Feb 21, 2024: Press release

Quality Scores for Forestry Carbon Credit Types Reveal a Complex Landscape of Integrity Risks, Uncertainties, and Transparency Issues

The Carbon Credit Quality Initiative (CCQI) released new scores for two types of forestry carbon credits: improved forest management (IFM) and commercial afforestation. Together, these project types comprise approximately ten percent of recent credit issuances in the voluntary carbon market.

The scores released today highlight that these credit types, which are primarily sourced from forestry projects in the United States, face significant risks of overstating their emissions impacts and often have limited benefits towards sustainable development. These risks are particularly high for improved forest management (IFM) projects where uncertainty in baselines and underestimation of carbon leakage were identified as key integrity concerns. CCQI also found significant threats to permanence, as some carbon crediting programs do not sufficiently address the risk that emissions benefits could be reversed due to wildfires, harvesting, or other risks. These findings are critical for stakeholders in the voluntary and compliance carbon markets, especially in contexts like California's cap-and-trade program, where over three-quarters of the credits in the program have been awarded to IFM projects.

"Our findings revealed that these forestry credit types are unlikely to deliver the climate and social benefits that we expect of high-integrity carbon credits," said Lambert Schneider, Research Coordinator for International Climate Policy at Oeko-Institut. "It revealed a complex landscape of risks, uncertainties and transparency. Many projects could simply be business-as-usual and the methodologies for quantifying emissions benefits have a whole range of issues. We also found a severe lack of transparency among these types of carbon credits, which is a major problem for ensuring credibility."

"The findings underscore the urgent need to revisit and refine our approaches to forestry crediting. It's essential that carbon credit programs bolster their methodologies for quantifying emissions reductions and removals, enhance their strategies to mitigate non-permanence risks, and explore avenues for genuinely sustainable project impacts. This reassessment is not just about ensuring the integrity of carbon credits; it's about elevating their role in our collective climate action efforts," stated Pedro Martins Barata, AVP, Carbon Markets and Private Sector Decarbonization at Environmental Defense Fund.

Improved forest management (IFM) encompasses a range of activities aimed at enhancing or maintaining carbon storage in forests. This includes a broad range of measures, such as avoiding degradation by avoiding the start of or an increase in harvesting, extending rotation periods for longer growth cycles before harvesting, increasing productivity through advanced forest management techniques like thinning and planting new trees, shifting from timber production to conservation-focused management, and employing reduced impact logging practices while harvesting.

Commercial Afforestation, a project type offered by all major carbon crediting programs, typically under the umbrella of afforestation and reforestation activities, involves creating new forests for timber production. It represents a smaller market share compared to IFM projects.

Key Findings Include

• Improved forest management (IFM): Risks of non-additionality are less uniform than for other project types. Most activities are likely to be financially attractive to some degree – even without carbon credits. Others, e.g., those that switch from timber production to conservation or extend the rotation age by many years, might depend on carbon credits to sustain these changes. Leakage is a key concern for IFM projects that produce timber in the baseline and quantification methodologies do not robustly account for leakage risks. Applying current methodologies likely leads to an overestimation of emissions reductions and removals, with methodologies allowing significant flexibility, leading to unrealistic baseline and carbon stock estimates.
• Commercial Afforestation: Faces more uniform additionality risks as all projects accrue income from timber harvests. Applying methodologies likely also leads to overestimation of emission reductions and removals but to a lesser degree than with IFM.
• Sustainable Development and Non-permanence Risks: Both project types offer limited benefits towards Sustainable Development Goals as activities often include a continuation or intensification of timber harvesting. Exceptions are IFM activities that pursue conservation goals, which support improvements to forest ecosystems. Carbon crediting program rules on non-permanence vary widely, with some requiring commitments for up to 100 years, while others have much shorter periods.

The challenges identified call for a reassessment of current practices in forestry crediting. Carbon credit programs should address risks to credit quality, including strengthening their methodologies for quantifying emissions reductions and removals, improving their approaches to address non-permanence risks, and identifying opportunities for projects to support sustainable development efforts.

With these new scores, CCQI's scoring tool now covers nearly 60% of the voluntary carbon market. CCQI aims to continue scoring more carbon credit types, including project-based avoided deforestation in the next months.

