Policy

Consultation response: Integrity Council for the Voluntary Carbon Market

by
Polly Thompson
October 19, 2022
Consultation response: Integrity Council for the Voluntary Carbon Market
Consultation response: Integrity Council for the Voluntary Carbon Market

Sylvera are highly supportive of the aims of the Integrity Council and value the emphasis and interest being placed on credit quality and integrity of VCMs. In general we agree with the CCPs as key areas of focus to identify credit quality, and note that there is a huge amount of overlap between the CCPs and our own carbon credit ratings methodology. 

However, the implementation of the CCPs currently proposed in the AF and AP may present significant operational challenges. We are concerned that the current stringency of criteria will exclude all credits, potentially damaging confidence in VCMs and having the opposite effect to the intended scaling. 

As a carbon credit ratings agency, we understand the challenges of performing reliable and fair assessments of credit quality. We assess credit quality at a project-level. These assessments have demonstrated huge variability in quality between projects from the same standards and methodologies. In developing frameworks for different credit types we have also become aware that different project types require significantly different approaches in order to assess key aspects of quality (such as carbon quantification, additionality, and permanence). We are therefore concerned that the IC-VCM’s intent to create universal criteria to apply at a standard and credit type-level may not be sufficient to identify quality and exclude the opposite. Instead, we would support a more sector-specific approach, where the key considerations, and common pitfalls, for each sector are identified and the programme assessed on how it considers these factors for its relevant methodologies. 

Furthermore, we urge the IC-VCM to further consider work that has previously been done to improve standards and safeguards in the VCMs. For example, the Cancun safeguards are a result of a collaborative, international process with diverse key stakeholders such as Indigenous Peoples and host countries. The relevant aspects of the Cancun Safeguards could be a model for Environmental and Social Safeguards, and could be adapted for different sectors. 

Furthermore, the Integrity Council may wish to consider if any aspects of its current scope are already being performed well by other market participants and whether narrowing its scope to address more specific issues may help deal with some of the potential operational challenges the Council may face. 

Based on discussions we have participated in during the consultation process, it seems possible that the AF and AP may change significantly in response to feedback. If this is the case, we would support a second consultation period to give market participants the opportunity to feedback on this initiative which may have significant impacts on the wider markets.

Consultation Questions

  1. Are the most important principles, criteria and requirements included in the draft CCPs and the draft Assessment Framework? 

We agree that the CCPs address the most important aspects that should be considered when assessing credit quality at the levels proposed by the IC-VCM. However, we think some aspects of the proposals for operationalising the CCPs, as outlined in the AF, are incomplete or too onerous for the current state of the VCM. It is a significant challenge to set universal standards that neither are too lax and fail to reliably identify low integrity credits, nor too stringent, excluding much of the market and decreasing confidence. We suggest an adapted approach that focuses on assessments at the standard level, but considers how that standard approaches credits from different sectors using differentiated criteria, to reflect the different key considerations for different types of credit. For example, standards with REDD+ methodologies should be assessed on their approach to baselines and leakage, and standards with methodologies for technological solutions such as DAC and CCS should be assessed on how they consider life cycle assessments (which are less relevant to e.g. NbS). 

  1. Are the requirements appropriately balanced between the initial and full stringency thresholds to address outstanding integrity concerns affecting the trust in the voluntary carbon market?

No. We suggest a more staggered approach than just a two stage implementation, with initial standards aligned with current understanding of best practice and a gradual ramping over time. Currently, the fact that so few or even no credits in the market risks damaging confidence in the market, in opposition to the initial aims of the IC-VCM. 

  1. Should the Integrity Council draw on assessments by the Technical Advisory Body under CORSIA or any other comparable body? If so, for which criteria and requirements would previous assessments of carbon crediting programs and carbon credits be most relevant?

