What Makes High-Quality Carbon Credits

The originating idea behind a carbon credit is that it can substitute for reductions that a buyer could have made to their own emissions (i.e., compensation use). For this to be true, the world must be at least as well off when a carbon credit is used as it would have been if the buyer had reduced their own carbon footprint.¹ The “quality” of a carbon credit refers to the level of confidence that the use of the credit will fulfill this basic principle.

This quality concept – frequently referred to as “environmental integrity” – sounds straightforward, but is challenging to guarantee in practice.

A variety of terms are sometimes used to define quality criteria for carbon credits, including that avoided emissions or enhanced removals must be “real,” “quantifiable,” and “verifiable.” Most of these terms have their origin in regulatory criteria established for air pollutant credits under the U.S. Clean Air Act (going back to 1977). However, these terms have distinct regulatory meanings under U.S. law that do not always translate meaningfully to carbon credits. The term “real,” for example, has no commonly agreed definition across carbon credit programs and standards, and is often used as a vague catch-all.²

The essential elements of carbon credit quality can be distilled to five criteria. Higher-quality carbon credits are those associated with avoided emissions or enhanced removals that are:

• Additional
• Robustly quantified
• Permanent
• Not claimed by another entity
• Not associated with significant social or environmental harms

Crediting programs were created to help assure the quality of carbon credits. This section of the website  describes the approaches that crediting programs use to address the quality criteria listed above. As indicated in Common Questions and Criticisms About Carbon Credits, however, many observers believe that crediting programs have a mixed track record, leading to accusations of greenwashing. Part of the challenge is that carbon credit quality is not black and white. The multiple criteria involved – plus the fact that critical criteria like “additionality” are a matter of confidence rather than absolute truth (see below) – means that quality exists along a continuum.

Crediting programs, by contrast, are forced to make a binary decision: do they certify a project and issue carbon credits or not? Most carbon crediting programs will say that every credit they issue is equally valid, but buyers should feel justified in questioning this assertion. Think of scoring the quality of a carbon credit on a 100-point scale. A crediting program may decide to issue credits to every project that exceeds a score of 50. But as a buyer, is a score of 51 really “good enough”?³

Astute buyers will understand this difficulty and actively seek out higher quality carbon credits. Each quality criterion has questions that buyers can ask about specific crediting projects to better ascertain their relative quality. Even for sophisticated buyers, however, getting detailed answers to these questions may be difficult. Thus, in How to Avoid Lower-Quality Credits, there is a range of strategies buyers can use to steer clear of lower quality carbon credits and improve the chances of acquiring higher-quality credits.

Additionality

To preserve environmental integrity, carbon credits must come from projects that are “additional.” An additional project is one that would not have occurred without the incentive provided by carbon credit revenues. In other words, a project proposed to a crediting program is additional if it would not have taken place without the expected revenue from selling carbon credits.

Additionality is the property of a project being additional and is typically assessed once by a crediting program when a proposed project is submitted for approval and registration (i.e., ex ante).⁴

In practice, additionality is determined by assessing whether the proposed project is distinct from its baseline scenario.⁵ If a project is not additional (i.e., it would have been undertaken regardless of carbon credit revenues), then the intervention and its baseline scenario are (in principle) the same.⁶ The baseline scenario is a prediction of the future behavior of the actors proposing, and affected by, a project’s activities in the absence of any carbon revenue incentives, holding other factors constant. In other words, the baseline scenario is what would happen without the expected revenue from selling issued credits?

The additionality of a project is essential for the quality of carbon credits. If credits are issued to projects that are not additional, then purchasing those credits instead of reducing one’s emissions will make climate change worse because total emissions to the atmosphere would be lower if the purchaser had instead reduced their emissions.

Evaluating whether greenhouse gas (GHG) projects, and therefore the credits issued to them, are additional can be deceptively difficult.⁷ For example, sometimes a project’s activities are required by law. Landfill operators in California, for example, are required to install equipment that captures and destroys methane (CH₄). In other cases, investments that reduce emissions will be made because they are profitable, without any influence from the revenue from carbon credits. An investment in energy-saving lighting, for example, can pay for itself through avoided energy costs. Similarly, renewable energy technologies, like wind and solar, are often cost-competitive with fossil fuels without revenue from carbon credit sales. For a proposed project to be deemed additional means the expectation of selling carbon credits must play a decisive (“make or break”) role in the decision to implement it.

Additionality is a topic about which there is frequent misunderstanding. One commonly heard claim, for example, is that a project is additional if GHG emissions are lower than they would have been “in the absence of the project.” This framing is incorrect because the question of additionality is fundamentally asking whether or not a proposed project is the same as its baseline scenario. If the baseline scenario is considered to be the “absence of the project”,  the real possibility that the proposed project and the baseline are identical is incorrectly ignored  (i.e., it is incorrectly assumed that the proposed project will not be undertaken without carbon credit revenue). It is also common to hear discussion of different “kinds” of additionality, using terms like “financial additionality” or “regulatory additionality,” as if these are distinct concepts, but they are not. The only definition of additionality relevant to credit quality is the one presented above. Legal, financial, and other considerations certainly all come into play when making determinations about additionality but are not separate definitional categories for what it means for a proposed project to be “additional.”

While additionality is the most essential criterion for assessing credit quality, its determination is inherently predictive. Carbon crediting programs must make binary determinations of additionality to decide the eligibility of proposed projects for crediting (i.e., administratively, a proposed GHG project is either additional or it is not). In practice, determining whether a proposed project is additional requires comparing it to a hypothetical scenario without revenue from the sale of carbon credits. Such a scenario must be established using educated predictions (e.g., informed by factors such as future fuel, timber, or electricity prices). The determination can also fall prey to “information asymmetry” where only a project developer can say whether the prospect of selling carbon credits was truly decisive for them. Regardless of the truth, every project developer has an incentive to argue that it was decisive to receive the revenue from carbon credits. Even though carbon crediting programs must still make a binary determination for administrative reasons, in light of these uncertainties, it is better to think of additionality in terms of risk: how likely is a project to be non-additional?

How do crediting programs address additionality?

Carbon crediting programs have developed two main approaches to determining the additionality of a proposed project: “project-specific” and “standardized.” Each of these approaches has strengths and weaknesses.

Project-specific approaches rely on an analysis (i.e., “tests”) of an individual project’s characteristics and circumstances to determine whether it is additional. For example, they may involve:

• A demonstration that the proposed project activity is not legally required (or that non-enforcement of the regulatory requirements is widespread); and
• An “investment analysis” of whether the project is financially attractive in the absence of carbon credit revenues; and/or
• A “barriers analysis” demonstrating that the project faces (non-financial) barriers that do not apply to its alternatives;⁸ and
• A “common practice analysis” demonstrating that the proposed project is not common practice or is distinct from similar types of activities that are common practice.

