prioritize decarbonizing their own value chains, carbon credits can supplement their efforts, allowing them to take responsibility for emissions they cannot yet eliminate,” Nazareth said.

Amy Merrill, CEO of the Integrity Council, reinforced the importance of rigorous, science-based assessments in ensuring that CCP-labelled carbon credits genuinely reduce emissions and deliver positive social and environmental outcomes. She noted that these decisions would ultimately benefit all market participants by unlocking greater investment flows and driving innovation.

Challenges and Opportunities for Renewable Energy Projects

The Council acknowledged the critical role renewable energy must play in achieving global emission reduction goals by 2030, as highlighted by the Intergovernmental Panel on Climate Change (IPCC). However, they also recognized that renewable energy costs have not fallen evenly across all countries, with many regions still facing high upfront costs and other barriers to deploying renewable capacity.

The Integrity Council is open to reviewing more rigorous renewable energy methodologies as they are developed and has urged carbon-crediting programs to update their methodologies to better reflect the rapidly changing circumstances in renewable energy deployment.

Nazareth highlighted the ongoing need for carbon credits to finance renewable energy projects, particularly in least developed countries where securing investment to transition away from fossil fuels remains challenging. “More robust methodologies could unlock the financing needed for a new wave of renewable energy projects in these regions,” she said.

Pedro Martins Barata, Co-Chair of the Integrity Council’s Expert Panel, encouraged programs to develop more sophisticated approaches to assessing the additionality of renewable energy projects. He also called on international agencies to support this work by developing more reliable models and datasets.

Future Assessments and Continuous Improvement

The Integrity Council continues to assess carbon credit methodologies across various sectors, with decisions on key categories like Improved Forest Management, Afforestation, Reforestation, and REDD+ expected in the coming months. The Council plans to increase its ambition in future versions of the CCP Assessment Framework and will establish expert groups to study complex topics that are vital to the voluntary carbon market’s future.

A new expert group will focus on improving methodologies for assessing the additionality and emissions reduction claims of renewable energy projects, marking the next step in the Council’s commitment to high-integrity carbon credits.