The voluntary carbon market is in a period of exponential grow supported by the Taskforce on Scaling Voluntary Carbon Market (TSVCM), a private sector-led initiative working to scale the voluntary carbon market to help meet the goals of the Paris Agreement. There has never been a more important time to scrutinize the integrity of the market and the projects that generate the carbon credits.
To achieve the climate benefits the world aspires for the voluntary carbon market to attain, both the companies purchasing the carbon credits and the project developers producing the credits need to act with integrity. Companies must set ambitious targets to reduce their emissions and carbon project developers need to adhere to stringent standards and demonstrate tangible impacts and benefits for nature and society.
Project developers need to prove the carbon credits being issued by their projects are measurable, real and producing the climate, livelihood and biodiversity benefits they claim to be making. The most credible way of proving that the desired outcomes are real is for a project to become certified by a reputable third-party certification standard such as Plan Vivo or Verra’s VCS and CCB standards.
The certification and issuance of carbon credits is a comprehensive process that requires a project developer to firstly develop a project in accordance with a methodology that has been approved by a certification standard. The project design is then validated by a third-party auditor known as a VVB (a Validation/Verification Body). Once validation is complete the project activities must be verified by the VVB and certified by the standard in order for Verified Emission Reductions (VERs) to be issued and sold on the voluntary carbon market as certified carbon credits.
Each step in the process contains extensive procedures that ensure the integrity of the project, the auditors and certification standards are upheld.
Before developing a carbon project, developers must create a blueprint of how they will develop a project in line with a standard’s methodology. This document, known as a Project Document, becomes the working checklist that is used by the project developer, the auditor and the certification standard to determine if the project activities will lead to the generation of real VER’s with climate, social and biodiversity benefits.
Before the project is officially validated there is a 30-day public comment period where any member of society can comment on a range of aspects including technical elements and community involvement.
If the VVB determines that the project document will produce the climate, social and biodiversity benefits in accordance with the methodology and is satisfied that the public comments have been addressed, they will validate the project.
The verification process is managed by the VVB and takes place after validation of the project and after project activities have been implemented. The process verifies that the activities that were validated in the project document have taken place and have led to real and measurable climate, social and biodiversity benefits. Verification must happen regularly and while each standard has varying timeframes and regulations, a project will be verified between every 1 – 5 years.
To verify the climate impacts of the carbon project a full climate analysis using maps and satellite imagery is conducted. The project document and the biodiversity and community monitoring reports are examined in detail followed by a visit to the project site to verify that every social and biodiversity outcome outlined in the reports have taken place. While on site the VVB will communicate with the community using independent translators to authenticate the project outcomes and they will refer to the satellite imagery to visit points of interest.
Once the audit has been completed the VVB delivers their report to the project developer with findings that may suggest corrective actions, seek clarifications, or request further action at a later date. Only once this report has been acted upon will the final verification report be sent to the certification standard with a request to issue the quantity of VERs for which the project has been verified.
The VVB’s play a critical role in ensuring the integrity of the carbon credits that will be issued. In much the same way that a financial auditor scrutinises the authenticity of a business’s transactions, the VVB must inspect every detail of the project activities and outcomes. In order to maintain an internationally recognized standard, the VVB must obtain accreditation through an appropriate authority such as the UN’s Clean Development Mechanism.
Before a VVB is chosen to validate and verify the project, the project developer must demonstrate that there is no conflict of interest between the VVB and the project developer. To strengthen the integrity of the validation and verification process a VVB cannot audit the same project for more than five years.
The certification standard is ultimately responsible for issuing carbon credits that produce real and measurable climate benefits. To allow for transparency and for the improvement of the certification standard the certification organisation opens the standard to a public consultation process before the standard is accepted and made available for use by project developers.
In order to strengthen the credibility of the certification standard a third-party auditor or VVB is contracted to conduct the audits. Only auditors that have followed a clear process to become accredited and have demonstrated experience and expertise in the industry are accepted.
Project leakage and project failure are issues that are scrutinised by industry actors, the market and the public and are issues the certification standards must openly address. Each certification organisation employs slightly different approaches to account for leakage and project failures, but they all use methods that take a conservative approach to calculating and issuing credits and they incorporate buffers and deductions into the final quantity of credits being issued based on numerous risk metrics.
As the industry matures, certification standards and methodologies are able to constantly improve due to the procedures in place that call for transparent and fair monitoring and reporting. Rapidly developing technology and the burgeoning of experts able to more accurately monitor and verify project activities is enabling project developers to meet the high standards set by the industry. With enhanced technology and certification processes, high quality, high integrity carbon credits will flow into an economy that is working to rapidly reduce emissions while providing much needed finance to communities on the frontline of conservation.