Project-specific approaches can be effective when applied rigorously but can also be time-consuming. Moreover, they often require subjective judgments (such as the evaluation of financial parameters or the identification of barriers) and strongly hinge on assumptions about the future (such as fuel prices for the next 7 years). It is often challenging for carbon crediting program staff and auditors to judge whether project developers are biasing these assumptions in their favor. Notwithstanding these concerns, project-specific approaches are applied to most projects under most carbon crediting programs.

“Standardized” approaches to determining additionality were developed in response to the perceived shortcomings of project-specific approaches. A standardized approach evaluates projects against a set of pre-defined eligibility criteria. (e.g., performance benchmarks) that – in principle – distinguish additional from non-additional projects.⁹

Standardized approaches require in-depth technical and economic analyses for each type of project to establish these objective eligibility criteria. When developed correctly, such criteria will make it unlikely that non-additional projects are eligible. The main advantage of the standardized approach is that, once these eligibility criteria are established, they can reduce the administrative burdens and subjectivity of making additionality determinations. Their main drawback is that they may be imprecise in addressing the atypical characteristics of individual projects within a given project type. Among the major independent (non-regulatory) carbon crediting programs, CAR has been the primary adopter of standardized approaches, although other programs (e.g. VCS, CDM) apply them to some project types.

For many project types, it can be difficult to define objective criteria that reliably screen out non-additional proposed projects, while not mistakenly excluding truly additional projects. Consequently, standardized approaches are available for a smaller set of project types. For example, CAR has adopted a smaller number of methodologies (several of which are for the same project type, but tailored to different geographies and jurisdictions) compared to VCS and the Gold Standard, which incorporate over 200 project-specific methodologies applicable across the world.

In practice, carbon crediting programs can also apply approaches to determining additionality for some project types that blend elements of both project-specific and standardized methodologies.

Observations on Baselines and Additionality

No matter how quantitative and objective it appears, any additionality set of “tests” will create some number of false positives (i.e., proposed projects that are deemed additional despite the fact that they are not) and some number of false negatives (i.e., proposed projects that are deemed non-additional despite the fact that they are additional). The design of tests – and how they are implemented in practice – determines how much they will err on the side of false positives or false negatives. It is important to understand that while false positives and false negatives can be problematic from a policy perspective, only false positives undermine the environmental integrity of carbon credits. In other words, it is the false positives – carbon credits issued to truly non-additional projects – that lead to increases in emissions and therefore hamper climate protection goals. Additionality tests can be cumbersome, time-consuming, and expensive. They are, however, necessary to ensure carbon credits have real value.

What questions can buyers ask about additionality?

Although carbon crediting programs all have standards designed to exclude non-additional projects, no additionality screen is perfect. Carbon credit buyers are advised to evaluate the specific projects from which they choose to buy credits. Recommended due diligence questions include the following:

For any project type…

• Did the project secure a buyer for carbon credits before implementation? Given the risks and uncertainties of the carbon market, it is very rare for a project that truly needs carbon credit revenue to go forward without first securing buyers for most or all of the credits it expects to produce. Forward contracts generally take the form of emission reduction purchase agreements (ERPAs). If a project began implementation without an ERPA, its claims to additionality should be further examined.
• How large is the project’s carbon credit revenue stream compared to other revenue streams or cost savings achieved by the project? Claims of additionality are often tenuous if carbon credit revenues constitute a small portion of a project’s total revenue plus savings. For example, if 95% of the total revenues for a renewable energy project derive from electricity sales and only 5% are from carbon credit revenue, the project’s additionality should be questioned.
• Would the project cease to avoid emissions (or cease to remove GHGs from the atmosphere) if it did not continue to receive carbon credit revenues? Even if a project’s carbon credit revenue is comparable to (or greater than) other revenue streams, for some projects those other revenues may be sufficient to cover costs – meaning that the project may continue avoiding emissions (or removing GHGs) even if it stopped selling carbon credits. While such projects are not necessarily non-additional – the decision to implement the project, for example, may still have been based on the prospect of carbon credit sales – they may pose a higher risk of being non-additional and should face greater scrutiny.

• If the project is not (currently) legally required, is there reason to believe that it is being undertaken in anticipation of future legal requirements (or to avoid triggering such requirements in the future)? Programs may differ in the extent to which they examine prospective legal requirements. For example, a landfill gas flaring project may not be required by law, but landfill owners may seek to implement such a project if they anticipate being mandated to control landfill emissions in the future (e.g., as the landfill grows to where it exceeds a regulatory size threshold). Thus, they could claim that the project is additional today, even though its implementation would be mandated in the (near) future.

Although carbon offset programs all have standards designed to exclude non-additional projects, no additionality screen is perfect. Carbon credit buyers are advised to evaluate the specific projects from which they choose to buy. Recommended due diligence questions include the following:

• Are data and assumptions used to justify the project’s additionality available and easily accessible? Most major carbon crediting programs require transparent reporting of additionality determinations and require that all data and methods used be checked by accredited verification bodies. Buyers conducting due diligence may still want to review and understand what methods were used, especially where a methodology allows for different options to demonstrate additionality – some of which may be more conservative than other options.
• Is the project applying the most recent version of any relevant methodology or additionality test? If not, would the project still be considered additional under the additionality criteria prescribed by the most recent methodology and program protocol? If a project would not be considered additional under the most current version of the methodology, this does not necessarily mean the project was or is not additional. For example, a project involving large upfront investment costs could have been approved at a time when it was not common practice; the fact that this type of project has now become common practice would not affect its additionality determination, which was properly determined when it was implemented. On the other hand, methodologies are often updated to close “loopholes” in additionality tests that allow non-additional projects to qualify. Further investigation should be done to understand why the methodology’s additionality criteria were updated, and whether the project in question would be excluded under the revised test.

