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6 things you need to know about carbon credits and the carbon removals opportunity

Written by ICVCM


With carbon removals recently in the news as the EU came to a provisional agreement on the voluntary Certification Framework for Carbon Removals, find out more about carbon removals and how they fit into the Integrity Council’s work. 

Q1. What is a carbon removal project? What are the differences between carbon removal and carbon reduction projects?

Carbon removal and carbon reduction projects are two types of climate change mitigation projects that are commonly incentivised through the carbon crediting markets. Both have an important role to play in supporting the Paris Agreement goal of limiting global temperature rise to 1.5˚C above pre-industrial levels.

Carbon Dioxide Removal (CDR) is the process of removing carbon dioxide from the atmosphere and locking it away for decades, centuries or millennia. It encompasses a wide array of approaches, from nature-based methodologies like Reforestation and Afforestation projects and Wetland Management, to technological removal processes like Direct Air Capture and Storage (DACS), or Carbon Capture and Storage (CCS), when combined with a removal process such as DACCS or BECCS.

Carbon reduction involves processes that reduce greenhouse gas emissions compared with prior practices or prevent emissions in the future. Examples include electrification of the power grid, increasing energy efficiency and halting deforestation.

Q2. What is the Integrity Council’s approach to Carbon Dioxide Removal and how do the Core Carbon Principles apply to carbon removal projects?

The Core Carbon Principles (CCPs) set a global benchmark for high-integrity carbon credits. They are based on ten fundamental principles that create real, verifiable climate impact, based on the latest science and best practice. The CCPs are a universal standard that covers all types of mitigation projects, including carbon reduction and removal credits.

In order to meet the CCP assessment criteria, carbon crediting programs must ensure that the carbon credits they issue make a genuine impact on emissions. This includes guaranteeing that they fund removals or reductions that are additional; permanent; measured robustly and conservatively; and verified by independent experts.

Assessments are now underway for nature-based removal methodologies, including those relating to forestry projects at national or sub-national scale (jurisdictional REDD+ or JREDD+) as well as Improved Forest Management, and Afforestation, Reforestation, Revegetation and Agroforestry. The ICVCM is also assessing biochar and soil carbon removal methodologies.

The Integrity Council welcomes applications from carbon-crediting programs that would like us to assess technology-based removal methodologies within the categories of Direct Air Capture and Technology-based Carbon Capture and Storage.

Q3. Why does the work of the Integrity Council matter for carbon-crediting programs and projects in the carbon removal field?

The Integrity Council recognises the urgent need to develop, mature and scale up carbon removals in order to reach the goal of limiting global temperature rise to 1.5°C. The CCPs are a foundation for achieving this. We must build trust in the market around new and emerging methodologies for designing carbon removal projects and measuring their success using technology like AI remote sensing, drone technology, satellite imagery and real-time monitoring. The CCP rulebook sets a clear bar and high-integrity threshold, so early-stage CDR actors can start aligning their procedures now. Projects registered under approved carbon-crediting programs and from approved categories of carbon credits will meet the CCP benchmark. This means credits from these projects can be issued by programs with a “CCP-label.”

Q4. What is the role of nature-based carbon removal projects and how will the criteria in the CCP rulebook address current challenges for nature-based credits?

There is no path to 1.5°C without protecting and restoring nature, our forests and other natural carbon sinks . Nature is one of the most cost-effective climate solutions we have at our disposal, and one that suffers from severe underinvestment. Protecting forests, wetlands and other intact ecosystems is an essential element of delivering on 1.5 aligned reduction pathways and should be urgently prioritized, alongside investment in scaling carbon removal projects through natural and technological means.

Nature-based carbon removal projects such as forests and blue carbon ecosystems also deliver a wide range of additional impacts, including local livelihoods, community adaptation and resilience benefits, and food and water security in the places hardest hit by the impacts of climate change. However, a lack of consistent quality across nature-based projects has damaged trust and discouraged investment from the market in these vital climate solutions.

The Integrity Council’s ongoing assessments of carbon crediting methodologies for adherence to its CCP rulebook has a key role to play. It will restore confidence and help highlight high quality nature-based projects, the carbon accounting that underpins credits generated from these types of projects, and help grow the market, which will accelerate investment in delivering on our collective climate goals.

Q5. What are the opportunities and projected trends of carbon removals?

The 2023 UNEP Emissions Gap report finds that all least cost pathways to meeting the long-term temperature goal of the Paris Agreement require considerable increases both in conventional and novel carbon dioxide removal. Up to 10 billion tonnes of carbon dioxide removal will be needed annually by 2050, according to the latest IPCC report’s estimated scenarios.

Given this context, it is essential that we invest in both scaling up existing ways to remove carbon from the atmosphere and developing new ones, alongside reducing emissions as fast as possible.

Investing in CDR now will enable these processes and technologies to develop to a gigaton scale within the required timescale. The carbon market will be a major funding channel for nature-based and technology-based removals in both the short and long term.

Q6. What’s next for the Integrity Council and carbon removal projects and what does the EU’s new Certification Framework for Carbon Removals mean for voluntary carbon crediting markets?

The Integrity Council recognises CDR as an essential element in the net zero transition economy. The CCPs will set a high-quality threshold to guide nature-based solutions and emerging technological CDR solutions, and the Integrity Council is in active dialogue with the removals community. The Integrity Council will continue assessment of emerging standards, new credit categories and new methodologies into 2025 and beyond as the CDR market continues to mature and evolve.

In February 2024, the EU Parliament and Council came to a provisional agreement on the voluntary Certification Framework for Carbon Removals. The final text has yet to be published but the framework will define which carbon removals can be used by businesses to comply with other EU legislation and voluntary schemes. The removals can only be used toward meeting the EU’s own climate targets. The decision also only covers carbon removal projects that are in the EU; and removals projects where carbon is captured in the EU and stored in neighbouring countries that apply the same standards for geological storage as the EU.

It proposes that in future other countries that align with the certification standards could be included in the framework. The framework may also be updated based on the outcomes of international discussions on carbon markets. Given the importance of scaling up international carbon removals to achieve global climate targets as soon as possible, it is critical that the use of carbon credits is not limited to those only from carbon crediting projects located within the EU. This would also provide much needed certainty to companies who wish to purchase removals from outside the EU and want to ensure that they are high-integrity.

The Certification Framework for Carbon Removals will underpin the green claims directive which sets out how businesses should disclose the use of carbon credits when making environmental claims about products or services. This legislation is still in the early stages of discussion but the latest report from the Parliament says that carbon credits certified under the carbon removals framework can be used for making “green claims” for products and services.

The draft is consistent with other EU legislation in that it encourages companies to prioritise direct reductions to their emissions first before considering carbon credits for residual emissions. The current text proposes that in future other carbon credit schemes may be able to be certified by the commission for green claims. This could include existing voluntary schemes such as Verra, or Gold Standard but it is not clear whether only removals projects will be eligible or whether carbon reduction projects may in future also qualify for green claims. However, if agreed, it is not clear how this will align with the Empowering Consumers Directive (agreed earlier this year) prohibiting any environmental claims for products and services based on “offsetting”.