Smart Net-Zero

Deutsche Gesellschaft für Internationale Zusammenarbeit | Source | Download   | 

The use of carbon credits to offset greenhouse gas emissions is increasing among companies worldwide. However, evaluating the quality of carbon credits, especially those from forest projects, remains challenging due to complex social and environmental contexts. This brief aims to provide guidance on assessing carbon standards, focusing on forest carbon credits. Two types of standards are analyzed, including projects standards such as Verified Carbon Standard (VCS), which dominates forest carbon credit markets, and emerging VCS Nested Projects, and Jurisdictional Standards, such as the VCS Jurisdictional and Nested REDD+ (VCS JNR), Forest Carbon Partnership Facility’s Carbon Fund, and the Architecture for REDD+ Transactions (ART). Authors with diverse roles in standard organizations and climate-focused institutions, provide insights into the complexities of carbon markets, emphasizing transparency. The report was funded by Deutsche Gesellschaft für Internationale Zusammenarbeit.

Quality Criteria for Carbon Credits

• Baselines: Establishing conservative benchmarks for emissions.
• Additionality: Demonstrating emission reductions beyond business as usual.
• Permanence: Ensuring long-term carbon storage.
• Leakage: Managing emissions outside project boundaries.
• Quantification: Accurate measurement of emissions and removals.

Forest carbon credits can be viable for corporate offsetting with stringent rules ensuring environmental integrity. However, they present higher risks due to complex project dynamics. Jurisdictional programs offer systemic change potential but come with larger risks. Nesting projects within jurisdictional programs can mitigate risks but requires substantial capacity building.

Policy Recommendations

• Standard Improvement: Enhance methodologies for setting baselines and quantification to ensure conservatism.
• Capacity Building: Support developing countries in establishing nested systems and sharing best practices.
• Knowledge Exchange: Establish a community of practitioners to facilitate knowledge sharing and guide governments in developing nested approaches.