Governance body rules out carbon credits that lock in fossil fuel emissions, technologies
Wong Pei Ting
THE voluntary carbon market’s key governance body has ruled that carbon credits from enhanced oil recovery and coal-fired electricity generation will not receive its stamp of approval.
Before the guidance from the Integrity Council for the Voluntary Carbon Market (ICVCM), the markets’ treatment of enhanced oil recovery projects – which involves injecting carbon dioxide underground in order to extract more oil – was unclear.
And while there are no credits issued from coal-fired electricity generation projects yet, market players had bandied about the idea of issuing credits from early coal phaseout projects.
ICVCM drew greater clarity to the acceptability of these projects on Thursday (Jul 27) as it published its long-awaited criteria for assessing carbon credit categories.
It stated that credible carbon credits must be compatible with the global goal of net zero, meaning mitigation activities – even those leading to short-term emission reductions – should be discouraged “if the result locks in an increase in long-term emissions”.
The framework essentially rules out projects that “lock in fossil fuel emissions or technologies”, said ICVCM.
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Such carbon projects include those:
- Directly leading to an increase in the extraction of fossil fuels, such as carbon capture and storage technologies used for enhanced oil recovery;
- Relating to unabated coal-fired electricity generation;
- Involving any other unabated fossil fuel-powered electricity generation other than new gas-fired generation as part of increased zero-emissions generation capacity in support of national low-carbon energy transition plans;
- Focusing on road transport that rely on the continued use of solely fossil-fuelled engines.
It further stated that its approach bears in mind recommendations of the United Nations climate science body Intergovernmental Panel on Climate Change, and the energy transition priorities of developing countries.
It pointed out that it still allows for new net-zero emissions from gas-fired generation in the context of transition planning and implementation. The use of carbon capture, utilisation and storage technology, as long as use of those technologies result in a net decrease of emissions, are still permitted.
However, approval for such projects will have to follow updated methodologies requiring compatibility with net-zero transition aligned with the host country’s objectives, it stated.
Another piece of the criteria sets the standard for carbon projects to have to monitor and report on emissions reductions and removals for at least 40 years where there is a risk they may be reversed – through wildfires, for instance.
This would impact the governance of projects that protect and restore forests, wetlands and marine ecosystems, and those that store carbon in farm soil.
The criteria address their credits’ permanence issue, which critics question the reversibility of emission reductions. A carbon credit after all represents the reduction or removal of emissions in order to compensate for emissions made elsewhere.
Third, projects must also be “additional”, meaning programmes must ensure that the emissions reductions or removals would not have happened without carbon credit incentives and that they were not enforced by law.
On this, ICVCM noted that carbon crediting programmes have already introduced restrictions on some activities, notably certain types of renewable energy and energy efficiency projects, to ensure they remain additional.
Lastly, projects must also measure their impact on emissions “conservatively” to minimise the risk of overestimation, noted ICVCM. This entails setting clear physical boundaries to the project, considering its impact on all carbon sources and sinks within the boundary, as well as knock-on effects on emissions outside its boundary, and reviewing this regularly.
With the framework drawing out “high integrity” standards, carbon crediting programmes may now submit evidence to ICVCM’s portal to become eligible for its Core Carbon Principles (CCP) stamp.
Once approved, programmes can use the CCP label on specific categories of credits that have been approved as meeting the CCPs.
ICVCM said it aims to announce the first CCP-eligible programmes and CCP-approved credit categories in time for such credits to be available to buyers by year-end.
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