Around third of existing carbon credits have failed to meet criteria for a new standard that aims to serve as the global benchmark for the voluntary carbon market, its board said on Tuesday.
In the voluntary market, companies can buy credits from projects such as wind farms or reforestation schemes across the world and use them to meet their internal carbon-cutting targets. All the credits that fell short of the benchmark in the latest assesement were linked to renewable energy.
Demand for offsets stalled last year following widespread doubts that credits served to reduce emissions.
The Integrity Council for the Voluntary Carbon Market (ICVCM), an independent governance body, has sought to address integrity concerns by launching Core Carbon Principle (CCP) standards and is assessing the validity of projects.
The ICVCM said eight renewable power methodologies, which cover around 236 million unretired, or unused carbon credits making up 32% of the market, had failed to meet the requirements of its standard on additionality grounds.
Additionality is a measure of whether the project needed revenue from carbon credits sales to go ahead. If the project would have gone ahead regardless, then the argument that it has led emissions to be avoided, and should therefore be credited, is undermined.
Amy Merrill, CEO of the ICVCM said renewable projects could still be part of the voluntary carbon market and that new methodologies can be submitted for consideration.
“There are still places in the world where barriers to deployment mean projects could be additional,” she said in an interview with Reuters.
The price of renewable energy offsets fell by 69% last year to an average of $3.88 per metric ton, a report by non-profit Ecosystems Marketplace said in May.
Analysts have said failure to meet the CCP standard could lead renewable offset prices to fall further this year.
“We don’t speculate about the price, we are trying to put an integrity threshold into the market. We have consistently said we don’t expect everything to pass,” Merrill said.
