The voluntary carbon market has evolved tremendously since its early days and now provides a multitude of standards to certify the carbon credits and guarantee that the carbon credits are real, additional, verifiable, permanent and unique.
Forestry carbon credits are in high demand at the moment, especially from the U.S. The compliance market has been unable to produce enough forestry projects while the voluntary market has developed innovative tools and methodologies to fulfil the demand for these types of credits.
In 2009, the voluntary carbon market invested heavily in the release of new and improved forestry methodologies. Most of the voluntary carbon standards provided new tools for project developers to start the certification process in order to sell the carbon credits.
The review analyzed seven forestry carbon standards in the voluntary market against a set of criteria to compare against each other and is illustrated in the following table.
The standards analysed are Voluntary Carbon Standard (VCS), Climate, Community & Biodiversity Standard (CCBS), CarbonFix, Plan Vivo, Chicago Climate Exchange (CCX), California Climate Action Reserve (CCAR) and American Carbon Registry (ACR).
Some standards do offer excellent guarantees. Voluntary Carbon Standards scores the highest when all criteria are added. CarbonFix tops the results surpassing VCS when only the essential criteria are added.
However, buyers should take more attention when buying forestry carbon credits as the results show that not all standards provide enough guarantees that the carbon credits are real, verified, additional, permanent and unique.
The table illustrates the results of the review between standards against a set of criteria. Totals should only be interpreted as a brief comparison. Different organizations will have different interests with carbon credits; therefore they should be looking at the score of the relevant criteria and not the total score. Some criteria, highlighted with an asterix (*), are essential for any forestry carbon standard to guarantee that the carbon credits are real, verified, permanent, additional and unique.
Below is a highlight of three standards. More information is available in the full review.
Voluntary Carbon Standard scores 55 points overall and 29 on essential criteria, which shows that it is a high quality standard that guarantees the carbon credits are real, verified, permanent, additional and unique. VCS provides some of the most detailed methodologies to quantify a reduction in carbon emissions. VCS only quantifies carbon emissions, and in order to assess co-benefits, project developers are advised to obtain double certification with CCBS.
CarbonFix scores 48 in total and 30 on essential. CarbonFix managed to transform a highly complex process into a simplified, user friendly standard and still guarantees high quality carbon credits. It is a standard that adapts itself as much as possible to the needs of the project developer, brokers and customers providing videos to explain how to use the website, methodologies and tools.
For afforestation, reforestation and improved forest management projects, CarbonFix is highly recommended.
Chicago Climate Exchange trades almost half of all voluntary market transactions in the world making it the most important platform for offset projects. However it is offering one of the worst services as a standard in the market scoring only 37 points in total and the lowest score in essential: 15 points.
Additionally it lacks the means to ascertain if the project would or would not have been possible without carbon finance. CCX only guarantees for 15 years the carbon sequestered in the trees. CCX only accounts for leakage in the delimited area and does not assess external leakage. CCX does double-check with other registries, which reduces the risk of double counting. CCX does not provide project documentation via the website, interested parties need to contact the project developer.
For better background, below is the definition of the criteria:
Afforestation/ Reforestation – Appraise if the standard accepts afforestation/ reforestation projects where the answer “yes” scores 5 and “no” scores 1.
REDD – Ascertain if the standard accepts REDD projects. Because this is a yes/no answer, the score will be 1 for NO and 5 for YES.
Location – This criterion will analyse any limitations in the location of projects. The more locations accepted, in order for a project to begin, the higher the score (up to 5).
Additionality – This criterion will look at how projects must demonstrate additionality. The standard that provides the most detailed information on additionality will score the most.
Methodology – The methodology and baseline will be discussed. This criterion will analyse how standards use methodologies to approve the projects. The more detailed methodologies will receive the higher scores; the less detailed will receive the lower scores.
Permanence – Analysis of how permanence is dealt with in the different standards. The highest score will go to the standard that assures the most permanent carbon credits.
Leakage – Examination on how leakage is dealt with in the different standards. Standards that provide the best mechanisms to minimize leakage will receive the higher score.
Co-benefits – Assessment of co-benefits and how they are included in the standard. The more co-benefits a standard accounts for, the more points it will receive.
Registry – Inspection of the mechanisms to reduce the possibility of double accounting. The greater assurance a standard will give to double counting the more points it will receive.
Transparency – The more information on the project that is accessible to the public and the more public consultation provided; the more points to add.
ICROA – International Carbon Reduction Offset Alliance (ICROA) was formed to provide a code of best conduct in the carbon market. ICROA members can only trade credits from CDM, JI, GS and VCS. A standard that is not accepted by ICROA will produce credits that a large part of the market will not accept. This criterion will check if the standard is accepted or not by ICROA where 5 is “yes” and 1 is “no”.
US Market – As the US market will be the most important market for forestry projects. A standard that is not popular in the US will not endure. This criterion will analyse the likelihood for the standard to be widely accepted in the US market. The more likely, the higher the score will be.