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Understanding Standards in the Voluntary Carbon Market

Understanding Standards in the Voluntary Carbon Market: Clarifying Misconceptions and Components

Recently, standards in the Voluntary Carbon Market (VCM) have been a hot topic in the media, often surrounded by accusations and misconceptions. This blog article aims to clear the confusion and provide a deeper understanding of the role that standards play in the VCM. We will explore the different responsibilities of standards and their connections to standard organizations, project developers, and third-party auditors.

Content:

What is a Carbon Standard?

In the VCM, the terms standards, programs, protocols, and registries are often used interchangeably, which can be confusing and lead to misconceptions.

A simple way to define a carbon standard is:

A carbon standard is a comprehensive framework of rules, procedures, and methodologies used to generate and issue Carbon Credits.

Carbon standards are administered by standard organizations, which are often non-governmental organizations (NGOs). Examples of standard organizations include VERRA, Gold Standard for the Global Goals, Silvaconsult and the Ecosystem Value Association e.V. (eva).

Components of a carbon standard framework include:

  • Eligibility for project types and technologies
  • Definition of technological requirements for climate protection projects
  • Methodologies for the quantification of Carbon Credits
  • Validation and verification process of projects by independent third parties
  • Registration and enforcement systems for Carbon Credits (including unique IDs, ownership, and retirement to ensure no double counting)
  • Requirements for co-benefits and sustainable development

What is the Role of Standard Organizations?

Acting as regulators in the VCM, standard organizations ensure the quality of carbon credits and lend credibility to the baseline-and-credit system on which the VCM depends. They typically oversee registries, manage and establish carbon standards, and develop methodologies.

Well-governed standard organizations have clear, regularly updated rules and requirements, mechanisms for stakeholder consultation and grievances, specific environmental and social safeguards, robust methodologies for determining baselines and project contributions, and requirements for independent review of projects by competent third-party auditors.

 

Example of the relationship between a standard organization and a carbon standard:
The standard organization VERRA administers standards like the Verified Carbon Standard (VCS), SD Vista, and the co-standard Climate, Community, and Biodiversity (CCB). The VCS governs the methodologies, which determine the rules on how activities must be developed and how Carbon Credits can be issued.

Tasks of a Standard Organization:

  • Contract or manage the registry for the standard
  • Define rules and requirements of standards
  • Develop methodologies
  • Set mechanisms for stakeholders (e.g., validation and verification body accreditation)

What is a Registry?

A registry for carbon credits is a public platform used for reporting and tracking climate protection project information. The information includes:

  • Project documents (e.g., PDD, monitoring reports, validation and verification reports)
  • Project status
  • Carbon credits generated, including ownership, sale, and retirement

What is a Methodology?

A methodology is a concept or protocol specific to the technology type and is the basis for accounting and enabling climate projects to credibly quantify impacts. A methodology entails important requirements and rules for the operation of a climate protection project, including:

  • Criteria for the Project Design Document (PDD)
  • Specifications for the monitoring plan, validation, and verification
  • Detailed procedures for the quantification of carbon credits
  • Assessment of additionality
  • Time and geographic constraints

How to Develop a Methodology?

In general, a methodology can be developed by various stakeholders, including standard organizations, project developers, or individuals. Most standard organizations allow the co-development of new methodologies or proposals to revise existing methodologies or modules. Here is an example of the development process:

  1. Methodology idea is submitted.
  2. Standard organization reviews the idea and determines the pathway forward.
  3. Methodology developer submits methodology concept.
  4. Standard organization reviews the methodology concept.
  5. Draft of the methodology (including modules) is submitted.
  6. Standard organization holds public consultation.
  7. Forward action requests are included in the methodology.
  8. Validation and Verification Body (VVB) assesses the revised methodology.
  9. Standard organization reviews the methodology and determines approval.

How are Project Developers Involved?

Project developers have some flexibility in choosing the methodology that best aligns with their climate protection projects. After selecting the best-suited methodology, they must demonstrate compliance with the rules and requirements of the standard and the methodology. This is done by submitting the necessary documentation at the beginning of a project’s life cycle and throughout the entire crediting period. The documentation includes the Project Design Document (PDD) and regular monitoring reports, which are submitted to the standard and to standard-accredited auditors, known as Validation and Verification Bodies (VVBs).

What is a Carbon Program?

To clarify the terminology: a carbon program is often just another term for a carbon standard. Examples of carbon programs include the Clean Development Mechanism (CDM), the Verified Carbon Standard (VCS), the SILVACONSULT ® Forest Carbon Standard and the Gold Standard. These programs or standards help bridge the gap between environmental goals and market-based mechanisms, fostering a sustainable approach to addressing climate change.

Carbon Standards and the Sustainable Development Goals:

Most carbon standards include additional requirements to safeguard biodiversity, avoid harm to local ecosystems, comply with all national and international laws and regulations, and include local stakeholders.

Some carbon standards also require certified contributions of climate protection projects to the United Nations Sustainable Development Goals (SDGs). For instance, the Gold Standard requires climate protection projects to have a positive impact on at least three SDGs.

The Evolution of Standard Organizations and Carbon Standards:

The evolution of standard organization and carbon standards goes back in to the 1990s. Here is an outtake of the initial launches.

1996: The American Carbon Registry was launched under the name Environmental Resources Trust

1997: First Plan Vivo credits were issued and sold

2001: The Climate Action reserve was launched (as the California Climate Action Registry)

2003: Launch of the Gold Standard by the WWF and other NGOs

2005: The Climate, Community and Biodiversity Standard (CCBS) has been developed

2007: Launch of the Verified Carbon Standard (VCS)

2011:  Launch of the Woodland Carbon Code

2019: Sustainable Development Verified Impact Standard launched (SD VISta)

Evolution of Carbon Standards over time

Conclusion

By maintaining robust frameworks and methodologies, standards organizations ensure the integrity and effectiveness of the Voluntary Carbon Market (VCM), thereby fostering meaningful climate action. Their essential role in the VCM underscores the importance of regularly updating standards to ensure continued and significant impact.

For OCELL's climate protection projects we are using the methodology Improved Forest Management (IFM).

Find out more about IFM here.