Monthly: VCM Updates (December)
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 sustainacraft Inc.'s newsletter. This edition is a Monthly VCM Update, focusing on topics related to the Voluntary Carbon Market and international regulations, primarily those announced in December 2023.
Monthly VCM Update
This month, we introduce the following topics:
A. Voluntary Carbon Credit Market Trends
- Issuance / Retirement Analysis
- Project Pipeline Analysis
B. Trends in Key International Regulations
- Joint Statement from Major Registries on Quality Improvement and Market Expansion
- Organizations Unite on the Role of Carbon Credits in Corporate Voluntary Climate Actions
- VCMI and ISO Announce Guidelines on Carbon Credit Usage
A. Voluntary Carbon Credit Market Trends (Verra)
1) Issuance / Retirement Analysis <to be updated>
In November 2023, 9,699,578 units of Verra Voluntary Carbon Credits were newly issued, and 11,949,530 units were retired. This represents a year-on-year change of -48% for issuance and +61% for retirement, respectively.
Focusing solely on the AFOLU (Agriculture, Forestry, and Other Land Use) sector, 3,286,845 units were issued, and 7,926,472 units were retired. This represents a year-on-year change of -70% for issuance and +60% for retirement, respectively.
This is a list of projects retired in October 2023 (AFOLU sector only). The top 20 projects accounted for approximately 64% of total retirements. By country, Peru was the largest (55%), followed by Indonesia (18%), Guatemala (10%), China (4%), and Brazil (4%).
The top 20 companies that retired Carbon Credits from the Verra AFOLU sector are as follows. This month, Shell's retirement volume was significantly larger than usual, accounting for over 70% of the total.
The projects that Shell retired in the AFOLU sector this month are as follows. Approximately half of these were from Peru's Cordillera Azul National Park REDD Project.
Shell has consistently retired credits every February, but this year, deviating from its usual pattern, it retired a large volume in November, and recent data shows a considerable amount was also retired in December.
2) Project Pipeline Analysis
Below, we show the monthly pipeline trends for each project subtype. The upper graph shows the number of projects, and the lower graph shows annual Emission Reductions (ER) based. The horizontal axis is based on the Listing Date1.
Over the past year, the pipeline has shown a reduction compared to 2022. In 2022, AWD (Alternate Wetting and Drying) projects (rice paddy methane projects) were particularly prominent in terms of project count, while REDD and Energy (renewable energy) projects stood out in terms of volume. It is presumed that the pipeline count did not increase for AWD because its CDM-based Methodology is under review and currently inactive, and for REDD while awaiting the recently announced VM0048 (Consolidated Methodology). On the other hand, as highlighted in last month's newsletter, a significant number of large-scale ALM projects have entered the Pipeline this year.
November was a particularly quiet month for project activity in 2023. Below are the projects that entered the Pipeline, listed in descending order of their estimated annual Emission Reductions.
It should be noted that in the above, a project in Peru that intends to use VM0047 and VM0048 Methodologies has been listed (link).
VM0047 is the new ARR Methodology, as introduced in our October newsletter, and VM0048 is the eagerly anticipated new REDD Methodology, which will be covered in this month's Methodology Update newsletter.
Currently, this is the only project listed under VM0048, with a status of 'Under development.' For VM0047, there is one other ARR project in Estonia, which is 'Under validation'.
B. Trends in Key International Regulations
This section reports on updates regarding key regulations and related information concerning the use and quality of Voluntary Carbon Credits, as well as the protection of forests and natural resources.
This month, in conjunction with COP28, numerous initiatives aimed at enhancing the trustworthiness and usability of Voluntary Credits were announced.