New factsheets on forestry carbon credits

Building on the release of our new scores today, CCQI is proud to introduce a set of detailed factsheets on forestry carbon credits. Prepared for the Foundation Development and Climate Alliance, these factsheets distill CCQI's rigorous research into an accessible summary to enhance understanding and facilitate informed decisions within the voluntary carbon market. Focusing on the two types of forestry carbon credits we've scored—IFM and Commercial Afforestation—these documents complement our interactive scoring tool by offering an alternative means to compare different quality criteria.

"These forestry factsheets equip stakeholders with essential insights into IFM and commercial afforestation project types, enabling more informed and strategic decisions," says Peter Renner, Chairman of the Board of Directors of the Foundation Development and Climate Alliance. Dr. Olivia Henke, Executive Board of the Foundation Development and Climate Alliance, added, "Bridging complex research with practical application, our foundation's dedication to science-based communication is embodied in the production of CCQI's forestry factsheets. They stand as a testament to our commitment to enhancing market transparency and integrity, arming the community with the knowledge to precisely assess types of forestry carbon credits."

Founded by Environmental Defense Fund, World Wildlife Fund (WWF-US) and Oeko-Institut, the Carbon Credit Quality Initiative (CCQI) provides transparent information on the quality of carbon credits. CCQI's free Scoring Tool and assessments enable users to better understand what types of carbon credits are more likely to deliver actual emission reductions as well as social and environmental benefits. For more information, visit CCQI's website and follow us on LinkedIn @Carbon Credit Quality Initiative.

Sept 14, 2023: News

New CCQI scores for Hydropower

New CCQI scores show that hydropower carbon market projects face several environmental integrity issues.

The Carbon Credit Quality Initiative (CCQI) released new scores for the project type hydropower today, covering the subtypes hydropower dam and hydropower run-of-river. Hydropower projects make up about 11% of recent credit issuances. The assessments reveal substantial risks regarding additionality, estimation of emission reductions, and impacts on sustainable development.

Key insights from CCQI's analysis are:

• Large-scale hydropower projects are unlikely to be additional. Usually, countries incorporate large-scale hydropower plants in their long-term planning processes, which take factors like energy security concerns or irrigation policy into account. It is unlikely that carbon credit revenues substantially influence these planning processes.

• Greenhouse gas emission reductions from hydropower power plants are likely to be overestimated. This is due to several methodological issues in the determination of the grid emission factor and the estimation of emissions from hydro reservoirs.

• Hydropower dams can have negative impacts on several Sustainable Development Goals. They can degrade natural habitats and disrupt ecosystems (SDG 15), lead to displacement of surrounding communities (SDG 1) and reduce food security (SDG 2).

The CCQI analyses can help crediting programs improve on delivering the climate and sustainable development benefits and assist carbon credit buyers with understanding and managing risks associated with their investments. The CCQI continuously expands its scorings to assess more project types and carbon crediting programs.

Sept 12, 2023: Press release

Factsheets released on different project types

To contribute to achieving the Paris Climate Agreement and the Sustainable Development Goals, carbon credits in the voluntary carbon market need to be of high quality. Transparent information on the quality of carbon credits from different types of projects can help align the market toward higher quality and toward a better implementation of the 2030 Agenda, leading to more financing for climate action.

Today the Carbon Credit Quality Initiative (CCQI) published factsheets on six project types. These factsheets, prepared for the Foundation Development and Climate Alliance, synthesize CCQI's research results for different project types in a comprehensible, easily accessible way for the interested public. Until now, users have only been able to compare different quality criteria through our interactive scoring tool. The factsheets are an alternative resource that concisely summarize information on different carbon credit types.

"The factsheets are a tool for stakeholders to learn about project types and make qualified decisions," says Peter Renner, Chairman of the Board of Directors of the Foundation Development and Climate Alliance. "The project is a science-based project on communication, which is of particular importance to us as a foundation and with which we provide an overview of the quality characteristics and risks of common types of projects", says Dr Olivia Henke, Executive Board of the Foundation Development and Climate Alliance.

CCQI was founded and is managed by Environmental Defense Fund (EDF), World Wildlife Fund (WWF-US) and Oeko-Institut, a leading European research and consultancy institution working for a sustainable future. Scores published by CCQI are derived from applying the CCQI assessment methodology. The assessment is led by Oeko-Institut, with support from experienced carbon market experts from Carbon Limits, Greenhouse Gas Management Institute (GHGMI), INFRAS and Stockholm Environment Institute (SEI).

"The aim of CCQI is to provide market participants and the interested public with a way to better understand quality differences in carbon credits," says Dr. Lambert Schneider, Research Coordinator for International Climate Policy at Oeko-Institut. With this aim in mind, the participating institutions developed a methodology to assess various quality features, using a catalog of criteria.