It is important that the IC-VCM considers the work of other players in the VCM ecosystem. However, rather than adopting wholesale the approaches from other bodies, it may be more effective for the IC-VCM to develop a more specific niche for itself in order to effectively address a specific problem limiting integrity in the market. There is a danger the Integrity Council  is currently trying to play too many roles, some of which are already being done well by, for example, ICROA, CORSIA, CCQI, standards and registries, and carbon credit ratings agencies. This would also help address the capacity constraints of the Integrity Council. 

  1. The Expert Panel of the Integrity Council considered alternative approaches to assess alignment with Environmental and Social Safeguards requirements for carbon crediting programs during the initial phase. The options include: 

Option 1): a risk-based approach to mitigation activity types building on IFC risk categorisation;

Option 2): evidence of alignment with national regulatory framework; 

Or Option 3): a joint approach using option 1 and 2. 

The Integrity Council seeks views from the public on this question to inform whether and how IFC risk categorization can help ensure a consistent approach by carbon crediting programs to address safeguards in the draft Assessment Framework in different jurisdictions and activity types. Your views will inform the design of the assessment process with the view to attest that mitigation activity proponents effectively implemented safeguards while providing the opportunity for current market infrastructure to update assurance systems’ capacities and processes. 

  1. Do you anticipate that there will be challenges in meeting the Sustainable Development requirements in the draft Assessment Framework under the initial threshold? If you do, could you provide information on those challenges. 
  2. Should mitigation activities created and managed by IPLCs be subject to differentiated safeguards requirements? If so, how would you recommend that the application of free, prior and informed consent (FPIC) is addressed in carbon crediting program guidance and mechanisms to ensure that relationships with IPLCs are based on informed consultation?

Careful consideration should be given to co-benefits. Currently the criteria for principle 9, Sustainable development impacts and safeguards, are too stringent and exclusionary. We agree that at a bare minimum projects should do no harm, but beyond this the IC-VCM should look at current best practice to guide realistic criteria to apply this principle now, with the potential to ramp up in future. The IC-VCM should consider carefully what should be considered essential for high integrity projects, versus what is considered desirable to many project buyers and could differentiate the highest quality credits. 

Additionality for project-level mitigation activities: 

  1. Are there alternative approaches to additionality that should be considered and that are not covered under the current draft Assessment Framework? 

The assessment of additionality is too narrowly focussed on financial additionality and does not sufficiently recognise the variability in key additionality considerations between different project types beyond the separation of jurisdictional REDD+ and project-level activities. Universal additionality criteria are hugely problematic and we would support sector-specific guidance. 

Additionality for jurisdictional REDD+ activities: 

  1. How should crediting under project-based REDD+ mitigation activities be considered within the scope of jurisdictional REDD+ programs? 

Jurisdictional REDD+ programs in jurisdictions which also issue project-based REDD+ credits should consider these credits in baseline assessments, reference emission levels and additionality assessments, even if these projects are not explicitly nested. 

  1. Should there be a requirement to nest baselines of REDD+ projects on avoided deforestation? 

In the long term the market should move in this direction, once jurisdictional approaches and data are reliable enough for this to be realistic. In the short term, a less formal approach than true nesting should be developed to ensure over-issuance does not occur.

  1. The Integrity Council is open to views on the appropriate balance of requirements between the criteria applied to assess permanence, as well as alternative approaches. Are there alternative approaches to permanence that should be considered and that are not covered under the draft Assessment Framework?

Again, a sector-specific approach would be useful here. For NbS, buffer pools can be one mechanism to address reversal risk, but these should be established and enforced robustly, which IC-VCM could validate.

  1. Should the Integrity Council consider the establishment of an attribute to differentiate credits according to the type of underlying mitigation activity? If so, at what level should types be differentiated (e.g., reductions vs removals, tech-based vs nature-based)?

Reduction vs removals labels will be useful due to differentiated usage in current credit use best practice from e.g. SBTi (BVCM vs neutralisation), and the fact that this is not always obvious based solely on credit type, especially to non-experts (e.g. IFM projects which can be avoidance, removals, or both). However, labels such as tech vs nature seem less useful to buyers who should be able to identify this quite easily. 

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