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A Third of Carbon Credits Fail on New ‘High-Integrity’ Criteria. The image shows a solar power plant in Thailand.(Photo: B.Grimm Power)
Due to a lack of additionality, nearly one-third of carbon credits in the global voluntary carbon market do not meet high-quality standards, potentially causing further damage to the struggling market and highlighting that greenwashing issues may be more severe than previously thought.
ICVCM: 8 renewable energy methodologies fail additionality standards
On August 6, the International Carbon Voluntary Market Integrity Initiative (ICVCM) announced that eight methodologies for obtaining carbon credits do not meet additionality requirements and therefore will not receive the Core Carbon Principles (CCP) label for high-quality carbon credits. It is estimated that 236 million unretired carbon credits are affected, representing 32% of the market. The eight methodologies related to renewable energy are:
- ACM0002 – Grid-connected electricity generation from renewable sources — Version 21.0 and below
- ACM0006 – Electricity and heat generation from biomass — Version 16.0 and below
- ACM0018 – Electricity generation from biomass in power-only plants — Version 6.0 and below
- AM0036 – Use of biomass in heat generation equipment — Version 7.0 and below
- AM0072 – Fossil Fuel Displacement by Geothermal Resources for Space Heating — Version 3.0 and below
- AMS-I.D. – Grid connected renewable electricity generation — Version 18.0 and below
- AMS-I.L. – Electrification of rural communities using renewable energy — Version 4.0 and below
- AMS-I.A. – Electricity generation by the user — Version 19.0 and below
The additionality requirement, according to ICVCM, centers on the inadequacy of carbon credit methodologies to ensure that renewable energy projects would continue without carbon credit revenues. ICVCM defines additionality as the requirement that the reduction or removal of greenhouse gas emissions from an activity should be additional, meaning that the benefits of high-quality carbon credits should exceed the process of generating those credits.
ICVCM Chair Annette Nazareth stated, “Many low-income countries face challenges in financing their energy transition, and carbon credits still play a role in securing investment. However, we need to ensure that projects keep pace with current standards.”
Carbon credits remain an important source of financing
Non-profit organization Carbon Market Watch's policy director, Gilles Dufrasne, expressed support for ICVCM's move, stating, “ICVCM aims to remove low-quality carbon credits from the market.”
Despite facing credibility issues and a halved trading volume in 2023 with consecutive declines over two years, the methodologies for obtaining carbon credits through renewable energy are still popular among many companies. However, these methods have been used as excuses to prolong fossil fuel use, failing to improve renewable energy production and redirecting additional revenues to developers.
ICVCM expert panel co-chair Pedro Martins Barata commented, “Following this decision, we encourage the development of stricter methodologies to assess the additionality of carbon credit projects.”
Additionally, after releasing the first batch of seven methodologies eligible for the CCP label in June 2024, two more methodologies have been added. These include methods for detecting and repairing methane leaks in the natural gas industry and capturing methane from landfills. However, more popular methodologies, such as those for reducing deforestation and forest degradation (REDD+), jurisdictional REDD (JREDD), and clean cookstoves, are still under review and are expected to be finalized in the coming months.
