The Paris Agreement poses a new framework for carbon markets. While the Kyoto Protocol was limited in both coverage and ambition, the Paris Agreement applies to all countries and its ambition introduces global net zero emissions targets.
These changes prompted reflection on how the voluntary carbon market can best contribute to the goals of the Paris Agreement. With support from the German government, Gold Standard convened a working group, including WWF, CDP, WRI, The Nature Conservancy, Carbon Market Watch, ICROA, and other standards bodies, to define the nature of voluntary carbon credits, associated claims, and implications on accounting in this new context.
PHASE 1
We shared the output of Phase 1 of this working group in this first Statement for public consultation, requesting feedback on the following areas:
1. Do you agree that the introduction of the Paris Agreement and global net zero goals changes the role of the voluntary carbon market (VCM)?
2. Does the description of ‘financing beyond’ boundaries to accelerate the transition to net zero emissions as opposed to going beyond compliance adequately deal with this shift?
3. Do you agree with how this statement addresses double counting issues? What other issues do you foresee with this approach?
4. Do you agree that organisations should focus on reductions within boundaries and financing beyond boundaries to accelerate the global transition to net zero emissions? Does having two separate targets make sense (reducing within boundaries / financing beyond boundaries)?
5. In support the development of a new guidance/framework in Phase 2:
- What should best practice guidance be for beginning to finance emission reductions beyond boundaries?
- Are there other ways to design the new guidance/framework to ensure that organisations follow a “mitigation hierarchy”—i.e. are appropriately prioritising internal reductions first?
- What targets for financing climate action beyond boundaries should a company have – for example an equivalence to residual emissions (full Scope 1-3 footprint) or another metric?
- What claims are appropriate for when the target is achieved – for example “carbon neutrality,” or “net zero”? Or is it better to simply demonstrate clear accounting for emissions vs financed emission reductions/removals and to avoid a high-level claim?
- What instruments (for example VCM) should be used and what types of actions should be encouraged and targeted (i.e., additionality, targeting ‘high hanging fruit’ project-types)?
- How should non-organisational use of the VCM be dealt with? For example, events, one person’s climate footprint, etc.?
Following multiple formal public events, webinars, bilateral engagements and email submissions, the working group now offers this statement to close Phase 1 of this programme.
PHASE 2
The group has continued to discuss a range of solutions, explored in a second published paper: ‘Outlining potential scenarios for the voluntary carbon market post-2020’. As before, the primary aim of this paper is to inform stakeholders of the key issues and inform further discussion, pointing to further work being required in the facilitation of corresponding adjustments, additionality and claims. The main discussion points in the paper are:
The potential for double claiming between voluntary markets and host country reporting and its implications
- The benefits and challenges associated with Corresponding Adjustments and differentiation between units with and without them
- An exploration of three solutions previously put forward by ICROA and how they may be applied
- The need for thoughtful transition to new solutions
Although this paper is not offered for formal consultation, feedback and dialogue is welcomed and can be submitted to Gold Standard at any time.
The working group notes that published statements do not formally represent the positions of the individual members of the group.