What might the Core Carbon Principles mean for the VCM?
At Kita, we welcome the release of the ICVCM’s Core Carbon Principles (CCPs) and Program-Level Assessment Framework.
The 10 principles, centred around 3 themes of integrity (climate, environment, and social), set a market-wide threshold for high-integrity carbon credits. Both the issuing carbon-crediting program and credit category must be assessed against these principles, prior to a credit being labelled as CCP-approved. The Program-Level Assessment Framework, released today, sets out the requirements under each principle which a carbon crediting program must meet to become ‘CCP-eligible’.
In this blog, we offer an overview of the ICVCM and the CCPs and we highlight the ways in which the introduction of these principles will integrate with the work we are doing at Kita.
Who are the ICVCM?
The Integrity Council for the Voluntary Carbon Market (ICVCM) are an expert, independent governance body for the Voluntary Carbon Market (VCM). They aim to accelerate the transition to 1.5ºC, by enabling the development of a high-integrity voluntary carbon market. The ICVCM has a 3-stage mandate:
Establish the Core Carbon Principles (CCPs) and Assessment Framework
Provide governance and oversight to standard-setting organisations, on adherence to CCPs
Coordinate and manage interlinkages between individual bodies and define a roadmap for the responsible growth of the VCM
What are the Core Carbon Principles?
Stage 1 of the mandate has begun, via the launch of the Core Carbon Principles and Program-Level Assessment Framework.
The CCPs, curated by carbon and subject matter experts, set a market wide threshold for high-integrity carbon credits. There are 10 principles which centre around 3 themes of integrity (climate, environment, and social):
A. Governance
Effective Governance
Tracking
Transparency
Robust independent third-party validation and verification
B. Emissions Impact
Additionality
Permanence
Robust Quantification of emissions reductions and removals
No double counting
C. Sustainable Development
Sustainable development benefits and safeguards
Contribution toward net zero transition
Both carbon crediting programs and credit types will be assessed against the principles, via an assessment framework. The assessment framework provides ‘rigorous criteria and decision tools’ for each principle. The Program-Level Assessment Framework has now been released, enabling carbon-crediting programs to be assessed to determine if they are ‘CCP eligible’.
For a CCP label to be attached to the credit, both the issuing carbon-crediting program and credit category must be CCP-approved. It is expected that the first CCP-approved programs will be announced in Q3 and the Credit-Level Assessment Framework will be released mid-year.
What is the benefit for the VCM?
The introduction of the CCPs provides a market-wide benchmark for high-integrity credits, bringing numerous benefits to the market.
1) Reducing complexity for carbon credit purchasers
The VCM is a complex market, with a plethora of carbon programs and standards, issuing a range of credits. For many carbon credit purchasers, this can cause confusion. The introduction of CCP labels can help to provide a simple, identifiable indication of high-integrity, across the whole market, which purchasers can use as a reference point to help guide their purchasing choices.
2) Enhance the VCM’s drive towards high-integrity
The introduction of the CCPs can enhance the VCM’s drive towards a consistent level of high-integrity. If all crediting programs are striving for high-integrity, using the same format and principles, this will greatly benefit the direction of the VCM. Structuring the pathway to a high-integrity VCM is particularly important, in such a rapidly developing market.
3) Removing market fragmentation
The CCPs are a market-wide threshold for high-integrity. The definitions of ‘high-quality’/‘high integrity’ credits have been a point of discussion within the market, for some time. By assessing all credits under the same set of public principles, the ICVCM can help to remove market fragmentation.
CCPs and Insurance
At Kita, we welcome the introduction of the CCPs.
Firstly, the CCPs will be an additional reference point for us, to identify high-integrity programs, categories, and credits.
Secondly, the principles can help to enable carbon insurance. For example, principle 2 - Tracking - requires mitigation activities to be identified, recorded and tracked on a registry. Additionally, principle 3- Transparency - requires ‘comprehensive and transparent information’ about mitigation activities to be ‘publicly available’ and ‘accessible to non-specialised audiences’. Insurance relies on data patterns, to assess risk. If more information can be publicly shared in a standardised, transparent and accessible format, across the VCM, it will enable insurers, such as ourselves, to gather data patterns to accurately assess risk and underwrite policies accordingly. Kita’s insurance equally relies on independent validations and verifications, to avoid conflicts of interest and provide a neutral assessment of the project. Therefore, principle 4 - Robust independent third-party validation and verification - is of the upmost importance.
Finally, Kita’s insurance is in place to de-risk the upfront financing of high-quality projects and unlock global capital investments. As stated by Annette Nazareth (Chair of the Integrity Council), ‘If buying high-integrity carbon credits is too difficult or too risky, a vital source of funding in the fight against climate change will be lost.’ Kita aims to de-risk investments and we hope the CCPs will help to reduce complexity and simplify purchasing for buyers. Therefore, both of these market mechanisms, amongst many others, help to increase trust and confidence in the VCM and thus unlock the ‘vital source of funding’ required to scale the market.
We look forward to future progressions and seeing the first CCP-approved programs and Credit-Level Assessment Framework, later in the year.
ICVCM process diagram