For project types where additionality is a particular concern…

• If a project-specific additionality test was used, is the project’s rationale for additionality compelling? Project-specific additionality tests attempt to determine additionality by evaluating legal, financial, and implementation details specific to each proposed project. Conducting due diligence on a project that asserts its additionality based on one of these tests requires examining the information provided by the project and assessing whether its arguments are truly compelling. Key questions to ask here include:
  • How much information and data has the project provided to establish its claim to additionality? A perfunctory (i.e., superficial) analysis should be immediately suspect.
  • Is it clear that the project is not legally required (and will not be required in the near future)?
  • Does the project identify – and describe in detail – credible implementation barriers, and does it make a compelling case that credit revenues are needed to overcome these barriers? All projects face implementation barriers of one kind or another. The key questions for a project’s additionality are whether such barriers are significant and whether credit revenues will enable them to be overcome. If there is no obvious connection between the credit revenue and how a barrier would be overcome, then the project’s additionality should be questioned.
  • Is there a clear and believable case that credit revenues were a decisive factor in pursuing the project? Notwithstanding the potential for credit revenue to address barriers, a crucial question is whether having access to credit revenues is a decisive factor in pursuing a project. “Decisive” means that the project will not be pursued without carbon revenues, even if it has (or had) access to other revenue streams. For example, a project may be designed to capture methane and deliver it to a nearby gas pipeline. Technical and permitting requirements for interconnection with the pipeline would constitute an implementation barrier. The project developer convincingly shows that credit revenues could cover the costs to address these requirements. However, financial analysis shows that the project would receive enough revenue from methane gas sales alone to both cover these costs and still achieve a competitive return on investment. Because of this, it is highly unlikely that credit revenues were a decisive factor in pursuing the project.
  • Is there a compelling argument that the project activity is not common practice? Projects involving activities that are common outside of carbon markets (aka “business as usual”) should usually be rejected unless the project developers can identify essential differences between their project and other similar activities. This determination can be subjective, however. It is important to examine how common practice is defined by a project, and whether inconsequential details are used to make it appear different from similar activities or practices in a country or industry.
• If a standardized additionality test was used, does the project present a possible exception to the rule? Standardized additionality tests are generally designed by considering average project conditions. It is important to understand the assumptions underlying any “performance standard” or other criteria used to screen for additional projects. If the project faces circumstances that diverge significantly from these assumptions (e.g., it has access to a revenue stream significantly above what is typical for similar projects) it may not in fact be additional even though it meets all standardized eligibility criteria.
• For due diligence purposes, buyers should seek to apply a separate “project-specific” additionality assessment to these projects. This would involve requesting more details about the project, and evaluating them against the key questions identified above for project-specific additionality tests. A project that meets all standardized additionality criteria and is able to present a compelling argument for passing a project-specific additionality assessment (e.g., demonstrating that carbon credit revenues were a decisive factor in project implementation) is more likely to be additional.

Robust quantification

Robust quantification means that the GHG emissions avoided or the removals that are enhanced by a mitigation project are quantified conservatively and not overestimated, relative to a realistic baseline. In other words, the claimed emissions avoided or removals enhanced by crediting projects must not be exaggerated.

Conservative quantification must ensure that it is unlikely too many credits will be issued to the project. Overestimation can occur by inflating estimated baseline emissions and/or underestimating the project emissions including failures to account for a project’s indirect effects on GHG emissions (i.e., leakage). Conservative assumptions can be applied to both the project and baseline scenario emission (or removal) estimates.

Robust quantification also typically demands that projects are monitored and that this data, along with the quantified avoided emissions or enhanced removals, are assured by accredited auditors before credit issuance.

Suppose that, for every 50 additional tonnes of carbon dioxide (CO₂) emissions that are avoided by a crediting project, the project developer reports avoiding 100 tonnes, and 100 carbon credits are then issued to the project. Half of these credits would have no effect in mitigating climate change and using them instead of lowering internal emissions would make climate change worse. Overestimation of avoided GHG emissions can occur in several ways:

• Overestimating baseline emissions. The first – and most subtle – way GHG credits can be overestimated is if a project’s baseline emissions are overestimated.¹⁰ Baseline emissions are the reference against which avoided GHG emissions are calculated, and are closely tied to additionality – they are the emissions that would have occurred in the absence of the expected revenue from selling issued credits.¹¹ Baselines are easier to determine for some types of projects than others. For a project that captures methane from a landfill and destroys it, the amount of methane that would have been emitted is generally the amount that is captured and destroyed plus methane that is not captured by the project (due to imperfect capture efficiency) as in the baseline scenario both sources of gas would have been emitted.¹² In contrast, there can be much greater uncertainty when estimating how many GHG emissions will be displaced on an electricity grid by a solar power project – leading to a greater risk of overestimation if estimation methods are not appropriately conservative.
• Underestimating actual emissions. Many kinds of carbon crediting projects avoid but do not eliminate GHG emissions. A project’s avoided GHG emissions are quantified by comparing the actual (i.e., ex post) emissions that occur after the project is implemented against its predicted baseline emissions.¹³ In the same way that baseline emissions can be overestimated, actual project emissions can be underestimated – with both contributing to an overestimation of GHG emissions avoided by the project. For carbon removal projects, this source of overestimation risk can result from overestimating actual removals caused by the project. Exaggerated estimates of the actual impact of a project can arise through measurement error. For example, determining the increase in the amount of carbon stored in trees from one year to the next is subject to measurement uncertainty and sampling errors, which can sometimes overstate actual carbon storage. Many standards address this by discounting measured quantities wherever significant uncertainties arise.
• Failing to account for the indirect effects of a project on GHG emissions (aka “leakage”). To quantify avoided GHG emissions, actual project and baseline emissions are determined for all sources affected by a project. Often, however, a project will have both intended and unintended effects on GHG emissions. If quantification methods fail to account for GHG emission increases caused by the project at some sources (even indirectly), then the total avoided GHG emissions will be overestimated. Unintended increases in GHG emissions caused by a project outside of its recognized boundaries are referred to as “leakage”. The classic example is a forest preservation project that ends up shifting the production of timber and deforestation to other areas.
• Forward crediting. Although rare, carbon credits may be issued for avoided GHG emissions that a project developer expects to achieve in the future. Such “forward crediting” is usually problematic because it can lead to an over-issuance of carbon credits if a project fails to perform as expected.¹⁴ It can also pose issues if future events (e.g., regulatory changes) lead to erroneous assumptions that inform the baseline emissions over the crediting period.

Finally, to control for these possible causes of overestimation, it is necessary to monitor and verify ex post a project’s performance.¹⁵ Measurement and data collection procedures – and calculations or estimates derived from these data – should be scientifically sound and methodologically robust. Furthermore, project monitoring data should be rigorously verified. Verification entails assessing the veracity of data provided by project developers, often through an independent audit of selected data samples. Crediting project developers have an incentive to report data that maximizes the number of carbon credits they can sell. Verification helps to assure that reported data are accurate and do not overstate avoided GHG emission emissions.

