Voluntary CO2 group finalizes initial standards

The Integrity Council for the Voluntary Carbon Market finalized standards today aimed at making the market for carbon offsets more trustworthy, while leaving unanswered some persistent questions about environmental integrity.

After delays and criticism from some established players in the market, the independent governance body run by global carbon market experts and former regulators released its final "core carbon principles" and a framework for assessing the integrity of carbon-crediting programs that register and issue carbon credits.

The Integrity Council plans to release a framework for assessing carbon credit categories — like clean cookstove or jurisdictional forest projects — in the second quarter. That would allow programs to apply for the group's approval soon after, with qualifying qualifying programs and categories endorsed by the third quarter. The council does not plan to assess individual projects, although credits associated with approved project types and crediting programs can be labeled as meeting the organization's standards.

These standards "are an important step towards a transparent, regulated-like market where buyers can easily identify and price" high-integrity carbon credits, said Annette Nazareth, chair of the Integrity Council and a former member of the US Securities and Exchange Commission.

The core principles, largely unchanged from draft standards issued last July, include issuing credits only for emissions reductions that would not have occurred otherwise and that programs provide detailed and easily available information about project activities.

Under the framework released today, assessing crediting programs is to generally take no more than four months, or two months for programs that have already met standards for the UN's Carbon Offsetting and Reduction Scheme for International Aviation. The council said it could use public information to assess an organization that has not applied for the group's approval, if it has made misleading claims about abiding by Integrity Council principles.

Environmental groups, including the Environmental Defense Fund and Carbon Market Watch, separately described the Integrity Council's standards today as helpful but insufficient. While clearer guidance around project types will come later this year, the council sidestepped some thornier issues and said it would soon form working groups "to tackle complex areas" that this year's standards will not address.

For instance, despite including "no double counting" as a core carbon principle, the Integrity Council said it needs to further review how to handle credits issued under Article 6 of the Paris Agreement, since both host countries and companies might take credit for climate benefits. The council also wants to study whether a share of all voluntary credit sales should support climate adaptation in developing countries and whether to impose more stringent sustainable development requirements.

Aiming for standards that improve over time, the council said it plans to formally launch a revision process in 2025 and start implementing new rules by 2026.

The Integrity Council is one of a handful of independent groups trying to set standards for the voluntary carbon market, which has grown in recent years as more companies set sustainability goals. Proponents hope that clearer private sector standards will assuage environmentalists, who have long worried that carbon offset projects exaggerate their climate benefits, and will potentially guide regulators weighing whether to set their own rules.

Some market participants, including carbon registries, have at times been less enthusiastic about the council's efforts.

Swiss registry Gold Standard today said the council's guidance lacks specificity on sustainable development and does not "raise the bar for ambition or quality." US registry Verra, which had called draft standards overly prescriptive, told Argus it would review the final guidance and had not yet decided whether to eventually apply for the council's approval.

By Cole Martin