The factsheets present CCQI's results for different project types along the relevant quality objectives, which include additionality, robust quantification of emission reductions, ensuring permanence, compatibility of projects with achieving net zero emissions, contribution to sustainable development, and, where relevant, double issuance of carbon credits due to indirect overlap between projects.

The first six factsheets can be found here.

May 12, 2023: News

CCQI comments on Verra cookstove methodology public consultation

As part of our mission to enhance the quality of carbon credits, the Carbon Credit Quality Initiative (CCQI) aims to leverage our assessments to inform and improve carbon crediting program rules and methodologies. To this end, CCQI submitted comments to Verra's public consultation on the methodology VMR0006 for installation of high efficiency firewood cookstoves. Our full comments can be found here. Information about the consultation and the proposed revisions to the methodology can be found on Verra's website here.

April 4, 2023: News

CCQI talks carbon credit quality at North American Carbon World

The Carbon Credit Quality Initiative (CCQI) joined the captivating debates at North American Carbon World (NACW) this year, engaging in key discussions around carbon credit quality and the future of the voluntary carbon market. John Holler, Senior Program Officer, Climate Cooperation & Sustainable Fuels, World Wildlife Fund – US, and Pedro Martins Barata, Associate Vice President for Carbon Markets and Private Sector Decarbonization at Environmental Defense Fund, both represented CCQI and spoke on engaging panels:

• John joined a conversation on determining quality standards for the voluntary carbon market. With the voluntary market in the midst of an unprecedented expansion worldwide, efforts have increased to ensure that the voluntary carbon market is equipped to play a critical role in global mitigation efforts. This has led to a variety of efforts to support this market, including CCQI, the Integrity Council for the Voluntary Carbon Market (IC-VCM), and the Voluntary Carbon Markets Integrity Initiative (VCMI), among others. Alongside John, panelists from IETA, BP, and Trove Research discussed the role each of these efforts are playing, the challenges they are facing to support credible market efforts going forward, and expectations from various market players.
• Joining a panel on "Sustainable Development Goals: Impact on Credit Quality and Pricing", Pedro engaged with fellow speakers from Climate Action Reserve and Anew to discuss how carbon credit buyers are increasingly demanding more information on how carbon credit projects go beyond emissions impacts to also address other sustainable development goals (SDGs). SDGs cover a variety of critical social areas, including protection of Indigenous rights, equal economic opportunity, and local environmental impacts, among many others. The panel explored recent market developments, including how important buyers view these SDG attributes, the impact of credit pricing, and global efforts such as IC-VCM to define appropriate criteria for assuring that SDGs are considered.
• Pedro also moderated a plenary discussion about "Voluntary Versus Compliance Markets: Working Together or Competing with Each Other?". Pedro guided the panelists, including speakers from Bezos Earth Fund, Gold Standard, Stockholm Environment Institute, and High Tide Foundation on a discussion about the emerging convergence of compliance and voluntary markets. Panelists shared that it would take a combination of compliance and voluntary actions to successfully address the climate crisis, and explored how and whether they could complement each other.

With guidance on quality and integrity being a key focus of this year's NACW, the engaging discussions and events called attention to the future of the carbon market. As CCQI prepares to release new quality scores this year, market stakeholders will soon have more clarity and resources than ever to strive for high quality and high integrity.

January 31, 2023: Press Release

Expansion of Carbon Credit Scoring Tool Reveals Opportunities to Improve Quality of Carbon Market

Quality assessment of wind, solar, methane and more carbon credit types highlights gaps in quality

31 January, 2023 — The Carbon Credit Quality Initiative (CCQI) launched an expanded version of its interactive scoring tool to assess the quality of several newly added types of carbon credits. The new CCQI scores reveal that the majority of carbon credit types assessed are low in quality in one or more criteria, and underscore the need to improve the quality of carbon credits in the market.

Led by Environmental Defense Fund, World Wildlife Fund (WWF-US), and Oeko-Institut, CCQI offers free resources, including its robust assessment methodology and interactive scoring tool, to support carbon market stakeholders in understanding which carbon credits are more likely to deliver actual emission reductions as well as social and environmental benefits. With these new scores, CCQI's scoring tool now covers over a quarter of the voluntary carbon market.

