Expansion of Carbon Credit Scoring Tool Identifies Opportunities to Improve Carbon Market Quality

The Carbon Credit Quality Initiative (CCQI) launched an expanded version of its interactive scoring tool to assess the quality of several newly added types of carbon credits. The new CCQI scores reveal that the majority of carbon credit types assessed are low in quality in one or more criteria, and underscore the need to improve the quality of carbon credits in the market.

The Carbon Credit Quality Initiative (CCQI), led by the Environmental Defense Fund, World Wildlife Fund (WWF-US), and Oeko-Institut, provides free resources, such as its robust assessment methodology and interactive scoring tool, to help carbon market stakeholders understand which carbon credits are more likely to deliver actual emission reductions as well as social and environmental benefits. CCQI’s scoring tool now covers more than a quarter of the voluntary carbon market, thanks to these new scores.

“CCQI sets a high bar for quality—and our scores show that all carbon credit types we’ve assessed have significant concerns in some quality aspects, whether it’s additionality, the robustness of emission reduction calculations, or other aspects of carbon credit quality,” said Pedro Martins Barata, Associate Vice President for Carbon Markets at Environmental Defense Fund. “This should serve as a wake-up call to carbon market stakeholders and buyers who want to see positive returns on their investments, as well as to carbon crediting programs to step up their game.”

The new set of scores released by CCQI assesses the quality of the following credit types:

  • Household biodigesters
  • Industrial biodigesters fed with livestock manure
  • Leak repair in natural gas transmission and distribution systems
  • Recovery of associated gas from oil fields
  • Solar photovoltaic power
  • Wind power (onshore)

CCQI assigns a score of one to five to each carbon credit type based on several quality objectives, such as robust determination of the emissions impact or environmental and social safeguards. This enables buyers to understand the nuances and trade-offs in the quality of carbon credit types, make an informed decision, and concentrate their due diligence where it is most likely to be required.

According to the expanded CCQI scorings, carbon credit types frequently perform well in some areas but poorly in others. Many carbon credit types have serious flaws in their methodology for quantifying emission reductions, such as a high risk of overestimation.

“Some methodologies have serious flaws in how they estimate emission reductions. This is bad news at a time when demand for carbon credits is on the rise,” said Lambert Schneider, Research Coordinator for International Climate Policy at Oeko-Institut. “The good news is that we also discovered good practice and novel approaches. If all carbon crediting programs adopted the most robust approaches from their peers, the quality of carbon credits could be significantly improved. For carbon credits to play a meaningful role in financing climate action, carbon crediting programs’ rules must be strengthened.”

The new scores also reveal that:

  • Most methodologies assessed either overestimate emissions reductions, or there is large uncertainty. This is an issue that affects project types regardless of their performance in other areas. For example, project types that deploy efficient cookstoves in rural areas generally had favorable additionality assessments, but risk significantly overestimating emissions reductions. Changes to these methodological approaches would significantly reduce this risk and uncertainty.
  • Renewable energy projects – specifically solar PV and onshore wind – score poorly on additionality, meaning that these project types are likely to be profitable without the added incentive of revenues from carbon credits. By contrast, in the case of industrial biodigesters or landfill gas utilization projects, carbon credit revenues often make a true difference, enabling these project types to become economically viable.
  • Across programs and project types, credits that are paired with a complementary standard – like Verra’s Climate, Community & Biodiversity (CCB) Standards and Sustainable Development Verified Impact Standard (SD VISta) – score higher on environmental and social safeguards.

Insights derived from these and future assessments under CCQI are aimed to help crediting programs improve on delivering the climate benefits they promise and to assist buyers with understanding and managing risks associated with their investments and claims.

CCQI will expand its scoring tool to assess more project types and programs, allowing users to discover how other project types and programs perform on quality. CCQI aims to cover over 80 percent of the current voluntary carbon market by the end of 2023.

For more information, visit www.carboncreditquality.org.

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