The Integrity Council for the Voluntary Carbon Market has just released a set of new rules which seek to boost the quality of carbon credits for offsetting but ignore other issues with the market. While this is an improvement on current practices, the problematic concept of offsetting itself must be abandoned.
As part of its self-declared mission of improving the governance of unregulated carbon markets through the laying down of ‘core carbon principles’, the Integrity Council for the Voluntary Carbon Market has released a first batch of rules for voluntary carbon markets.
“While the new rules help enhance the quality of carbon credits, they do not close all the loopholes of the voluntary carbon market,” says Gilles Dufrasne, lead expert on global markets at Carbon Market Watch. “More rules are needed and the credibility of the Integrity Council still hangs in the balance as several important criteria still need to be released.”
Offsetting should not and must not in itself be a goal of carbon markets. While the Integrity Council’s efforts to improve the quality of carbon credits are necessary, this must be accompanied by clear guidelines on how to use them. Selling “carbon neutral” goods and services, for example, should not be considered an acceptable use of carbon credits.
This is for a variety of reasons, including the difficulty associated with estimating the exact climate impact of carbon market projects, the temporary nature of much of the carbon storage involved, and the need to provide incentives for technologies and practices that lead to deep decarbonisation of companies’ own activities. Another disadvantage is that offsetting promotes a culture among wealthy corporations and countries that they can continue to pollute with impunity rather than slashing their real emissions.
Other pros and cons
The new Integrity Council rules represent an improvement on some of the current market practices. For instance, in a bid to tackle the obscurity and lack of transparency surrounding the usage of carbon credits, the guidelines mandate the identification of the beneficiaries of carbon credits and the purpose for which they used the credits.
The rules also mandate the quantification of uncertainty in emissions reduction measurement so as to better reflect and express the risk that the estimated climate impact of a project is overstated. In addition, the Integrity Council has sought to improve access to grievance mechanisms by ensuring that fees are not used to deter civil society organisations or indigenous peoples from filing complaints.
Despite these incremental improvements, there are missing urgently needed elements. The Integrity Council’s criteria include virtually nothing on raising the level of transparency of revenues from credit sales. This is highly problematic at a time when, as we uncovered in recent research, most intermediaries in the voluntary carbon market do not release information on their commission rates and markups.
There are also no rules to promote the use of carbon credits to actually lower global emissions, such as by requiring that a portion of issued carbon credits is cancelled instead of used to offset emissions somewhere else. The Integrity Council’s criteria also involve no mandatory requirement for a share of carbon market finance to be channelled to adaptation finance. That is despite the latter two issues being mandatory under the market that is being set up under Article 6.4 of the Paris Agreement.