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Biden-Harris Administration Announces Principles for High-Integrity Voluntary Carbon Markets

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The Biden-Harris Administration (the Administration) today released the Voluntary Carbon Markets (VCM) Joint Policy Statement and Principles (the Principles), along with an accompanying fact sheet (the Fact Sheet). The Principles represent the U.S. government’s affirmation that high-integrity VCMs can and should play a meaningful role in reducing and removing global greenhouse gas (GHG) emissions and support the objective of global net-zero emissions by 2050. The Principles support the Administration’s commitment to ensuring VCMs effectively channel private capital into innovative technological and nature-based solutions, while also protecting natural ecosystems and supporting the U.S. and international partners in achieving their climate objectives.   The Principles follow other key U.S. climate-related legislation and policies, including the Inflation Reduction Act (see our earlier bulletin here), climate adaptation and resilience plans for federal agencies (see our earlier bulletin here), and the U.S. Department of the Treasury’s Principles for Net-Zero Financing and Investment, released last year, supporting the development and execution of strong net-zero commitments and transition plans by financial institutions, with a focus on Scope 3 financed and facilitated GHG emissions.   This bulletin briefly summarizes the Principles, their anticipated role in addressing climate change, and other ongoing U.S. government actions to support VCMs.    Principles for high-integrity VCMs. The Principles provide seven principles for high-integrity VCMs, drawing from existing best practices for credit certification standards, including the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), the G7’s Principles for High-Integrity Carbon Markets, the Commodity Futures Trading Commission’s proposed guidance regarding the listing of voluntary carbon credit derivative contracts (December 2023), the Integrity Council for Voluntary Carbon Markets (ICVCM) Core Carbon Principles (see our earlier bulletin here), and relevant decisions under Article 6 of the Paris Agreement. The Principles are as follows: Carbon credits and the activities that generate them should meet credible atmospheric integrity standards and represent real decarbonization. Credit-generating activities should avoid environmental and social harm and should, where applicable, support…

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Council of EU and European Parliament Agree Deal on Carbon Removals Certification Framework

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The Council of the EU (the Council) and the European Parliament reached a provisional political agreement (the Agreement) earlier this week on a regulation to establish the Carbon Removals Certification Framework (CRCF), the first EU-level certification framework for permanent carbon removals. The CRCF is a voluntary framework intended to facilitate deployment of high-quality carbon removal and soil emission reduction activities in the EU, in support of net-zero by 2050. The Agreement follows the European Commission’s (the Commission’s) regulatory proposal for the CRCF (released December 2, 2022) and the Council’s mandate for negotiations with the European Parliament (released November 17, 2023). The European Parliament and Council now need to formally approve the Agreement. Once this process is completed, the new legislation will be published in the Official Journal and enter into force. We anticipate that the CRCF will facilitate integration of carbon dioxide removals into the EU’s broader package of climate policies and eventually allow for market-based trading of CRCF-certified units. CRCF certification may also serve as an integrity benchmark for CDRs developed for the voluntary carbon market. This bulletin briefly summarizes the main elements of the Agreement. Scope of activities. The CRCF will use an “open definition” of carbon removals, in line with the IPCC and which only covers atmospheric or biogenic carbon removals. It will cover the following carbon removal and emission reduction activities and differentiate between four corresponding unit types: permanent carbon removal (storing atmospheric or biogenic carbon for several centuries); temporary carbon storage in long-lasting products (such as wood-based construction products) of a duration of at least 35 years and that can be monitored on-site during the entire monitoring period; temporary carbon storage from carbon farming (e.g., restoring forests and soil, wetland management, seagrass meadows) of a duration of at least 5 years; and soil emission reduction (from…

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ICVCM Releases Core Carbon Principles