“CCQI sets a high bar for quality—and our scores show that all carbon credit types that we've assessed have notable concerns in some quality aspects, whether that pertains to additionality, the robustness of emission reduction calculations, or other aspects of carbon credit quality,” said Pedro Martins Barata, Associate Vice President for Carbon Markets at Environmental Defense Fund. “This should be a signal to carbon market stakeholders and buyers who want to see their investments return positive impacts to do their due diligence, and to carbon crediting programs to up their game.”

The new set of scores released by CCQI assesses the quality of the following credit types:

• Household biodigesters

• Industrial biodigesters fed with livestock manure

• Leak repair in natural gas transmission and distribution systems

• Recovery of associated gas from oil fields

• Solar photovoltaic power

• Wind power (onshore)

CCQI scores a given carbon credit type on an interval scale of one through five against several quality objectives, such as robust determination of the emissions impact or environmental and social safeguards. This allows buyers to understand the nuances and trade-offs in the quality of carbon credit types, make an informed decision, and focus their due diligence where it's likely to be needed most.

The expanded CCQI scorings show that carbon credit types often perform well in some areas, but poorly in others. Many carbon credit types face serious shortcomings in their methodology of quantifying emission reductions, for example, with a high risk of overestimating reductions.

“There are serious problems with how some methodologies estimate emissions reductions. This is not good news at a time when demand for carbon credits is increasing,” said Lambert Schneider, Research Coordinator for International Climate Policy at Oeko-Institut. "The good news is that we also found good practice and innovative approaches. The quality of carbon credits could be improved quite a bit if all carbon crediting programs would adopt the most robust approaches from their peers. For carbon credits to play a meaningful role in financing climate action, the rules of carbon crediting programs need to become more robust."

The new scores also reveal that:

• Most methodologies assessed either overestimate emissions reductions, or there is large uncertainty. This is an issue that affects project types regardless of their performance in other areas. For example, project types that deploy efficient cookstoves in rural areas generally had favorable additionality assessments, but risk significantly overestimating emissions reductions. Changes to these methodological approaches would significantly reduce this risk and uncertainty.

• Renewable energy projects – specifically solar PV and onshore wind – score poorly on additionality, meaning that these project types are likely to be profitable without the added incentive of revenues from carbon credits. By contrast, in the case of industrial biodigesters or landfill gas utilization projects, carbon credit revenues often make a true difference, enabling these project types to become economically viable.

• Across programs and project types, credits that are paired with a complementary standard – like Verra's Climate, Community & Biodiversity (CCB) Standards and Sustainable Development Verified Impact Standard (SD VISta) – score higher on environmental and social safeguards.

Insights derived from these and future assessments under CCQI are aimed to help crediting programs improve on delivering the climate benefits they promise and to assist buyers with understanding and managing risks associated with their investments and claims.

CCQI will expand its scoring tool to assess more project types and programs, allowing users to discover how other project types and programs perform on quality. CCQI aims to cover over 80 percent of the current voluntary carbon market by the end of 2023.

For more information, visit www.carboncreditquality.org.

November 14, 2022: News

CCQI in Reuters: COP27: Talks on carbon market rules off to slow start

CCQI is mentioned in Reuters coverage of COP27 in Sharm El-Sheikh Egypt, where we hosted an event on carbon credit quality. Read the full article here.

July 7, 2022: News

CCQI in GreenBiz!

In the race toward quality, CCQI is here to help keep companies, carbon credit developers, and all market participants racing in the right direction.

A recent GreenBiz Group article featuring CCQI affirms, "Offset integrity must become the top priority for companies to ethically leverage the convenience of the voluntary carbon market." Read the full article here

June 1, 2022: News

Learn how CCQI aims to move the carbon market toward quality, how users can explore our tool to assess carbon credit types, and what's next for CCQI.

To read the full article, visit: https://lnkd.in/egnbSetG

May 31, 2022: Press release

New Interactive Tool to Score Carbon Credit Quality Launches

Carbon Credit Quality Initiative (CCQI) released transparent scorings for three carbon credit types to help enhance the quality of credits being transacted in the market

31 May, 2022 — The Carbon Credit Quality Initiative (CCQI) launched a new interactive tool to score the quality of several types of carbon credits. The free online CCQI Scoring Tool enables buyers in the growing carbon credit market to make more informed decisions and ultimately aims to improve the quality of credits transacting in the market.

