- Around 32% of carbon credits linked to renewable energy projects did not meet the Core Carbon Principle (CCP) standards set by the ICVCM.
- The price of renewable energy offsets dropped 69% last year, and further declines may occur as more credits fail to meet CCP standards
- ICVCM CEO Amy Merrill emphasised that maintaining high standards and ensuring project additionality are crucial for market credibility despite the setbacks.
Around a third of existing carbon credits have failed to meet the criteria for a new standard that aims to serve as the global benchmark for the voluntary carbon market, its board said on August 6.
Companies can buy credits from projects such as wind farms or reforestation schemes worldwide in the voluntary market and use them to meet their internal carbon-cutting targets. All the credits that fell short of the benchmark in the latest assessment were linked to renewable energy. Demand for offsets stalled last year following widespread doubts that credits served to reduce emissions.
The Integrity Council for the Voluntary Carbon Market (ICVCM), an independent governance body, has sought to address integrity concerns by launching Core Carbon Principle (CCP) standards and assessing project validity.
The ICVCM said eight renewable power methodologies, which cover around 236 million unretired or unused carbon credits, making up 32% of the market, had failed to meet the requirements of its standard on additionality grounds. Additionality is a measure of whether the project needed revenue from carbon credit sales to proceed. If the project had gone ahead regardless, then the argument that it has led to emissions being avoided and should, therefore, be credited is undermined.
Amy Merrill, CEO of the ICVCM, said renewable projects could still participate in the voluntary carbon market and that new methodologies can be submitted for consideration.
“There are still places in the world where barriers to deployment mean projects could be additional,” she said in an interview.
A report by the non-profit Ecosystems Marketplace in May said the price of renewable energy offsets fell by 69% last year to an average of $3.88 per metric ton.
Analysts have said failure to meet the CCP standard could lead renewable offset prices to fall further this year. “We don’t speculate about the price. We are trying to put an integrity threshold into the market. We have consistently said we don’t expect everything to pass,” Merrill said.