The ICVCM Assessment Framework

The ICVCM aims to establish a “global threshold standard for carbon credit quality” based on their 10 “Core Carbon Principles” (CCP), which they initially presented in March 2023. The new document provides comprehensive guidance on the “process and operational requirements'' followed by the ICVCM to enforce these standards, certifying carbon credits as “CCP-approved”. 

What is the ICVCM?

The ICVCM is an independent governance body for the voluntary carbon market (VCM). Its governing body is made up of representatives from a wide range of stakeholders in the voluntary carbon market, including buyers, sellers, project developers, and NGOs. 

As the voluntary carbon market is currently unregulated, we are reliant on these independent government bodies to put together standards and approaches to regulate carbon credits.  

Governance Under the CCP Framework

Carbon credits are “CCP certified” by ICVCM through two mechanisms:

1. Assessment of carbon-crediting programs – carbon-crediting programs are approved by ICVCM on the basis that they fulfill the principles and criteria of the assessment framework

2. Assessment of categories of carbon credits – ‘categories’ are common mitigation activities to reduce emissions, as defined by ICVCM. Once a carbon-crediting program is approved, the ICVCM assesses and approves the individual categories for which the program issues carbon credits. 

The upshot of this is that the burden for validation of carbon credits falls on the programs that deliver them, and are therefore gatekeepers, rather than project developers or buyers on the market.

Furthermore, the ICVCM has designated ‘attributes’, with which approved programs can tag approved carbon credits to identify additional features of interest to buyers:

1. Whether the country where the carbon credit is generated has authorized its use in other countries, in accordance with Article 6 of the Paris Agreement

2. Whether the mitigation activity makes a voluntary contribution to the Adaptation Fund of the UNFCCC

3. Whether the mitigation activity makes additional quantified positive contributions to Sustainable Development beyond climate activities (as defined by the SDG impacts beyond SDG 13)

Assessment Framework

The report provides detailed criteria for assessment based on the ten “Core Carbon Principles” across three areas:

Source: ICVCM Core Carbon Principles

Each of these principles translates to one or multiple criteria which must be met during the assessment. These criteria can either apply to the assessment of the carbon crediting program, of categories, or of both.

Full details are found in “Section 4”, the “Assessment Framework” section of the document.

Assessment Process

CCP approvals to certify carbon credits are issued through the following steps:

Full details are found in “Section 6”, the “Assessment Procedure” section of the document.

Implications for the VCM going forward

NetaCarbon believes that ICVCM’s Core Carbon Principles Framework is an important step toward improving integrity and quality in the carbon market. Here are our thoughts on its implication for the voluntary carbon market:

• Adoption of the standards is not a given, but the ICVCM has laid the groundwork for success: Ultimately, the ICVCM has no statutory power in the voluntary carbon market, being an industry advisory body encouraging rather than mandating best practices for carbon projects. It, therefore, remains to be seen how widely the CCP standards will be adopted. Nevertheless, ICVCM has laid the groundwork for success through extensive consultations with industry stakeholders.

• Increased rigor in standards bolsters market confidence: The CCP framework and other forms of self-regulation will help to address concerns from carbon market stakeholders (particularly buyers). Increased rigor in standards for carbon credits will alleviate uncertainty and address scrutiny around the effectiveness of the market. We welcome the Framework’s emphases on co-benefits and sustainable development - we see carbon projects as more than just efforts to reduce emissions but also as forces to improve livelihoods and wellbeing of vulnerable communities.

• Expect a divergence between carbon credits based on certification: With the first batch of projects receiving the CCP-label to be announced by the end of 2023, investors and project developers should pay close attention to this label going forward. It may have a significant impact on credit prices, creating a divergence between certified and non-certified credit types, and affecting the financial viability of individual projects. 

• The new standards lay a foundation for further regulatory work and potential market consolidation: The timely announcement of these standards provides a foundation for the implementation of Article 6, which is on the agenda for COP28. It could also support future potential consolidation of carbon markets (and the expansion of the compliance markets regulated by the governments). 

*Most of ICVCM’s requirements are built upon the “Carbon Offsetting and Reduction Scheme for International Aviation” (CORSIA) scheme established by the global airline industry, but extend the scope to a broader set of industries. “CCP” approval follows many of the prerequisites of CORSIA, for instance requiring the quantification of monitoring, reporting and verification standards, but extending the scope to a broader set of industries.