Carbon Credit Standards for Emerging Markets

Project developers have many different carbon credit standards available to register their emission reduction project. This articles takes a look at the leading standards for projects in emerging markets (those outside the US, Europe and other high income countries).

Understanding the pros and cons of the various carbon credit standards can really help project developers to successfully register and realise revenue from carbon credits.

What are Carbon Credit Standards?

Carbon credit standards serve as a regulatory framework for the official recognition of emission reduction projects. These standards govern the issuance of carbon credits to projects through a series of rules, eligibility criteria and processes for registration, monitoring, issuance and sales/transfers.

Carbon credit standards are important because they bring quality, consistency and integrity to the market for carbon credits. Of course, this is an ongoing journey, and each of the carbon credit standards continues to hone and refine their approach.

Why is it Important to Select the Right Carbon Standard?

Selection of a carbon credit standard for a particular emission reduction project needs careful consideration.

Firstly, there can be variation in rules and criteria between the carbon standards. Different types of projects and different geographies may simply require a different standard.

Secondly, there can also be differences in administrative support and processing time between standards. Each of the most common standards are attempting to make it more straight-forward for project developers. Some are having more success than others.

Thirdly, carbon credit standards have differing levels of acceptability in the market for carbon credits. This might be due to the length of time that the standard has been established, or particular rules that have been put in place to ensure quality, integrity or other outcomes, or the decisions by external bodies to accept a particular carbon credit standard (for example, in relation to CORSIA, the program for carbon credits for airlines). More respected and more widely accepted carbon credit standards tend to see higher prices and this is an important consideration for project developers.

What are the Leading Carbon Credit Standards for Emerging Markets?

Two carbon credit standards are widely known and respected in emerging markets. These are the Gold Standard and Verra’s Verified Carbon Standard.

Gold Standard (GS)

The Gold Standard has established a strong reputation in the market for carbon credits.

Developed by the Gold Standard Foundation, the Gold Standard for carbon credits is a worldwide recognized certification that ensures environmental projects adhere to strict sustainability criteria. Not only does this standard indicate carbon emission reductions; but it also emphasises UN Sustainable Development Goals (SDGs).

To be successfully registered on Gold Standard, projects must contribute to greenhouse gas reductions, simultaneously demonstrate positive impacts on local communities and regional economic development.

Verified Carbon Standard (VCS) by Verra

The Verified Carbon Standard (VCS) Program is the most extensively used carbon crediting standard.

Up until the end of 2023, Verra maintains a portfolio with over 1,800 certified projects, contributing to a cumulative reduction or removal of over 920 million tons of greenhouse gas (GHG) emissions.

This standard emphasises projects which not only contribute to GHG reduction but also demonstrate commitments regarding social and environmental sustainability.

Verra now requires all VCS projects to report their quantified contributions to at least three Sustainable Development Goals (SDGs), simultaneously showing no negative impacts on the society and environment.

What are Other Carbon Credit Standards for Emerging Markets?

There are a range of other carbon credit standards in the market, although they aren’t as common as Gold Standard and Verra’s VCS.

Clean Development Mechanism (CDM)

The Clean Development Mechanism (CDM) was a tool established under the Kyoto Protocol to combat climate change. It encouraged developed countries to invest in emission reduction projects in developing nations, fostering sustainable development. Under the CDM, projects that contribute to greenhouse gas (GHG) emission reductions earned Certified Emission Reduction (CER) credits.

The CDM is no longer accepting new projects. However, many of the methodologies and tools built for the CDM are still in use today. In fact, many of the other carbon standards have adopted the methodologies and tools of the CDM and made further improvements.

Cercarbono

Cercarbono supports the registration of Climate Change Mitigation Programmes or Projects (CCMPs). Cercarbono emerged from South America but now supports projects further afield.

Global Carbon Council (GCC)

The Global Carbon Council (GCC) is a newer carbon crediting standard based in the Middle East and North Africa (MENA) region. With very few projects having completed the registration and issuance process, it is still too early to gauge the traction of GCC in the carbon market.

Do You Want to Know More?

It is crucial to recognize that the above standards are not one-size-fits-all solutions. A thorough understanding of carbon credit standards is needed for project developers to make the right decisions when it comes to selecting a carbon credit standard.

Monsoon Carbon has delivered carbon credit projects spanning various countries across all the main carbon standards. If you are not sure about which standards or projects align best with your needs, don’t hesitate to reach out.