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Carbon credit quality

Carbon credits should benefit the climate and the broader environment, as well as bear fruit for local communities and society as a whole. In order to achieve these goals, the credits and the projects which underpin them should be of the highest quality.

But what determines the quality of a carbon credit? A number of factors influence the quality of a carbon credit. 

Additionality means that the underlying project provides additional benefits to the climate that would not have been possible without this investment. For example, renewable energy projects have become so economically viable that they do not require carbon markets to exist. This means that they do not provide additionality, except perhaps in countries where the transition to renewable energy is not as feasible as in others.

Realistic baselines refer to the fact that many climate projects are based on assumptions and counterfactual scenarios. In such cases, the baseline estimates the emissions that would have occurred in a “business as usual” scenario without the project and hence the emissions savings it represents. It is vital that this baseline is set very conservatively to avoid “hot air” emissions savings.

Double counting occurs when two or more parties claim the same emissions reductions. This can occur, for example, when a country records an emission reduction in its national accounts and this same emission reduction is sold in the form of a carbon credit to a company which also claims it for offsetting purposes. This must be avoided at all cost.

Robust monitoring, reporting and verification criteria and practices are vital for ensuring that climate projects deliver on their promised impact and clearly identify when they fail so that remedial action can be taken. These systems need to be in place over the long term to also safeguard permanence.

Human rights and benefits to the local community are vital components of any climate project and project developers must ensure this through a robust consultation process and a fair grievance mechanism.

What is CMW doing about it?

When it comes to carbon credit quality, Carbon Market Watch focuses on:

  • Monitoring the methodologies and practices of standard bodies, project developers and intermediaries
  • Making recommendations for the improvement of carbon credits, projects and standards

“There are too many junk credits around, especially on the voluntary carbon market. This is bad news for the climate. If carbon markets are to achieve their climate goals, the quality of carbon credits needs to be improved considerably.”

Gilles Dufrasne

Lead policy expert on global carbon markets

“There are too many junk credits around, especially on the voluntary carbon market. This is bad news for the climate. If carbon markets are to achieve their climate goals, the quality of carbon credits needs to be improved considerably.”

Gilles Dufrasne

Lead policy expert on global carbon markets

What changes is CMW demanding?

Standards set robust methodologies that safeguard the highest quality

Project developers use the best available crediting standards and methodologies

Buyers only purchase carbon credits of the highest available quality

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Biodiversity markets are meant to channel private sector funding towards schemes that aim to conserve and restore biodiversity. In its current form, the unregulated funding schemes are reminiscent of the voluntary carbon market, which has a track record of supplying poor quality, cheap credits that inadequately transfer funds to the Global South. 

Lost in Documentation

Navigating the maze of project documentation

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Highlighted

Carbon credits should benefit the climate, the environment and society

Contact our experts

Gilles Dufrasne
Lead on Global Carbon Markets

gilles.dufrasne[at]carbonmarketwatch.org

Jonathan Crook
Expert on Global Carbon Markets

jonathan.crook[at]carbonmarketwatch.org

Inigo Wyburd
Expert on Global Carbon Markets

inigo.wyburd[at]carbonmarketwatch.org

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