How do crediting programs address robust quantification?

Carbon crediting programs endeavor to ensure that avoided GHG emissions are not overestimated by requiring the use of detailed quantification methods specified within approved project type-specific methodologies. In general, the quantification methods within a methodology include:

• GHG accounting boundaries which define the GHG sources and sinks to be considered in quantifying a project’s baseline GHG emissions and the actual project GHG emissions.¹⁶
• Baseline scenario determination and emission estimation methods that prescribe how a project’s baseline scenario is defined, including acceptable assumptions regarding baseline technologies and practices and provide instruction for quantifying the baseline emissions.
• Quantifying actual project emissions methods that prescribe how emissions associated with the implemented activities are calculated. These methods ensure there is functional equivalence between the baseline scenario and project (i.e., that the same level of service or quantity of goods results from both scenarios).
• Monitoring requirements that prescribe the data to be collected for quantifying the baseline emissions and the project emissions. These methods also specify how to conduct measurements, what kinds of estimates are acceptable, the calculation formulas that must be used, and how estimation uncertainties are assessed.¹⁷

Importantly, carbon crediting programs require auditing (i.e., validation and verification) by independent third-party auditors who check that projects have properly applied prescribed quantification methods (see the box below). In most cases, carbon credits are only issued after GHGs have been avoided or removed, and have been audited.

Finally, crediting programs also limit the crediting periods during which projects can be issued credits for avoiding GHG emissions. Crediting periods are typically from 7 to 10 years, which is often shorter than the operational lifetime of a project’s equipment. Programs generally allow crediting periods to be renewed (usually one or two times, depending on the project type), as long as a project remains eligible under its crediting program standard.¹⁸

What do crediting project auditors do?

Third-party auditors have two main responsibilities in the context of the operations of a carbon crediting program. First, they perform project validation, which entails confirming that a proposed project meets a program’s eligibility criteria, including the determination of additionality. Second, auditors conduct project verification, which entails confirming that project monitoring data was collected per a program’s requirements, as well as reviewing calculations to confirm that the project’s avoided GHG was estimated according to the approved methodology.* The verification process usually involves a site visit combined with auditing (or sampling) of monitoring data to confirm with “reasonable assurance” that the data are accurate. Auditors are generally paid by project developers, which creates an inherent conflict of interest. To address this conflict of interest, most carbon crediting programs review verification arrangements, require auditors to legally certify that they are free from conflicts of interest (beyond the verification services contract), and limit the number of times that the same auditor can verify a single project or multiple projects for the same project developer. Programs also regularly audit the work of auditors to assure their objectivity.

* Carbon crediting programs can differ in their approach to validation and verification. Some programs, like CAR, combine validation with the first verification of a project and do not make a formal distinction between the two functions. Others require validation and verification as separate steps (and some, like the CDM, require separate auditors for each step to avoid conflicts of interest – since positive validation could lead to a more lucrative verification contract).

What questions can buyers ask about robust quantification?

Examining in detail how a project’s avoided GHG emissions were quantified and thus how overestimation has been prevented can be difficult and time-consuming. However, two relatively straightforward questions can point to areas of potential risk:

• Does the project apply any deviations from the methodology and if so, are the deviations appropriately justified? Several crediting programs allow projects to deviate from a methodology’s requirements if the project developer can justify an alternative approach to program staff. Deviations are often temporary and typically involve situations where a project is not able to produce monitoring data according to prescribed methods but can estimate them using alternative methods. Programs will generally try to ensure that alternative methods are more conservative than what a methodology prescribes. Carbon credit buyers may nevertheless wish to review cases where a deviation was applied for and approved.
• Are there any gaps or other discrepancies in project monitoring data, and have these discrepancies been properly explained and addressed? Major carbon crediting programs all have established methodologies for quantifying avoided GHG emissions and enhanced removals from projects. These methodologies provide consistent methods for both estimating baseline emissions and determining a project’s actual emissions. In general, these methodologies can be relied on to credibly quantify a project’s avoided emissions or enhanced removals. Buyers should be aware, however, that different methodologies under separate programs may produce varying results – even for the same project.¹⁹ Further recommended due diligence questions include the following:

For any project type…

• Is the project applying the most recent version of the methodology to quantify avoided emissions or enhanced removals? Crediting programs regularly revise methodologies to update assumptions and improve quantification methods. Previously registered projects are generally allowed to continue using prior versions, even after an update (i.e., by virtue of their legacy application of the methodology). Buyers should check, however, whether applying the most recent version of a methodology would significantly affect a project’s avoided emissions or enhanced removal estimates. If applying the most up-to-date version would result in a downward revision of quantified impact on atmospheric GHG levels, then buyers should avoid purchasing previously issued carbon credits for the project and insist that it follow the current methodology going forward.
• Are the quantification methods scientifically sound? (Does an internet search for the methodology bring up anything problematic?) One reason crediting programs update their methodologies is to respond to discovered flaws in quantification methods or advances in scientific understanding. The UN Clean Development Mechanism, for example, revised its quantification methods for HFC-23 destruction projects once it was discovered that projects were taking advantage of a flawed baseline approach that allowed them to increase HFC-23 production in order to get credit for destroying it. For any project, it is worth doing some basic research to see if any credible critique has identified shortcomings with the methodology.

For project types where quantification challenges are a particular concern…

• Are methodology-prescribed methods for addressing quantification uncertainties – including leakage risks – appropriate for the specific project being examined? Methodologies will generally prescribe methods to address quantification uncertainties, but such methods are often based on what a typical or “average” project implementation looks like. In evaluating a specific project, it is important to determine whether the project’s circumstances differ from conditions or parameters assumed in the methodology’s methods. This task requires a thorough understanding of the quantification methods used and their underlying assumptions and may require examination of scientific literature underpinning the methods. Leakage risks should come in for particular scrutiny, since many methodologies apply standard “defaults” or discount factors to account for leakage, given the difficulties of actually measuring leakage effects (which may occur far away from a project site). Although these default approaches are designed to be conservative, buyers should still compare their underlying assumptions to a project’s specific circumstances. A project whose circumstances deviate significantly from those assumed in quantification methods may have avoided emissions or enhanced removals that are overestimated.
• Would using another methodology for the same project (e.g., under a different program) produce substantially different avoided emission or enhanced removal estimates? Different methodologies for the same project type do not always produce consistent estimates of a project’s avoided emissions or enhanced removals. As a result, project developers may seek out programs with more generous quantification methods. Especially for project types with greater quantification uncertainties, buyers should err on the side of purchasing credits from projects that have applied more conservative quantification methods.

