Carbon Monthly: Different approaches to enhance the VCM and their possible consequences
Welcome to the second edition of Carbon Monthly! This month we dive into the announcement made by the US Federal departments and offices concerning their support for the Voluntary Carbon Markets (VCM), news that was greeted with much enthusiasm from the public within the sector of carbon dioxide removals (CDR). However, with the developments made by the EU in the previous months a conundrum arises on whether the VCM should be guided by global or regional regulations.
Verra is also undertaking a review of its methodologies; we will particularly look at the case of VM0042, addressing improved agricultural land management. This methodology is being reviewed without having ever issued any carbon credits, so what kind of implications could this review have on the credibility of this methodology? The newsletter also looks at other news within the sector and shares the carbon credits verification status of the HeavyFinance Carbon Farming Project.
Various Approaches to Enhancing the VCM and Their Potential Consequences
Last month, US Federal departments and offices issued a statement emphasising the significant role the Voluntary Carbon Markets could play in reducing greenhouse gas emissions and achieving the global net-zero target by 2050 while limiting warming to 1.5°C, as per the Paris Agreement. The statement underscores the crucial importance of credit integrity, defined by principles such as credits being additional, unique, real, quantifiable, third-party validated and verified, permanent, and robust. This announcement adds a layer of credibility to the VCM, highlighting the necessity for continuous improvement of this mechanism for combating climate change and supporting sustainable development goals.
The statement from US Federal departments and offices contrasts with recent actions taken by the European Union (EU) regarding the VCM. In fact, the EU aims to address concerns about market integrity by issuing regional regulations, which may replace existing international guidelines and standards set by existing credit certification standards bodies, such as VCMI or IETA. In contrast, the US approach focuses on enhancing high-integrity VCMs by advising these standards bodies to govern their standards effectively, improve transparency, ensure robust Monitoring, Reporting, and Verification (MRV), and establish mechanisms to address double-counting risks, among other measures.
At HeavyFinance, we recently published an article highlighting the potential risk of geographic fragmentation due to the EU's regional regulations, which might undermine international cooperation. We believe that the US statement acknowledges the importance of such cooperation, and we encourage the European Union to complement their efforts by promoting a high-integrity market that also fosters international collaboration. This approach would ensure that both regional and global initiatives contribute effectively to the fight against climate change.
Company News: Field Visits and the Science Behind our Carbon Credits
Last month, the Carbon Farming Programme of Lithuania received field visits from third-party auditors. As part of the audit, random farms from our regenerative farming programme were selected for visits. These audits are at the heart of ensuring credibility, transparency, integrity, and trust within the Voluntary Carbon Market (VCM). Here we can see our Carbon Farming Project Lead, agronomist, and the SCS Global team of auditors.
Our carbon farming project adheres to the VERRA VM0042 AFOLU methodology, focusing on reducing fuel and fertiliser consumption and measuring organic soil carbon levels. Participants sign a 20-year contract, with the option to renew for up to 100 years. The VERRA verification process includes project registration, farmer enrolment, comprehensive data collection, public commenting, and final verification, ensuring the integrity of issued carbon credits.
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VERRA is undertaking a major revision of its VM0042 Methodology for Improved Agricultural Land Management, aiming to release version 3.0. The update aims at standardising procedures for land stratification, soil sampling, and analysis, introducing a flexible baseline approach for crop rotations, aligning woody biomass quantification with existing VCS methodology, and clarifying the purpose of repeated SOC stock measurements. These improvements will ensure more accurate and reliable carbon credit generation from agricultural land management projects.
Although the reviewal process initiated by VERRA cannot be faulted, the manner in which this will be approached is of great importance for this methodology. As it stands, no carbon credits have ever been generated from the VM0042 methodology. With projects already registered under this methodology, it is vital for the market sentiment for the generation of these carbon credits to not be delayed due to this review process. Further delay could result in loss of faith and financing for such projects, which is why we encourage VERRA to take this into consideration and not postpone the issuance of carbon credits from projects that meet the requirements under the current criteria of the methodology.
The revision process is supported by TerraCarbon and involves significant stakeholder engagement. VERRA will host a webinar on June 18 to present the proposed updates, followed by a pre-consultation survey to gather early feedback. The formal public consultation on the draft version 3.0 is scheduled for Q4 2024, with the final version expected in the first half of 2025. These updates build on the current minor revision (v2.1) and aim to facilitate the adoption and scaling of sustainable agricultural practices, ultimately contributing to more effective climate change mitigation.
Microsoft, Google, Meta, and Salesforce, four Fortune 500 tech companies, have established the Symbiosis Coalition. This initiative aims to acquire 20 million tons of nature-based carbon removals by 2030 through long-term agreements that will catalyse and scale the development of high-quality projects.
The Coalition will issue its first public Request For Proposals (RFP) this year to purchase carbon credits from projects focused on Afforestation, Reforestation, and Revegetation (ARR). A subsequent RFP will target mangrove restoration projects.
Additionally, the Coalition seeks to incorporate like-minded companies to support action-oriented RFPs, uphold unified quality criteria, and drive market development while working with the broader restoration and carbon market community.
We applaud the innovative approach of these founding companies to enhance and support nature-based carbon removal through action and long-term commitment. Their efforts address the critical need for capital among project developers, NGOs, and other local climate heroes. We encourage the Coalition to consider including regenerative agriculture projects in future RFPs.
Latest report from Allied Offsets looks at the progressive merge of the Voluntary Carbon Markets (VCM) with Compliance Carbon Markets. The data intelligence platform uses a VCM/Compliance Tracker to monitor projects and carbon credits that are eligible for inclusion under the compliance market. Currently, 450 million carbon credits in VCM are eligible for the compliance market.?
This overlap is emerging due to the continuously increasing standard of carbon credits being generated for the VCM, in terms of measurement, reporting, and verification. As well as the increasing demand for carbon credits within the compliance market. This trajectory can lead to a decrease in the price difference between the carbon credit prices in the compliance market and VCM as the VCM gains more credibility.?
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Founder/couch at Math studio Q. E. D.
8 个月Well, isn't it a time to say "the king is naked"? The sentence "The formal public consultation on the draft version 3.0 is scheduled for Q4 2024, with the final version expected in the first half of 2025.?" implies that most probably first credits might be issued (not earlier than) H2 2025 or H1 2026 which is two years after the forecast made by HF in 2023 when their projects were funded... Would someone say I'm wrong?