Expansion of Carbon Credit Scoring Tool Reveals Opportunities to Improve Quality of Carbon Market

The Carbon Credit Quality Initiative (CCQI) launched an expanded version of its interactive scoring tool to assess the quality of several newly added types of carbon credits. The new CCQI scores reveal that the majority of carbon credit types assessed are low in quality in one or more criteria and underscore the need to improve the quality of carbon credits in the market.

Led by Environmental Defense Fund, World Wildlife Fund (WWF-US), and Oeko-Institut, CCQI offers free resources, including its robust assessment methodology and interactive scoring tool, to support carbon market stakeholders in understanding which carbon credits are more likely to deliver actual emission reductions as well as social and environmental benefits. With these new scores, CCQI’s scoring tool now covers over a quarter of the voluntary carbon market. 

“CCQI sets a high bar for quality—and our scores show that all carbon credit types that we’ve assessed have notable concerns in some quality aspects, whether that pertains to additionality, the robustness of emission reduction calculations, or other aspects of carbon credit quality,” said Pedro Martins Barata, Associate Vice President for Carbon Markets at Environmental Defense Fund. “This should be a signal to carbon market stakeholders and buyers who want to see their investments return positive impacts to do their due diligence, and to carbon crediting programs to up their game.”

The new set of scores released by CCQI assesses the quality of the following credit types:

• Household biodigesters
• Industrial biodigesters fed with livestock manure
• Leak repair in natural gas transmission and distribution systems
• Recovery of associated gas from oil fields
• Solar photovoltaic power
• Wind power (onshore)

CCQI scores a given carbon credit type on an interval scale of one through five against several quality objectives, such as robust determination of the emissions impact or environmental and social safeguards. This allows buyers to understand the nuances and trade-offs in the quality of carbon credit types, make an informed decision, and focus their due diligence where it’s likely to be needed most. 

The expanded CCQI scorings show that carbon credit types often perform well in some areas, but poorly in others. Many carbon credit types face serious shortcomings in their methodology of quantifying emission reductions, for example, with a high risk of overestimating reductions.

“There are serious problems with how some methodologies estimate emissions reductions. This is not good news at a time when demand for carbon credits is increasing,” said Lambert Schneider, Research Coordinator for International Climate Policy at Oeko-Institut. “The good news is that we also found good practice and innovative approaches. The quality of carbon credits could be improved quite a bit if all carbon crediting programs would adopt the most robust approaches from their peers. For carbon credits to play a meaningful role in financing climate action, the rules of carbon crediting programs need to become more robust.”

The new scores also reveal that:

• Most methodologies assessed either overestimate emissions reductions, or there is large uncertainty. This is an issue that affects project types regardless of their performance in other areas. For example, project types that deploy efficient cookstoves in rural areas generally had favorable additionality assessments, but risk significantly overestimating emissions reductions. Changes to these methodological approaches would significantly reduce this risk and uncertainty.
   
• Renewable energy projects – specifically solar PV and onshore wind – score poorly on additionality, meaning that these project types are likely to be profitable without the added incentive of revenues from carbon credits. By contrast, in the case of industrial biodigesters or landfill gas utilization projects, carbon credit revenues often make a true difference, enabling these project types to become economically viable.
   
• Across programs and project types, credits that are paired with a complementary standard – like Verra’s Climate, Community & Biodiversity (CCB) Standards and Sustainable Development Verified Impact Standard (SD VISta) – score higher on environmental and social safeguards.

Insights derived from these and future assessments under CCQI are aimed to help crediting programs improve on delivering the climate benefits they promise and to assist buyers with understanding and managing risks associated with their investments and claims.

CCQI will expand its scoring tool to assess more project types and programs, allowing users to discover how other project types and programs perform on quality. CCQI aims to cover over 80 percent of the current voluntary carbon market by the end of 2023.

For more information, visit www.carboncreditquality.org.