Permanence

Carbon credits must be associated with the permanent avoidance or permanent enhanced removal of GHG emissions. If a project that only temporarily stores carbon (e.g., by sequestering it in trees or soils) substitutes for activities that permanently avoid carbon emissions (e.g., by reducing fossil fuel use), environmental integrity will be undermined.

One challenge with using carbon credits to compensate for CO₂ emissions is that the effects of CO₂ emissions are very long-lived. Most of the carbon in a tonne of CO₂ emitted today will – eventually – be removed from the atmosphere. However, around 25% remains in the atmosphere for hundreds to thousands of years.²⁰ To physically compensate for CO₂ emissions, carbon credits must be associated with avoided emissions or enhanced removals that are similarly permanent.

The problem is that the effects of some types of projects can be reversed. A “reversal” occurs if carbon stored by a project is later emitted, resulting in no cumulative change in atmospheric carbon over time. For many kinds of carbon offset projects, reversals are either physically impossible or extremely unlikely. The greatest risk occurs with projects that store carbon in reservoirs (like trees) that may be subject to future disturbances. The classic example is a forestry project that keeps carbon in trees and soils (and adds to those carbon stores over time, as the forest grows). If a fire later burns down the project’s trees – or the trees are cut down to make way for new development – some, or all, of the carbon may be (re)emitted, leading to a reversal.

One common misunderstanding is that – for carbon credits – “permanent” means something less than hundreds or thousands of years. A standard convention, for example, is that carbon only needs to be kept out of the atmosphere for a few decades (e.g., 40 years) to be considered “permanent.” Such compromises are frequently made in the context of carbon crediting programs seeking to balance technical requirements (i.e. storing carbon indefinitely) with practical constraints (i.e. realistically, crediting programs can provide only a finite guarantee). But, scientifically, anything less than a full guarantee against reversals into the indefinite future is not “permanent.” Buyers of carbon credits subject to reversal risk should bear this in mind and recognize the potential liability that reversals could pose in the future – even after the minimum “permanence” period guaranteed by crediting programs. Strictly speaking, such credits do not fully offset fossil CO₂ emissions.

How do crediting programs address permanence?

Most carbon crediting programs have established “buffer reserves” to address the risk of project reversal.²¹ Under this approach, a portion of carbon credits from multiple projects are set aside into a common buffer reserve (or “pool”), which functions as an insurance mechanism. Buffer reserve credits can be drawn upon to compensate for reversals from any project with reversal risk. If a reversal occurs, credits are retired or cancelled from the buffer reserve on behalf of the project’s buyers. The number of credits a project must contribute to the buffer reserve is usually based on an assessment of the project’s risk for reversals. Over finite time periods, this approach can fully cover catastrophic losses affecting individual projects, as long as the buffer reserve is sufficiently stocked with credits from projects across an entire program.

Carbon crediting programs also encourage – or require – projects to reduce the risk of reversals. Some programs, for example, allow lower buffer reserve contributions if project developers implement risk mitigation measures (such as forestry projects that implement fuel treatments, and the use of conservation easements or other legally binding restrictions on future land uses). Other programs make reversal risk mitigation a requirement for eligibility.

Buffer reserves can effectively compensate for reversals due to natural disturbance risks — such as fire, disease, or drought affecting forests and soils. However, they run into a “moral hazard” problem if used to compensate for human-caused reversals, such as intentional timber harvesting.²² If a landowner faces no penalty for harvesting trees for their timber value, for example – because any reversals caused by harvesting would be compensated for out of a buffer reserve – then the landowner could face a strong incentive to harvest. This would be a classic example of an “uninsurable” risk that would quickly compromise the effectiveness of a buffer. Because of this, most crediting programs are careful to place the primary responsibility for compensating intentional reversals on project developers. However, not all crediting programs have equally credible mechanisms for enforcing these obligations. Some do so through legal contracts, for example, while others simply withhold future credit issuances – which may not be effective if a developer simply “walks away” from a project after an intentional reversal.

What questions can buyers ask about permanence?

No reversal risk can be insured against in perpetuity. Over the very long run, the chance of reversal for projects that store carbon in trees and soils approaches 100%. Buyers should keep this in mind when considering carbon credits from these kinds of projects. As a guideline, if the goal is strictly to offset GHG emissions, avoiding reversible avoided GHG emissions or enhanced removals altogether is considered the safest approach. However, addressing emissions from agriculture, forestry, and land use is critically important for mitigating climate change globally – and these kinds of projects often have desirable co-benefits. If the primary goal is to contribute to mitigation efforts (not offset per se), then purchasing credits that are additional from these projects can be a great choice.

Assuming some risk of reversibility is acceptable, questions for buyers to consider include:

• Does the project have a formal plan for managing and reducing reversal risks, and is this plan being followed? Higher-quality carbon sequestration projects will have management plans in place to lower the risk of reversals. These plans may cover physical measures like thinning or other treatments to reduce the risks of fire and disease in forests; financial management practices to reduce risk of project failure or bankruptcy; and/or easements, legal restrictions, or other measures to guard against over-harvesting or land conversion. Often, crediting programs will require that such plans be in place. Projects with strong plans, along with implementation and enforcement provisions, are likely to have higher-quality carbon credits. For carbon credit buyers conducting due diligence, it is nevertheless a good idea to review such plans and evaluate their implementation and effectiveness. Important review questions include:
  • Have the project owners allocated sufficient staff and budget to maintain the project’s intended impact?
  • Are implementation partners responsible for management and maintenance contractually obligated to perform these duties?
  • Is the project in good financial standing? Is there a prospect of financial instability or bankruptcy?
• How long is “permanence” guaranteed by the crediting program that issued the credits? Crediting programs differ significantly in terms of the length of time that they will guarantee compensation for reversals. The majority do so only through the end of a project’s lifetime, which under some programs may be as short as 10 years. Other programs offer a minimum guarantee of 100 years from the time a credit is issued. Crediting programs are not always transparent about what their minimum guarantee is, so it is worth inquiring either with project developers or directly with carbon crediting program staff. The longer the guarantee, the higher the relative quality of the carbon credits.

For project types where lack of permanence is a significant risk, all major crediting programs have mechanisms to address this risk and compensate for it. Thus, buyers of carbon credits generally bear little risk themselves related to the reversibility of avoided emissions or enhanced removals. Nevertheless, buyers should be aware that there is always at least some risk that the insurance mechanisms established by programs to cover reversals may fail, and carbon credits from these projects may effectively be impermanent. If non-expiring credits are purchased anyway, then buyers should examine a project’s circumstances and management practices to determine whether these risks have been minimized. Further recommended due diligence questions include the following.

