November 2024 VCM Updates: Section B (2/n)

This article is an automatically translated version of the original Japanese article. Please refer to the Japanese version for the most accurate information.

sustainacraft Inc. newsletter. This article is Section B (Trends in major international regulations) of VCM Updates (Voluntary Carbon Market Updates).

Climate Change Special at NHK Special: Nov 30 (Sat) 10:00 PM~ (link)

As per the link, an NHK Special on climate change is scheduled to air. Our company might even be featured.

This article covers the following topics:

• CORSIA Phase 1: Approved Use of Major Carbon Standards such as Gold Standard and Verra
• ICVCM: CCP Certification for Three REDD+ Methodologies

Recently, there were reports that major carbon standards such as Gold Standard and Verra's VCS were approved for use in CORSIA Phase 1. Following these reports, this article will explain the overview of CORSIA, the approved carbon standards, and the future supply and demand outlook.

Additionally, ICVCM announced that three REDD+ Methodologies have received CCP Certification. Therefore, after reviewing the overview of ICVCM and CCP, we will discuss the newly approved Methodologies and anticipated future developments regarding REDD+ projects.

These developments are expected to provide a tailwind for financing REDD+ projects. As many companies rely on SBTi, Carbon Credit demand is shifting towards Removal/Sequestration, and demand for REDD+ Credits has remained uncertain. However, both Avoidance and Removal/Sequestration have similar effects on climate change (for more on this, please refer to this article. The issue of past over-issuance of Carbon Credits, including REDD+, is also covered in this month's review paper introduction article).

We expect that the CCP Certification of REDD+ Methodologies, as explained in this article, and the eligibility of Verra for CORSIA Phase 1—although detailed Methodology-level specifics are yet to be confirmed—will invigorate financing for REDD+.

CORSIA: Approved Use of Major Carbon Standards such as Gold Standard and Verra

Sources: Carbon Herald (2024.11.1), Gold Standard Announcement (2024.10.30), Verra Announcement (2024.10.30), CAR Announcement (Nov 2024 Newsletter), GCC Announcement (2024.10.30)

«What is CORSIA, and what is required of airlines?»

Since some readers have recently subscribed to our newsletter, I would like to briefly touch upon what CORSIA is and what obligations airlines have.

CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation) is an initiative promoted by ICAO (International Civil Aviation Organization) aimed at reducing Carbon Dioxide Emission Reductions and Carbon Offsetting in the international aviation industry. This initiative requires airlines to operate in an environmentally friendly manner by reducing their CO2 emissions and purchasing Carbon Offsets for the remaining portion.

Specifically, airlines in participating countries are required to monitor and report their CO2 emissions. If these emissions exceed the Baseline (set at 85% of 2019 activity levels), they must purchase approved Credits.

«CORSIA Phases and Eligible Credits»

CORSIA is divided into three phases:

• Pilot Phase (2021-2023)
• Phase 1 (2024-2026)
• Phase 2 (2027-2035)

Participation in CORSIA is voluntary during the Pilot Phase and Phase 1, but the number of participating countries has steadily increased, from 88 countries (including Japan) in 2021 to 129 countries by September 2024 (Source: ICAO CORSIA News). In Phase 2, most airlines in ICAO member states (193 countries) will be mandated to participate.

For each phase, eligible Credit Standards are reviewed and approved. During the Pilot Phase, the following standards were approved for use (Source: ICAO):

• American Carbon Registry (ACR)
• Architecture for REDD+ Transactions (ART)
• BioCarbon Fund for Sustainable Forest Landscapes (ISFL)
• China GHG Voluntary Emission Reduction Program
• Clean Development Mechanism (CDM)
• Climate Action Reserve (CAR)
• Forest Carbon Partnership Facility (FCPF)
• Global Carbon Council (GCC)
• The Gold Standard (GS)
• SOCIALCARBON
• Verified Carbon Standard (VCS)

Furthermore, prior to this announcement, only the following two were approved for Phase 1 (Source: ICAO):

• American Carbon Registry (ACR)
• Architecture for REDD+ Transactions (ART)

Currently, the only Credits issued under Phase 1 are 7.14 million units from ART's project in Guyana.

«Carbon Standards additionally approved for CORSIA Phase 1 this time»