- The IC-VCM’s newly launched Core Carbon Principles (CCPs) are an important and helpful initiative to improve integrity in the voluntary carbon market (VCM).
- Trove’s Carbon Credit Integrity Assessments are aligned to and built on top of the CCPs; all CCPs are addressed either directly or indirectly within our Integrity Assessments.
- Trove’s Integrity Assessments represent a complement to the CCPs through our more detailed and comprehensive assessment of Carbon Credit Integrity.
- Trove’s Carbon Credit Integrity Assessments can be used to provide an indication of whether a credit will be CCP-eligible in the future.
- Trove’s team is continually working on improving our assessment methodology, and, where relevant, we will update our methodology to reflect further releases of the CCPs over time.
There have been long-standing concerns around the integrity of carbon credits. These concerns were highlighted as one of the major barriers to scaling the voluntary carbon market in research undertaken in 2021 by the Taskforce for Scaling the Voluntary Carbon Market (TSVCM).
The Integrity Council on the Voluntary Carbon Market (IC-VCM), a multi-stakeholder and widely respected body, was set up as a successor to the TSVCM, and tasked with defining a market-wide benchmark for high-integrity carbon credits, known as the “Core Carbon Principles” (CCPs). A first draft of the CCPs were published for consultation in mid-2022, with a final version published in late March 2023. The IC-VCM hopes credits can start to be assigned a CCP label from late 2023.
The final CCPs consist of ten principles, covering a credit’s governance, emissions impact and broader sustainable development impact. The CCPs will be operationalised through an Assessment Framework, which is split into two parts. The first, the “Programme-Level Assessment Framework”, assesses the integrity of the carbon crediting programme (i.e., registry or standard) that a credit is issued under. The second, the “Category-Level Assessment Framework”, assess the methodology a credit follows. The latter of these assessment frameworks has not yet been released, with publication expected in mid-2023. Greater detail on the CCPs can be found on IC-VCM’s website here.
It is important to note that the CCPs are not designed to assess individual projects or credits. They instead operate at a level above, assessing the registry and methodology that a credit is issued under. In theory, if a registry and methodology are of sufficiently high integrity, they will not issue any low integrity credits – however, it remains to be seen if this works effectively in practice.
Trove’s Carbon Credit Integrity Assessments and the CCPs:
At Trove we have long highlighted the issue of low integrity credits, and are supportive of all efforts to enhance market integrity. With enhanced integrity, the voluntary carbon market is more likely to scale rapidly and thereby help the world transition successfully to net zero. We believe the IC-VCM and its CCPs have a very important role to play in improving carbon credit integrity, both actual and perceived.
It was, therefore, very important for us to align Trove’s Carbon Credit Integrity Assessment methodology with the IC-VCM’s CCPs. By setting a minimum bar for integrity in the market, the CCPs act as a complement to the more detailed and project-specific evaluations of Trove’s Carbon Credit Integrity Assessments.
Due to the close methodological alignment, Trove’s Carbon Credit Integrity Assessments can be used to give an early indication of CCP eligibility, while simultaneously providing a more nuanced and comprehensive assessment of an individual project’s integrity.
1. How aligned are the CCPs to Trove’s Carbon Credit Integrity Assessments?
An analysis of the CCPs was an important input into the methodology development of Trove’s Carbon Credit Integrity Assessments. This ensured strong alignment to the CCP’s assessment criteria.
All CCPs relating to carbon crediting programs and carbon credits are therefore addressed either directly or indirectly in our Integrity Assessments, as shown in Table 1.
Given that Trove’s Integrity Assessments are conducted at the project level, not all the CCPs are directly relevant to Carbon Credit Integrity. For example, principles related to a registry’s governance or transparency are largely out of individual project’s control. However, as we only consider projects that are registered by registries that meet our minimum standards, these registry assessment factors are accounted for indirectly.
Table 1: CCP Assessment Framework and Trove Integrity Assessment Framework Comparison
Table 1 only covers the CCPs at their highest level. However, the draft CCP’s sub-criteria are also largely accounted for in Trove’s Carbon Credit Integrity Assessments. For example, in our analysis of additionality, we consider Financial Attractiveness, Barriers to Implementation, Market Penetration and Legal Requirements. However, in certain cases, as the CCP’s are designed to be forward-looking, some of the draft assessment sub-criteria are not feasible for retrospective project assessments. For example, factors like Evidence showing Expectation of Carbon Credits are not accounted for in Trove’s Integrity Assessments as it is not possible for all retrospective project assessments.
2. How do Trove’s Carbon Credit Integrity Assessments differ from the CCPs?
Trove’s Carbon Credit Integrity Assessments serve a complementary but fundamentally different purpose to the CCPs. The CCPs are focused on assessments at the programme and methodology level to provide a binary approval of whether a minimum threshold has been achieved. In contrast, our Integrity Assessments are focused on the individual project level and provide a more nuanced insight on project integrity.
Trove’s Integrity Assessments are more comprehensive in both the criteria we assess and how we assess them. We also assess the broader reputational risks that credits may represent to buyers (such as legal and ethical risks around financial crime or fraud). Furthermore, our assessments recognise that not all integrity considerations are binary – and hence our results are presented on a 1 to 5 scale that provides a more granular way to understand and compare integrity, and enables subscribers to tailor their integrity judgements against their own risk tolerance. For example, our assessment of permanence includes geospatial analysis of the specific fire risks of the project area and compares this to their buffer pool contributions. The CCP’s permanence assessments are limited to assessing the presence and structure of a buffer pool within a specific methodology on a particular registry.
- How can Trove’s Carbon Credit Integrity Assessments be used to assess likely CCP eligibility?
Trove’s more detailed methodological and scoring approach means that direct like-for-like comparisons to the CCPs can be challenging. However, it is possible to draw clear inferences between Trove’s Integrity Assessment scores and CCP eligibility.
A closer look at Additionality reveals both the challenges and opportunities in doing this. The CCP’s draft Additionality assessment approach included the following sub-criteria: carbon credits as a % of revenue, IRR attractiveness, barrier analysis, common practice, legal requirements, and evidence showing consideration of carbon credits. All these sub-criteria (apart from historic evidence of consideration of carbon credits) are considered in Trove’s Integrity Assessments, though our scoring approach is more nuanced than the simple pass/fail hurdle included in the CCPs.
In general, the higher the Trove integrity score the greater the likelihood that a credit will be CCP eligible. A comparison of the scoring approaches can reveal a more specific indication of CCP eligibility through Trove’s scores. As shown in Table 2, we believe projects scoring more than a 3 on Additionality, 3.5 on Quantification and 2 on Permanence have a high likelihood to be CCP eligible. As of 1st April 2023, there were nearly 120 registered projects that fulfilled these requirements.
Table 2: Score Thresholds for Likely CCP Eligibility
|Trove Integrity Score that indicates high likelihood of CCP Eligibility
In this way, Trove’s Integrity Assessments can be used to indicate the likelihood that a credit would have been CCP eligible.
To learn more about Trove’s Carbon Credit Integrity Assessment tool and Trove’s analysis of the IC-VCM’s CCPs, please sign up to our 18 April 2023 webinar here.