Led by Environmental Defense Fund, World Wildlife Fund (WWF-US), and Oeko-Institut, CCQI offers free resources, including its robust assessment methodology and interactive scoring tool, to support carbon credit buyers who seek the highest possible quality as well as to build broader public understanding of which credits deliver the greatest climate mitigation impact. The tool is now available at www.carboncreditquality.org.

The first set of scores released by CCQI assesses the quality of three carbon credit project types (landfill gas utilization, establishment of natural forests and efficient cookstoves) under four carbon crediting programs (the Clean Development Mechanism, Climate Action Reserve, Gold Standard and the Verified Carbon Standard operated by Verra).

The first round of CCQI scorings show that carbon credits often perform well in some areas but poorly in others. Efficient cookstove projects, for example, face serious shortcomings in quantifying emission reductions and addressing non-permanence but often generate high environmental and social benefits.

"CCQIs first round of scoring confirmed that there is both wheat and chaff in the carbon credit market. The important thing, however, is that the consumer can tell the difference," said Pedro Martins Barata, Senior Director of Climate at Environmental Defense Fund. "Free, transparent resources like our Scoring Tool can move the market toward quality by helping users understand what quality means for carbon credits." Carbon credits are in high demand from buyers aiming to meet their voluntary climate commitments and compliance obligations under emissions trading schemes and carbon tax policies.

"When buyers come to the carbon credit market, they are sometimes surprised that detailed guidance on how to evaluate credits is not publicly available," said Brad Schallert, WWF's director of carbon market governance and aviation. "CCQI hopes to fill this information gap by offering our scoring tool as one of several steps a buyer takes when conducting due diligence on how credits might differ in quality."

Carbon credits are assessed using CCQIs methodology, which scores a given carbon credit on an interval scale of one through five against several quality objectives, listed below. This allows buyers to understand the nuances and trade-offs in the quality of carbon credits and make an informed decision.

For instance, the CCQI scores reveal considerable differences between carbon crediting programs. For example, the Clean Development Mechanism was found to have the best third-party auditing rules, the Climate Action Reserve performed best in its approach for compensating for potential non-permanence, the Gold Standard was found to have the most comprehensive environmental and social safeguards, and the Verified Carbon Standard performed high in its governance, transparency and its approaches for reducing non-permanence risks.

"What makes a high-quality carbon credit is a complex question," said Lambert Schneider, Research Coordinator for International Climate Policy at Oeko-Institut. "We designed our Scoring Tool so that users could have a nuanced 360-degree view of different quality features of carbon credits. The scorings show a mixed performance of carbon crediting programs. If all carbon crediting programs would adopt the best practice approaches from their peers, however, this would be an important step forward in addressing the quality problems currently faced in the market."

CCQIs quality objectives include:

• Robust determination of the GHG emissions impact: How well does the carbon credit ensure additionality and robust quantification of emissions reductions and removals?
• Avoiding double counting: How well does the carbon crediting program avoid different forms of double counting?
• Addressing non-Permanence: Does the carbon credit have significant risks of non-permanence, in which stored carbon is lost though natural or anthropogenic disturbances? Does the carbon crediting program have adequate provisions to mitigate those risks?
• Facilitating a transition towards net-zero emissions: Is the credit contributing toward the adoption of low, zero or negative emissions technologies and practices, and avoids lock-in of technologies and practices that lead to continuous GHG emissions?
• Strong institutional arrangements and processes: How strong are the institutional arrangements of the carbon crediting program issuing the credits? Does the program have strong governance, transparency, and auditing practices?
• Environmental and social impacts: How robust are the programs environmental and social safeguards? What are the typical expected sustainable development impacts of the project type? Does the carbon credit contribute to improving adaptation and resilience?
• Host country ambition: Is the host country where the project is located committed to global temperature goals and pursuing an ambitious NDC?

CCQI will expand its Scoring Tool to assess more project types and programs, allowing users to discover how other project types and programs perform on quality and cover a larger share of the current market. The next round of scores will be released later by the end of 2022.

May 31, 2022: News

Article in Carbon Pulse

CCQI experts Brad Schallert, Pedro Martins Barata and Lambert Schneider are quoted in a Carbon Pulse article showcasing our new carbon credit quality scoring tool!

As the article highlights, "The initiative aims to help carbon credit buyers make more informed decisions – something they hope will drive an improvement in the quality of credits transacted in the voluntary carbon market... [CCQI] is set apart from other similar initiatives because of its financial independence and unlikelihood of any conflict-of-interests making its way into the ratings."

Check out the full article here: https://carbon-pulse.com/161150/