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Hidden in plain sight: Flawed renewable energy projects in the voluntary carbon market

Whilst REDD+ credits have been the subject of intense media and civil society scrutiny, the same cannot be said of renewable energy projects, which are plagued by similar issues when used for offsetting, yet manage to hide in plain sight.

Serious concerns exist regarding the use of renewable energy projects to generate carbon credits. Those that are large-scale and connected to the grid are highly unlikely to be able to demonstrate additionality, except in least-developed countries, because renewable energy is as feasible in economic terms and often more so than fossil fuel-based energy. In most cases, these projects were already not additional when they were initiated several years ago, in part because carbon credit revenues are insignificant compared to revenues from electricity sale, and hence cannot credibly change the profitability of such large-scale plants.

At the heart of the issue lies the Kyoto Protocol’s Clean Development Mechanism (CDM). Lax methodologies developed under the CDM enabled a large number of non-additional renewable energy projects to be registered.

Addressing the surplus and low quality of renewable carbon credits in the VCM is crucial. Credit buyers should exercise careful due diligence and prioritise the purchase of credits from projects that offer real climate impact, rather than being swayed by their low price. Standards can help make this a priority by enhancing transparency and enforcing requirements for public disclosure of detailed information on credit retirement.

Additionally, standards should curtail further issuances of non-additional renewable energy projects by restricting the renewal of crediting periods. Furthermore, the Integrity Council for the Voluntary Carbon Market (ICVCM) must enforce its stringent criteria to exclude substandard credits and promote best practices to prevent the market from being flooded with more low-integrity, poor-quality carbon credits.

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