For any project type…

• Is there a possibility of an emissions “reversal” due to project failure? Unless a project involves carbon storage of some kind (e.g., sequestering carbon in trees), a reversal of avoided emissions or enhanced removals is highly unlikely. In theory, however, a “reversal” occurs any time GHG emissions rise above what they would have been in a project’s baseline scenario. A hypothetical example would be where a solar panel and battery storage system is used to provide electricity to a building, allowing it to operate off the grid (and avoiding grid-based electricity emissions); however, the solar panel fails and a backup diesel generator is brought in to provide power instead, causing more emissions than would have occurred in the baseline using grid electricity. Technically, this would lead to a “reversal” of any prior avoided emissions. Such circumstances will be rare, but for some project types it may be worth evaluating the risks. Buyers should steer clear of projects with these kinds of “failure-induced reversal” risks.

For project types where permanence is a particular concern…

• What is the magnitude of the project’s reversal risk (e.g., as calculated in accordance with program standards)? Most crediting programs require forestry and land-use projects to develop a project-specific assessment of reversal risks (e.g., taking into account the likelihood of natural disturbances, management or financial failures, etc.). Although programs usually take this risk into account when insuring against reversals, carbon credit buyers may still prefer projects with lower risks. If a program does not require a project-specific risk assessment, buyers should request one as part of their due diligence.
• Are the crediting program’s insurance or “buffer reserves” reliable? Most major crediting programs have insurance mechanisms in place to compensate for reversals. Usually, these take the form of “buffer pools” or reserves stocked with carbon credits contributed by projects subject to reversal risk (e.g., forestry projects). Programs differ, however, in how they determine the required contribution of each project. They also differ in the extent to which they cover “intentional” reversals (e.g., those due to overharvesting or land conversion) or just “unintentional” ones (e.g., reversals due to natural disturbances). A full comparison of crediting programs’ insurance mechanisms is beyond the scope of this guidance. A carbon credit buyer, however, may want to become familiar with the policies of the programs whose credits they buy and decide whether they are comfortable with their ability to compensate for any reversals.

No Double-Counting

To preserve environmental integrity, carbon credits must convey an exclusive claim to avoided emissions or enhanced removals and must not be counted or used more than once.

The use of carbon credits can make climate change worse – i.e. the atmosphere will see greater total emissions – if more than one party can lay claim to the avoided emissions or enhanced removals from which the credits were issued. For example, imagine that two different companies claim the same 100 tonnes worth of avoided CO₂ emissions. Together they would claim to have avoided 200 tonnes of emissions, but the actual change in emissions to the atmosphere (relative to the baseline scenario) would only be 100 tonnes. The climate would be worse off, compared to a situation where both companies were to each separately avoid 100 tonnes of emissions. “Double counting” like this can happen in three ways:²³

• Double issuance occurs if more than one carbon credit is issued for the same avoided tonne of GHG emissions. For example, a carbon crediting program can mistakenly issue two credits to the same project for one tonne of avoided emissions. This rarely happens. A more likely scenario is that two different programs could issue credits to the same project, without realizing the project is “double registered” under both programs. Most crediting programs run checks to avoid this situation (though they are not always foolproof). Finally, a more subtle “double issuance” risk is that the same program, or multiple programs, could issue credits to two different projects, each of which claims to have avoided the same tonne of emissions. An example would be if both the producer and consumer of biofuels claim to have avoided the GHG emissions from combusting the same liters of fuel – and two different programs issue carbon credits separately to each project without realizing the overlap.
• Double use occurs if two different parties count the same carbon credit toward their avoided emission or enhanced removal targets. Again, most carbon crediting programs have procedures to prevent this from happening. The most likely way for it to occur is for an unscrupulous seller to represent to a buyer that a credit was retired on their behalf, and then proceed to market the same credit to other buyers in the same fashion. To prevent this, carbon crediting programs must require that the purpose of any carbon credit retirement is clearly recorded in a registry system, that the beneficiaries of credit retirements are identified in the same registry, and that all of this information is publicly accessible. Across existing crediting programs, current practices related to this kind of information disclosure are somewhat mixed.
• Double claiming can happen if carbon credits are issued to a project for avoided emissions or enhanced removals that another entity (e.g., a government or private company) claims toward its own emissions target. For example, double claiming would occur if an energy efficiency project obtained carbon credits for avoiding emissions at a power plant covered by an emission target. In this case, both the project and the power plant could claim the same avoided emissions: the project through carbon credits, and the power plant through the contribution the project makes to helping meet its target. Double claiming associated with carbon credits is also a potentially significant issue under the Paris Agreement, an issue further discussed in Using Carbon Credits: Issues and Considerations.

How do crediting programs address double-counting ?

Carbon crediting programs apply several methods to ensure that carbon credits convey an exclusive claim to avoided GHG emissions or enhanced removals.

Double issuance is addressed primarily by:

• Ensuring that carbon credits are only issued after program approval of verification reports and other supporting documentation.
• Checking that the accounting boundaries used to quantify avoided GHG emissions or enhanced removals do not overlap with other projects.²⁴

Double use is addressed primarily through registry systems that assign unique serial numbers to individual carbon credits, track their transfer and ownership, and record the purpose of their use and on whose behalf they were retired.²⁵

Double claiming is addressed through:

• Restricting the eligibility of project types (e.g., excluding those that are known to be subject to GHG reduction mandates or competing claims); and/or
• In some cases, project developers are required to sign legal attestations asserting exclusive claims to credited avoided emissions or enhanced removals and agreeing to legally convey such claims to the buyers of carbon credits (programs may differ in their specific legal requirements).

What questions can buyers ask about double-counting

Major crediting programs have rules and procedures in place to ensure that avoided emissions and enhanced removals are not double counted and that there are no competing claims for which they issue carbon credits. Nevertheless, there are steps credit buyers can take to help ensure they have an exclusive claim to a credit’s avoided emissions or enhanced removals. Recommended due diligence questions include the following.

