August 2024 Methodology Updates (1/n)
This article is an automatically translated version of the original Japanese article. Please refer to the Japanese version for the most accurate information.
This is the newsletter from Sustainacraft Inc.
Methodology Updates is a series covering carbon and biodiversity Credit Methodologies. This article introduces ABACUS, a label for high-quality ARR projects under Verra's Verified Carbon Standard (VCS).
Public comments on the ABACUS label guidance were solicited last November, and the official v1.0 version, incorporating the feedback, was formally released last month. Applications for the label will be accepted from the next Verification cycle for projects meeting the eligibility criteria. While there appear to be no major changes from the draft version, this article will reintroduce the requirements of v1.0 below.
Although ABACUS is limited to VM0047 projects, it is positioned similarly to IC-VCM's Core Carbon Principles (CCP) in terms of ensuring Credit quality, and some view it as a competitor to the CCP. Market reactions are mixed, with positive opinions suggesting that the introduction of ABACUS will accelerate discussions on quality, and negative opinions foreseeing further confusion. We will briefly cover these backgrounds as well.
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ABACUS Label Officially Launched (Verra)
(Source: Verra website, accessed August 19, 2024)
At the end of July, Verra announced the official launch of the ABACUS label, which can be granted to high-quality ARR projects. ABACUS is a label developed by a 1working group in which Amazon, a U.S. company, participates as a key member. It is applicable to ARR projects that use Methodology VM0047. While many of ABACUS's main requirements overlap with those of VM00472, it demands stricter conditions in several aspects compared to VM0047.
When public comments (hereafter, "public comments") were solicited last November for the draft defining ABACUS requirements, we introduced the draft's content and key issues in the newsletter below. This official version is a revision of the draft based on those public comments, but the fundamental requirements have not changed significantly from the original draft. Therefore, while there will be some overlap with our previous newsletter, we will reintroduce the four pillars of the finally adopted requirements: 1) Additionality and Baseline, 2) Transparency, 3) Permanence, and 4) Leakage, along with the content of the public comments.
Overview of ABACUS Label Requirements
Requirement 1: Additionality and Baseline
Principle: A Dynamic Performance Benchmark that tracks changes in carbon stock in a control group must be used throughout the entire Crediting Period.
For this requirement, it is necessary to dynamically assess the Baseline and Additionality using the Dynamic Baseline Method, in accordance with VM0047.
Additionally, the ABACUS label sets the following supplementary requirements:
Ensuring Objectivity in Control Plot Setup
The time series of vegetation indices used for matching with the Control Plot must consider at least 5 points in time (5 years).
VM0047 considers a minimum of 3 points in time over the past 8-10 years.
Considering more points in time reduces the possibility of Project Proponents arbitrarily selecting plots that are convenient for them (it is recommended to match as far back in time as possible).
The procedures for setting up Control Plots, their locations, and annual vegetation index values must be disclosed.
VM0047's Monitoring Requirements do not include locations or vegetation index values.
Ensuring Financial Additionality
In addition to the Performance Benchmark, an Investment Barrier Analysis must be conducted to demonstrate Additionality from a financial perspective.
Under VM0047, an Investment Barrier Analysis is only a required step if the project has economic incentives other than Credits.
The expected Credit volume at the start of the project must also be calculated to demonstrate that Credit revenues are essential for project operation.
There have been no significant changes to these points since the draft during the public comment period.