Carbon markets non-profit the Integrity Council for the Voluntary Carbon Market (ICVCM) announced that it will not allow carbon credits issued under existing renewable energy methodologies – representing nearly a third of the voluntary carbon market – to be labelled with its Core Carbon Principles (CCP) designation.

According to the ICVCM, the decision was made to exclude the renewable energy-based credits from the CCP label based on the concept of “additionality,” meaning that the projects may have gone ahead even without the incentives provided from carbon credit revenues.

Annette Nazareth, Integrity Council Chair, said:

“We are taking the tough decisions necessary to build a high-integrity voluntary carbon market that can be scaled to meaningfully fund climate solutions and channel material amounts of finance to the Global South. While companies’ first priority must always be to decarbonise their own value chains, carbon credits can be an important supplement, allowing them to go further and take responsibility for emissions they cannot yet cut.”

Launched in 2021, and backed by 250 organizations, the ICVCM aims to set and maintain a global standard for high integrity in the voluntary carbon market, helping to mobilize financing into projects and programs that reduce greenhouse gas emissions in the atmosphere.

The ICVCM launched its Core Carbon Principles last year, aimed at establishing fundamental principles for high-quality carbon credits that create a verifiable impact and are based on the latest science and best practices, in order to set a global benchmark for high integrity in the voluntary carbon market.

The framework underlying the CCP includes a requirement for the emissions impact of carbon credits to consider additionality, stating:

“The greenhouse gas (GHG) emission reductions or removals from the mitigation activity shall be additional, i.e., they would not have occurred in the absence of the incentive created by carbon credit revenues.”

The decision covers eight methodologies, such as grid-connected electricity generation from renewable sources, and electricity and heat generation from biomass, among others. Overall, the methodologies cover approximately 236 million unretired credits, accounting for 32% of the voluntary carbon market, according to ICVCM.

While rejecting the use of the label for existing methodologies,  the ICVCM noted the need to scale up renewable energy capacity to meet global climate goals, and said that it is “ready to review more rigorous renewable energy methodologies once they are developed,” in particular for projects in areas where renewable energy is expensive or difficult to deploy.

Nazareth said:

“Renewable energy projects financed by carbon credits still have a role to play in the decarbonisation of energy grids because it remains challenging for many least developed countries to secure the investment they need to transition away from fossil fuels. However, we need to modernise the design of these carbon projects, which carbon-crediting programs can and should do. More robust methodologies would unlock finance for a new wave of renewable energy projects in places where they are most needed.”