For any project type…

• Once the carbon credits are retired, is the purpose of the retirement clearly indicated, irreversible, and unambiguously designated in a crediting program registry? Crediting programs generally try to ensure that the purpose of any carbon credit cancellation or retirement is clearly indicated in their registry systems, so that only one party is able to make a legitimate claim to the retirement. This process prevents any “double use” or “double selling” of credits, where more than one party claims that a retirement was made on their behalf. If the buyer controls the credits directly (e.g., they control the account in which they are held in a program’s registry system), then clearly indicating an exclusive claim to the credit upon retirement is usually straightforward. Retail purchasers should ask to see proof of retirement on the relevant registry from the retail provider. This can be provided in the form of certificate numbers or transaction IDs that match the quantity purchased.
• Are programs taking into account all voluntary or mandatory GHG emission targets in the jurisdiction(s) of the project? Although carbon credit programs usually take pains to avoid crediting avoided emissions or enhanced removals that are covered by official GHG mitigation targets, in some cases they may ignore voluntary targets, other non-binding commitments, or commitments that countries have made but subsequently abandoned. In Copenhagen in 2009 and Cancun in 2010, for example, many countries made voluntary commitments to lower GHG emissions. In most cases, the rationale for crediting programs to ignore these past commitments is that the countries have not followed through in achieving them, and they have been superseded by Paris Agreement pledges. Buyers should therefore ascertain that avoided emissions and enhanced removals do not occur at sources subject to any corporate GHG inventory reduction commitments.

For project types where ownership is a particular concern…

• How high is the risk of competing claims to indirect avoided emissions? Were the carbon credits issued for avoiding offsite emissions? In most cases, a project type will be flagged as higher risk for ownership conflicts where it involves indirect avoided emissions – i.e., the avoided emissions occur at sources not owned or controlled by the project owners. Ownership claims are harder to police where they involve emissions that occur at sources not owned or controlled by the project developers. Claims to these avoided emissions are inherently riskier because there is always a chance that the entities who do own or control the sources may claim the avoided emissions as well. Major crediting programs generally try to police conflicting claims by having project owners legally attest to having an exclusive claim to avoided emissions that are credited. In many cases, however, it is difficult if not impossible to determine exactly where a project impacting indirect emissions occurs, making the truth of such attestations difficult to verify. Where risks of double claiming seem significant (for example, if avoided GHG emissions occur in sectors with significant voluntary commitments or compliance obligations), buyers should avoid carbon credits from such projects. From a due diligence perspective, the key question is whether the owners of the indirect emission sources are likely to make a claim related to emissions sources lowered by a crediting project. Related questions to ask include:
  • Have the owners of the indirect emission sources (or potential sources) adopted any voluntary GHG inventory emission reduction goals? If so, they may effectively count any project effects towards their own goals.
  • Are the owners of the indirect emission sources subject to any legally binding requirements to lower emissions? Programs will usually not credit avoided emissions that could occur at regulated sources, but it may be worth examining whether relevant legal requirements have been fully surveyed.

Sustainable development benefits and safeguards

To ensure that carbon credit transactions do not make people or the environment worse off, crediting projects must avoid causing any (new) social and environmental harms.

Some projects that avoid GHG emissions or enhance removals can at the same time harm local communities or cause (non-climate related) environmental damage. Some project types have higher risks of causing harm. For example, large-scale hydropower projects, such as those implemented or proposed to be implemented in Brazil through the CDM, can displace local populations, and cause the loss of valuable agricultural land and the loss of ecosystems (e.g., in the flooded reservoir above the hydropower dam). Forestry projects also have the potential to cause harm. For example, in many countries unresolved land tenure issues can result in social harm if communities lose access to forestland. Also, forestry projects may maximize timber production and CO₂ sequestration but this could reduce the forest’s diversity and lead to the degradation of the other ecosystem benefits.

To broadly uphold the principle of environmental integrity, potential harm must be prevented or minimized. At a minimum, projects should demonstrate compliance with all legal requirements in the jurisdiction where they are located. In many cases, however, additional reviews and safeguards may be necessary to guard against negative social and environmental outcomes.

How do crediting programs address sustainable development benefits and safeguards?

Carbon crediting programs generally have environmental and social safeguard policies designed to reduce the risk of any detrimental effects from registered projects. Nearly all require (and verify) that projects comply with applicable legal requirements. Most crediting programs also require local stakeholder consultations as part of the project approval process and have established grievance mechanisms to address complaints related to projects after implementation. Crediting programs may guard against the risks of harm presented by specific project types by excluding these riskier project types from the program. Crediting programs may also require risk assessment and reporting by project developers. Finally, some programs – like the Gold Standard – actively require that projects demonstrate social and environmental co-benefits (and not just avoid harm), as well as monitor and report on these benefits.

There are several “add-on” certification schemes (see What Are Carbon Crediting Programs) focused on the social and environmental impacts of carbon crediting projects. Organizations like the Climate, Community, and Biodiversity Alliance (CCBA) and SocialCarbon Standard, for example, certify the added co-benefits achieved by crediting projects (but do not otherwise address credit quality).

Carbon credits were originally conceived as a means to not only provide avoided GHG emissions benefits but also co-benefits to the communities in the vicinity of crediting projects. Co-benefits from the implementation of a carbon offset project improve social, economic, and/or ecological outcomes. For example, co-benefits can include improving community employment opportunities, air and/or water quality, biodiversity, biological habitat conservation, energy access, or access to community health and education services.

When deciding between crediting projects to buy credits from, if one is confident in the environmental integrity of each project, then the co-benefits can be a distinguishing factor. If buying credits from a clean cookstove project, one should also be supporting a project that reduces the amount of purchased fuel as it enables more efficient use of fuel. This outcome can save households money as well as reduce air pollution health impacts from inefficient indoor fuel combustion. For a buyer, it is useful to know their prioritization for these project characteristics – do they want to associate their organization with a project that conserves wilderness or financially benefits communities? Do they want to find a project with a connection to their business operations, products, or supply chain? Carbon credit purchases can represent a public relations risk if seen as ‘buying out’ of the problem of addressing climate change instead of reducing internal emissions. However, there is also risk related to a project’s potential to cause social or environmental harm. By supporting projects with high co-benefits, one can turn this aspect of risk into a positive attribute. Unsurprisingly, projects with high co-benefits typically correspond with higher credit prices.

What questions can buyers ask about sustainable development benefits and safeguards?

Major carbon offset programs have rules and procedures in place to avoid approving projects that could cause social, economic, or environmental harm. In addition, some carbon offset programs and third-party certifiers offer supplementary certifications for social and environmental benefits produced by offset projects. Buyers can generally rely on these rules and certifications in evaluating potential offset credit purchases, particularly when it comes to identifying projects with positive co-benefits. In conducting due diligence, it may be useful to examine the following questions to reduce the risk of purchasing from harmful projects. Recommended due diligence questions include the following.

