Carbon Market Watch (CMW) is deeply concerned by the Integrity Council for the Voluntary Carbon Market’s (ICVCM) decision to grant its label of approval to Verra’s updated coal retirement methodology. Rather than ensuring a genuine transition away from coal, this decision risks rewarding false progress while giving a green light to continued fossil fuel emissions.
On the 3rd of November, the ICVCM approved the latest version of Verra’s coal crediting methodology, VM0052 “Accelerated Retirement of Coal-Fired Power Plants Using a Just Transition, v1.1”, granting such credits access to its coveted Core Carbon Principle (CCP) label. The CCP tag is widely perceived to only back high-quality carbon credits. ICVCM missed the mark by granting this methodology its seal of approval, given that unresolved methodological weaknesses could lead to the issuance of potentially millions of carbon credits that do not represent genuine climate impact.
A previous assessment of an earlier version of Verra’s coal crediting methodology conducted by the Oeko Institute and funded by Carbon Market Watch (CMW) identified several weaknesses. Despite some improvements in the updated methodology, CMW maintains that it risks generating more credits than is justified. For instance, it remains possible for fossil fuel plants to replace the lost energy generation from retired coal plants, instead of this being fully replaced by clean renewable energy. This risks locking the power sector into continued fossil fuel emissions for decades to come. The methodology also doesn’t properly account for situations in which new coal plants are built while others are shut down. Shutting down coal plants means little for the climate if new ones can simply take their place.
Beyond methodological concerns, these “coal transition credits” risk being used to offset greenhouse gas emissions at scale, for example, when considering them to be integrated into the EU ETS. This would equate to shutting down coal plants in Southeast Asia, in order to prolong the lifetime of coal-fired power plants in the EU. Even in a best-case scenario, where credits represent genuine emissions reductions, such offsetting would amount to a zero-sum game for the atmosphere. Worse still, if they don’t fully represent genuine emission reductions, a substantial risk from Verra’s coal transition credits, global emissions would actually increase.
Inigo Wyburd, a policy expert on global carbon markets at Carbon Market Watch, states: “ICVCM’s decision to grant CCP approval to Verra’s coal crediting methodology risks legitimising carbon credits that fail to deliver genuine emission reductions. It sets a dangerous precedent for the credibility and integrity of the voluntary carbon market.”
Global emissions from coal combustion reached approximately 15.8 billion tonnes of CO₂ in 2024, accounting for over 40% of energy-related CO₂ emissions, underscoring the urgent need to phase out coal. However, we remain firmly unconvinced that Verra’s methodology closes the necessary loopholes to accelerate the replacement of coal power with renewables. Phasing out coal requires proactive government planning as well as support from development finance institutions. This means setting clear, binding deadlines for closing coal and other fossil-fuel power plants, and putting in place concrete targets, and policies to rapidly scale up renewable energy and energy saving measures, and reduce energy demand. Public and private investment should be directed to clean energy, grid infrastructure upgrades, and a just transition for affected workers and communities, rather than to precarious carbon credits.
With COP 31 around the corner, coal crediting is likely to be championed as key to phasing out coal plants. However, this simplified narrative risks downplaying more effective policies and measures for power sector decarbonisation, and glosses over quality problems and the fact that these credits will be used to justify emissions. The significance of this ruling cannot be overstated: “At a time when the world urgently needs to shift away from coal, we cannot afford approaches that risk rewarding false progress while giving a green light to continued fossil fuel emissions,” adds Wyburd.
