Monthly Methodology Updates (February 2024)

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 Sustainacraft Inc. newsletter. This month, there wasn't much news regarding VCS Methodologies. Therefore, this time, we will delve into the new ARR Methodologies that were revised last year, with a particular focus on Leakage. Additionally, we will continue to cover topics related to Biodiversity, following up from last month.

Announcements

• In co-sponsorship with SDG impact Japan, we will hold a seminar to consider the role of Carbon Credits in investing in Natural Capital. Please find more details here. Online attendance is still possible.

  • 【Date/Time】Monday, February 26, 2024, 16:00-18:00

  • 【Venue】Online (Zoom) *Only online registrations are currently accepted.

Monthly Methodology Updates

This month, we will present the following topics:

(1) Comparison of ARR Methodologies Focusing on Leakage

(2) Updates on Biodiversity Credits

(3) Invalidation of Peatland Forest Methodology (Verra)

(1) Comparison of ARR Methodologies Focusing on Leakage

In September 2023, Verra published VM0047 Afforestation, Reforestation, and Revegetation, v1.0, a new Methodology for above-ground ARR projects. This Methodology replaces the existing CDM Methodology, AR-ACM0003: Afforestation and reforestation of lands except wetlands (Version 2.0), and introduced several significant changes, including the adoption of a Dynamic Performance Benchmark (= Baseline) and a revamped Leakage module. We also covered this in the following newsletter:

Monthly Methodology Updates（October）

This is the Sustainacraft Inc. newsletter. This time, as part of our Monthly Methodology Updates, we will mainly provide news related to VCS Methodologies announced in October 2023. Monthly Methodology Updates This month, we will cover the following topics: Release of new ARR Methodology: VM0047 (Verra) First VCS project using new ALM Methodology completed Registration (Verra) Corrections and additional explanations related to the VCS Standard announced (Verra)

sustainacraft’s Newsletter

This time, we would like to delve deeper into the treatment of Leakage, in particular.

While AR-ACM0003 also had requirements regarding Leakage, in practice, assessments often remained qualitative, and Market Leakage was not considered, making it less stringent. In fact, most ARR projects registered to date use AR-ACM0003, but very few account for positive Leakage.

In contrast, VM0047 requires a more quantitative and conservative assessment of Leakage. Market Leakage must also be considered. As of February 20, 2024, there are no registered VM0047 projects. While information on Leakage is still limited for the seven projects in the Pipeline, some projects are already accounting for positive Leakage.

As the demand for high-quality Removal Credits is expected to grow further, the assessment of Leakage is considered a critical issue.

Therefore, below we will present the concepts of Leakage in AR-ACM0003 and VM0047, respectively, and then examine examples from actual projects.