For any project type…

• Before implementation, did the project developers engage and consult with local stakeholders potentially affected by the project? Most – but not all – crediting programs require that local stakeholder consultations be conducted prior to a project’s registration. Stakeholder consultation can be particularly important in developing countries, where there are often fewer regulatory safeguards. If stakeholder outreach was not undertaken, this failure should raise concerns, though the seriousness may depend on the type of project involved and where it is located. Some types of projects pose fewer risks to local communities than others.
• Has the project received any program or third-party certifications affirming its environmental or social co-benefits? Generally, such certifications (e.g., from the CCBS; SocialCarbon Standard or crediting programs themselves, see What Are Carbon Crediting Programs) can provide added assurance that a project will not cause harm and ensure that project developers have considered the concerns of local stakeholders. Projects that have not received any co-benefit certification do not necessarily pose a high risk of harm, but it may be useful to inquire with project developers about why they did not seek certification if it was an option.

For project types where potential harms are a particular concern…

• What has the project done to minimize risks and reduce potential harm? In general, it is wise to avoid project types that are associated with social, economic, or environmental harms. If such projects are still pursued, then it is crucially important to understand a project’s specific circumstances, how it has addressed potential risks and the concerns of local stakeholders, and what mechanisms it has in place to both avoid harms where possible and compensate for them if they occur. The CCBS, for example, requires ongoing community impact monitoring associated with forestry projects. A project’s documentation that is publicly accessible from the crediting program’s registry should provide information to answer this question. If not, the buyer should reach out to the project developer directly. It is ultimately up to offset carbon credit buyers, however, to decide whether these mechanisms are sufficient. Visiting the project site is usually the best way to identify potential harm caused by a project. If this is not possible, making a request to visit and reading the developer’s reaction can also be revealing.

1. This condition applies to greenhouse gas (GHG) emissions, as well as to other social and environmental impacts. If global GHG emissions are no greater as a result of using a carbon credit instead of reducing one’s own emissions, then the credit is said to preserve “environmental integrity” (Schneider and La Hoz Theuer 2019). However, it is also important that crediting projects do not cause significant social or (non-climate) environmental harms. Both are important for carbon credit quality. ↩︎
2. See Gillenwater (2012). ↩︎
3. For an in-depth discussion of these ideas, see Trexler (2019). ↩︎
4. In most cases, additionality is assessed only once, when an activity is submitted to a crediting program for approval. Conceptually, one could think of some projects as becoming “non-additional” in the future – e.g., if, in the absence of carbon credit revenue, the same activity would have instead been implemented at a later point in time than proposed by the project developer. Typically, however, crediting programs address this possibility through reassessment of the activity’s baseline (effectively, ceasing credit issuance to the activity, because the activity and its baseline are determined to be identical at a future date) rather than formally determining that an existing project was never additional in the first place. ↩︎
5. However, crediting programs typically define baseline scenarios under the presumption that project interventions are additional. ↩︎
6. See Gillenwater (2011). ↩︎
7. See Trexler (2019). ↩︎
8. In addition to identifying non-financial barriers preventing a project’s implementation, a barriers analysis should also address whether expected revenue from the sale of carbon credits is likely to enable the project developers to overcome the barrier(s). For example, if a project enables a dedicated staff person to spend more time educating and building trust with a community to overcome social barriers preventing the adoption of a new clean cookstove that differs from those typically used in a community. A barrier may exist, but it must be eliminated by credit revenue if it is to be used to determine additionality for a project. So in this example, the new stove adoption or use rate must be increased resulting from the additional education the staff person is able to engage in resulting from credit revenues. ↩︎
9. Standardized additionality approaches can use “positive lists” (lists of defined technologies or practices that are deemed additional without further evaluation) or a set of technical specifications and other criteria that a project must meet to be determined to be eligible (for example landfill gas collection and destruction, occurring at a sanitary landfill that is below a certain size threshold, where the gas collection is not required by law). ↩︎
10. For projects that enhance the removal of carbon, this baseline concern is flipped as the risk of overestimating the impact of a project would result from underestimating the baseline’s rate of carbon removal. ↩︎
11. Again, a common misconception is that the baseline for a project represents what would have happened “in the absence of the project.” However, it is essential to evaluate whether a proposed project is itself the baseline (i.e., is not additional), and therefore will avoid no emissions. ↩︎
12. Assuming that the project is additional and that the project itself does not affect the rate of methane generation at the landfill – for example, by creating a “bioreactor” landfill. ↩︎
13. See GHGMI’s website for more information on the baseline concept and terminology. ↩︎
14. See, for example, Offset Quality Initiative (2008). ↩︎
15. This process may include collecting and verifying data needed to estimate a project’s baseline emissions. ↩︎
16. Some of these sources and sinks may be treated as “leakage” effects and accounted for in supplemental calculations. ↩︎
17. Most quantification methods prescribe a combination of project-specific data collection, along with the use of conservative defaults or estimates where data collection is impractical. ↩︎
18. Renewal under some programs may also involve requirements to update the baseline scenario, and therefore reconsider additionality determination. ↩︎
19. See, for example, http://www.sei-international.org/publications?pid=1607 ↩︎
20. Technically, the individual molecules of CO₂ emitted may cycle back and forth between the atmosphere and terrestrial reservoirs multiple times, but atmospheric concentrations of CO₂ will remain elevated by an amount equal to about 25% of the original mass emitted after 1,000 years (Joos et al. 2013). ↩︎
21. The CDM is alone in issuing “temporary credits” for reversible GHG reductions. Under this approach, carbon credits issued for these reductions expire after a predefined period (up to 30 years) and must be replaced with other avoided emissions credits. This approach effectively guarantees permanence if it is enforced (whether the CDM’s administrative structures will be maintained in the future is an open question). However, it has faced significant hurdles, not least because it puts the onus for ensuring permanence on carbon credit buyers. As a result, buyers have been far less willing to pay for these credits, and the market for them has been largely non-existent. ↩︎
22. See Murray et al. (2012). ↩︎
23. See Schneider et al. (2015) for a fuller explanation of double counting issues with carbon credits. ↩︎
24. Procedures may include requiring project developers to sign legal attestations stipulating that they will not request issuance of carbon credits for avoided emissions or enhanced removals from more than one program (unless they are effectively “transferring” credits from one program to another). ↩︎
25. Some third-party programs, like Green-e Climate, provide checks on credit retirement steps for retail credit buyers. However, in most cases, this adds little value in terms of assurance beyond what carbon crediting programs already make available to any buyer in terms of retirement certification. In practice, programs do not always clearly indicate the purpose and beneficiaries of credit retirements. ↩︎