The Voluntary Carbon Markets Integrity Initiative (VCMI), a global task force initiated to monitor the integrity of voluntary markets for the purchase and sale of carbon offset credits (VCMs), held a global launch event and issued its consultation report (VCMI Report) in late July. The VCMI Report seeks to provide further guidance for assessing carbon credits and the emissions reductions they represent.
A carbon offset is a transferrable credit or other instrument, certified by an independent verification organization, that represents a reduction in emissions of one metric ton of carbon dioxide or other greenhouse gas. The use of carbon offset credits as a means to reduce greenhouse gas emissions and meet voluntary environmental targets has expanded over the past decade, including as a means for firms to meet the goals stated in the Paris Agreement.1 However, some critics of carbon offset credits point out that there is an “additionality” problem, meaning that the underlying activity behind the credit may not always create any new reduction in emissions but may instead only continue a baseline level of existing activity. Another frequently stated critique is the difficulty and resulting uncertainty in properly accounting for the claimed emissions reduction.
The VCMI Report seeks to provide guidance to the voluntary carbon credit markets and address these criticisms, with the goal of further expanding VCMs as a means of “mitigating climate change, protecting nature and supporting sustainable livelihoods.”
Drawing on previous working groups related to carbon credits, the VCMI Report notes that the Taskforce on Scaling Voluntary Carbon Markets (TSVCM) identified concerns with carbon quality as a barrier to investors engaging in carbon markets. The VCMI “will continue to engage in, collaborate with and monitor the TSVCM’s activities on supply-side integrity.” (We have previously written about the TSVCM here.)
The VCMI Report proposed 10 principles to promote high integrity and high ambition voluntary corporate climate action. Three of these principles are specifically related to carbon offset credits:
- Scaled-up action: VCMI notes that businesses should make significant investments in climate change mitigation outside their value chain, i.e., through purchasing carbon credits.
- Transparent action: The VCMI Report encourages the private sector to be transparent about the “scope, boundary, use of carbon credits, and terminologies relating to their commitments and activities and should publicly report on progress and learnings.”
- Collective and predictable action: VCMI proposes that companies align their carbon credit activity in partnership with NGOs, local stakeholders, and communities to maximize the climate and sustainable benefits of carbon markets.
In a related statement, John Kerry, the US special presidential envoy for climate, praised the VCMI principles: “We welcome the VCMI’s focus on clear norms for companies to use high-quality carbon credits, including toward their net zero targets in a way that is credible, transparent, and aligned with the goal to limit global warming to 1.5 degrees.”
Following consideration of the comments received in response to the VCMI Report and a report thereof in November at COP26, the VCMI intends to issue additional guidelines to bring increased integrity to private sector action in late 2021.