New Interactive Tool to Score Carbon Credit Quality Launches

31 May, 2022 — The Carbon Credit Quality Initiative (CCQI) launched a new interactive tool to score the quality of several types of carbon credits. The free online CCQI Scoring Tool enables buyers in the growing carbon credit market to make more informed decisions and ultimately aims to improve the quality of credits transacting 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 credit buyers who seek the highest possible quality as well as to build broader public understanding of which credits deliver the greatest climate mitigation impact. The tool is now available at www.carboncreditquality.org. 
 
The first set of scores released by CCQI assesses the quality of three carbon credit project types (landfill gas utilization, establishment of natural forests and efficient cookstoves) under four carbon crediting programs (the Clean Development Mechanism, Climate Action Reserve, Gold Standard and the Verified Carbon Standard operated by Verra).  

The first round of CCQI scorings show that carbon credits often perform well in some areas but poorly in others. Efficient cookstove projects, for example, face serious shortcomings in quantifying emission reductions and addressing non-permanence but often generate high environmental and social benefits. 
 
“CCQI’s first round of scoring confirmed that there is both wheat and chaff in the carbon credit market. The important thing, however, is that the consumer can tell the difference,” said Pedro Martins Barata, Senior Director of Climate at Environmental Defense Fund. “Free, transparent resources like our Scoring Tool can move the market toward quality by helping users understand what quality means for carbon credits.” 

Carbon credits are in high demand from buyers aiming to meet their voluntary climate commitments and compliance obligations under emissions trading schemes and carbon tax policies.

“When buyers come to the carbon credit market, they are sometimes surprised that detailed guidance on how to evaluate credits is not publicly available,” said Brad Schallert, WWF's director of carbon market governance and aviation. “CCQI hopes to fill this information gap by offering our scoring tool as one of several steps a buyer takes when conducting due diligence on how credits might differ in quality.”  

Carbon credits are assessed using CCQI’s methodology, which scores a given carbon credit on an interval scale of one through five against several quality objectives, listed below. This allows buyers to understand the nuances and trade-offs in the quality of carbon credits and make an informed decision.  

For instance, the CCQI scores reveal considerable differences between carbon crediting programs. For example, the Clean Development Mechanism was found to have the best third-party auditing rules, the Climate Action Reserve performed best in its approach for compensating for potential non-permanence, the Gold Standard was found to have the most comprehensive environmental and social safeguards, and the Verified Carbon Standard performed high in its governance, transparency and its approaches for reducing non-permanence risks. 

“What makes a high-quality carbon credit is a complex question,” said Lambert Schneider, Research Coordinator for International Climate Policy at Oeko-Institut. “We designed our Scoring Tool so that users could have a nuanced 360-degree view of different quality features of carbon credits. The scorings show a mixed performance of carbon crediting programs. If all carbon crediting programs would adopt the best practice approaches from their peers, however, this would be an important step forward in addressing the quality problems currently faced in the market.” 

CCQI’s quality objectives include:   

• Robust determination of the GHG emissions impact: How well does the carbon credit ensure additionality and robust quantification of emissions reductions and removals? 

• Avoiding double counting: How well does the carbon crediting program avoid different forms of double counting? 

• Addressing non-Permanence: Does the carbon credit have significant risks of non-permanence, in which stored carbon is lost though natural or anthropogenic disturbances? Does the carbon crediting program have adequate provisions to mitigate those risks?  

• Facilitating a transition towards net-zero emissions: Is the credit contributing toward the adoption of low, zero or negative emissions technologies and practices, and avoids lock-in of technologies and practices that lead to continuous GHG emissions? 

• Strong institutional arrangements and processes: How strong are the institutional arrangements of the carbon crediting program issuing the credits? Does the program have strong governance, transparency, and auditing practices?   

• Environmental and social impacts: How robust are the program’s environmental and social safeguards? What are the typical expected sustainable development impacts of the project type? Does the carbon credit contribute to improving adaptation and resilience? 

• Host country ambition: Is the host country where the project is located committed to global temperature goals and pursuing an ambitious NDC? 

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 and cover a larger share of the current market. The next round of scores will be released later by the end of 2022. 

For more information, visit www.carboncreditquality.org.