Somehow, I imagine the salvation of our world and civilization (if that’s even still possible and we haven’t already depleted our entire stock of carbon wealth), that at some point, electricity consumption will continue to grow (or peak), while absolute CO₂ emissions begin to decline. In my dream, humanity advances while also beginning to devour and digest its tragically accumulated carbon wealth since the Industrial Revolution: this is the era of negative carbon emissions. One day, perhaps even this seemingly infinite material will be harnessed to our advantage and used at a scalable level. We’re still very, very far from that point, of course, but it’s worth thinking along the lines that lead us there.
One of Verra’s recent posts, from their headquarters in Washington, captured this vision perfectly for me. Verra is best known as the creator and developer-distributor of the world’s most recognized carbon market standard: the Verified Carbon Standard (VCS). Of course, the organization has faced serious scandals in the past, but it responded well and has since become a hub for programs based on complex methodologies and comprehensive frameworks. Closely linked to Verra are, for instance, the Scope 3 Standard (S3S), the Climate, Community & Biodiversity Alliance (CCBA), and the Plastic Waste Reduction Standard (PWRS). It was also among the first to obtain the top-tier general CCP accreditation.
By now, it’s no surprise to anyone that forecasts of humanity’s development suggest we are becoming increasingly dependent on electricity over the coming decades. Nor does it require much explanation why coal-fired power plants and fossil-based technologies in general are being replaced at an accelerating pace by renewable energy sources. However, as Verra points out, the voluntary carbon market — which has often served as a kind of financial underpinning or guarantee of return for low-emission electricity generation — has, in certain respects, become outdated and in need of reform. This helps to clarify their key question: why, where, and to what extent there is an urgent need for further renewable energy generation projects, and why the carbon market should once again be supporting their implementation in full force.
According to a report by MSCI, a specialist in ESG and climate finance, about one-third of all issued and retired (i.e. successfully sold) carbon credits since 2010 have come from renewable energy projects. However, that curve has flattened over the past year or so. Strangely enough, in those places where renewable energy has already become the primary source to meet growing electricity demand, further expansion no longer depends primarily on the carbon market or carbon credits. In other countries and regions, however, the opposite is true: the lack of a renewable energy infrastructure boom has failed to stir economic momentum or ignite broader development. As a result, many regions continue to lag behind in the global race toward clean energy transition.This is a loss for everyone, as it holds back the affected lower- and middle-income regions from achieving their decarbonization goals, and the world from reaching its global climate targets.
This is why Verra is amending the relevant VCS standards – instead of issuing a uniform “no” due to a blanket assumption of non-additionality, it would now differentiate “the eligibility of grid-connected (i.e., grid-feeding) renewable energy projects under the VCS program in low-, lower-middle-, and upper-middle-income countries.” The aim is to introduce a more nuanced approach in which renewable energy projects located in the lower two of the three income categories would once again become eligible under the carbon market and thus qualify for the issuance of CCP-accredited carbon credits, representing the highest standard of compensation.
This aligns with the position voiced last November by the Integrity Council for the Voluntary Carbon Market (ICVCM), which highlighted that the previous crediting standards used for designing and implementing renewable energy projects were not sufficiently effective. These standards failed to adequately assess whether the projects genuinely required carbon credit financing, making them unsuitable for “the proper allocation of carbon finance.” In February, Verra already conducted a methodological review on this issue and has just announced that it will submit the results for CCP accreditation review by ICVCM.
Over the past few months, I’ve posted several times about the carbon market’s growing need for reform, using examples from different perspectives. I read a lot, I reflect a lot on what the best possible solutions could be — and yes, I dream a little too. Which shouldn’t come as a surprise, since my startup, Mitigia, is built entirely around this mission. The Verra article I referenced above is a good confirmation of why it’s worth dedicating time to this topic. In terms of questions raised, we’re more or less on the same page — but when it comes to solutions, I had already moved a bit further along by last December. So in my dreams, we reach a carbon-negative state within a foreseeable time frame, and this includes renewed support for renewable energy on the carbon market.
This article was first published on the 22nd of July, by Levente Tóth, CEO of mitigia, on their personal LinkedIn profile.