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The Integrity Council for the Voluntary Carbon Market (ICVCM) has released its long-awaited Core Carbon Principles (CCPs) that are intended to define the criteria for high integrity carbon credits. The 10 CCPs were released today at the European Climate Summit in Lisbon following broad and controversial consultation on draft principles in 2022. They are intended to build additional trust in the voluntary carbon market, unlock investment at scale, and deliver real climate impact at the speed and scale necessary to transition to a 1.5ºC pathway. They apply to carbon crediting programs/standards (CC Program), GHG emission reductions/removals (ERRs) and categories of projects (Methodology Type). This bulletin briefly summarizes the 10 CCPs CCP Sub-ordinate Requirements Applicable Entity Details A. Governance 1. Effective Governance CC Program Note: Programs that have already met the CORSIA requirements will not be required to demonstrate compliance with the detailed Governance CCPs Program governance must ensure transparency, accountability, continuous improvement and credit quality. 2. Tracking CC Program Must have a registry to uniquely identify, record, track credits securely and unambiguously. 3. Transparency CC Program Transparent information, publicly available in electronic format, to enable scrutiny by all audiences. 4. Robust 3rd Party Validation/Verification CC Program Must have/require independent 3rd party validation and verification. B. Emissions Impact 5. Additionality ERRs and Methodology Type ERRs would not have occurred in the absence of the incentive from carbon credit revenue. 6. Permanence ERRs and Methodology Type Permanent or measures in place to address risk of reversal and compensation for same (buffer). 7. Robust Quantification of Emission Reductions/Removals CC Program Thorough process for assessing and approving methodologies with public stakeholder and expert involvement. Robust and conservative quantification based on complete and scientific methods. 8. No Double Counting  ERRs No double issuance, double claiming, double use. Starts to address assessment of host country authorization under Article 6 with…

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Who’s Who Legal and Environmental Finance Recognize Resilient LLP

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Resilient LLP is pleased to announce that Who’s Who Legal (WWL) has recognized Lisa DeMarco, Senior Partner and CEO, as a “Global Elite Thought Leader” in Climate Change Law. She has been identified as leading in climate change law, particularly within the energy market, and described as “the lead climate change lawyer in Canada on any issue.” Resilient is also pleased to announce that it has been recognized as a leading voluntary carbon market specialist by Environmental Finance magazine. The Resilient Team including Jonathan McGillivray (Senior Associate), Daniel Vollmer (Associate), Nicholas Daube (Counsel), John Coyne, and Monika Pecnikova, was named the Runner-Up Best Global Law Firm in Environmental Finance’s 2022 Voluntary Carbon Market Rankings, following the results of its peer review survey. The rankings are the magazine’s annual poll of the market, in which market participants vote for the leading companies, service providers, and initiatives based on efficiency and speed of transaction; reliability; innovation; quality of service provided and influence on the market, not just the volume of transactions handled. “We are very pleased that our partners and clients have recognized our world-leading specialized climate and clean energy legal and advisory services,” said Lisa DeMarco. “We are grateful to have our clients’ trust as we support them in navigating the transition to a net-zero and climate-resilient future.” Resilient LLP is Canada’s only climate and clean energy boutique law firm and provides leading multi-jurisdictional legal advice in the areas of climate change, clean energy, and related Indigenous rights. Read more about our service offering on our website. Please cast your vote for Resilient LLP as Best Law Firm in Environmental Finance’s Annual Market Rankings 2022 by following this link (voting is open until Friday, October 28, 2022). We appreciate your support!

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VCMI Launches Claims Code of Practice

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The Voluntary Carbon Markets Integrity Initiative (VCMI) last week launched a provisional Claims Code of Practice (the Claims CoP) to guide “credible, voluntary use of carbon credits and associated claims.” VCMI anticipates that the Claims CoP will: provide clear guidance to companies and other non-state actors on when they can credibly make voluntary use of carbon credits as part of their net zero commitments; and ensure the credibility of claims made by companies and other private non-state actors regarding this use of carbon credits. Broadly, the Claims CoP includes four steps: Meet the Prerequisites. Companies must make a public commitment to achieve science-aligned long-term net zero emissions no later than 2050 and meet other pre-requisites before making voluntary use of carbon credits (and making a VCMI claim). Identify Claim(s) to Make. Companies can make “enterprise-wide” claims (VCMI Gold (net zero), VCMI Silver, VCMI Bronze (only available until 2030)) or “brand-, product-, and service-level” claims. Purchase High-Quality Credits. All credits used as the basis for credible claims must be high quality and meet basic criteria (based on work of CORSIA and the IC-VCM). Report Transparently on the Use of Carbon Credits. Companies must report full information in publicly available annual corporate sustainability or similar reports to demonstrate that prerequisites and claim requirements have been met. Detailed information is available in the draft Claims CoP. Several companies are “road testing” the Claims CoP through Fall 2022. The VCMI is also collecting public feedback on the draft until August 12, 2022. For further information or to discuss the contents of this bulletin, please contact Lisa DeMarco at lisa@resilientllp.com.

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