Understanding the Verified Carbon Standard (VCS)
Standards are required to provide guidelines and requirements for the certification of greenhouse gas (GHG) emission reduction or removal projects, finally certify carbon emission reductions.
The Verified Carbon Standard (VCS) is a global standard for certifying projects that reduce greenhouse gas emissions and issue Verified Carbon Units (VCUs).
Previously under “Voluntary Carbon Benchmark Program”, it began as a a “pilot program” in 2006, setting the worldwide benchmark and offering a clear structure that has helped verify voluntary reductions in greenhouse gas emissions.
With the release of a full-scale VCS standard in 2007, the VCS became the very first multiple registry system operating in the voluntary carbon market, with a few multinational registries such as APX inc., Caisse des Depots (Europe), and Markit participating. (US, UK, and Asia Pacific regions).
The Foundation of VCS
Verified carbon standards are critical in the certification of GHG emission reduction projects, and it is critical to use a leading voluntary program (such as Verra), which is the current leading VCU marketplace. This is the updated version of VCS Guideline, which was issued earlier this year.
VCS initiatives must adhere to VCS standards, such as independent verification, scientifically sound procedures, and social/environmental safeguards. Transparency is essential, with project information made available for public assessment. Procedures for liability and risk management are also essential. VCS compliance assures that VCUs are credible, transparent, and trustworthy.
In addition to technical standards, VCS projects must comply to social and environmental protections in order to protect local communities, biodiversity, and other environmental and social assets.
These protections could include stakeholder participation, community consultation, land use rights protection, biodiversity conservation, and other relevant issues. This ensures that VCS projects contribute to long-term development, while also benefiting local communities and the environment.
Steps to get a VCS Certification
Here are the steps to get a VCS certification for your project:
Step 1: Project Development (Identification)— Create a project utilizing one of the approved VCS approaches that lowers or eliminates greenhouse gas (GHG) emissions. With the use of these approaches, project categories including renewable energy, energy efficiency, afforestation/reforestation, or avoided deforestation can monitor and report their GHG emissions or removals.
Step 2: Project Documentation (Design)— Prepare the relevant project paperwork, such as project design documents (PDD) or programme design documents (ProgDD), monitoring plans, and other information, in accordance with the VCS methodology chosen. These documents should clearly define the project’s activities, emission reductions or eliminations, social and environmental safeguards, and risk management methods.
Step 3: Project Validation — The PDD and accompanying project documentation must be validated independently by a VCS-accredited third-party validator. The validator evaluates the project against VCS criteria and determines if it is certified.
Step 4: Project Registration — If the project successfully passes the validation process, it is registered with the VCS registry. This involves the issuance of Verified Carbon Units (VCUs) for the project’s confirmed emission reductions or removals.
Step 5: Project Monitoring — The project must be monitored on a regular basis to verify the actual emissions or reductions accomplished. Monitoring data must be collected and reported in accordance with VCS specifications.
Step 6: Independent Verification — Choose a qualified third-party validator who is Verra-accredited to conduct an impartial verification of your project. The validator will study the project paperwork, monitoring data, and conduct on-site visits to verify the project’s activities and performance.
Step 7: Quality Assurance — The verifier will send their verification report to Verra for quality assurance after the verification. Verra will examine the report to confirm that the verification was carried out in accordance with VCS standards and that the project produced genuine, measurable, additional, and verifiable emission reductions or removals. Here is the link for quality assurance principle.
Step 8: Issuance of Verified Carbon Units (VCUs) — If the verification report meets VCS requirements, Verra will issue VCUs for the project’s verified emission reductions or removals. These VCUs can be used in either the voluntary or compliance markets, and they are a credible and transparent offset that can be sold or utilised to offset emissions.
Step 9: Ongoing Monitoring and Reporting — Once the project has been certified, it must be monitored and reported on an ongoing basis to verify that it continues to meet VCS criteria. This includes submitting, monitoring data and project updates to Verra on a regular basis via the VCS registry, as well as periodic verification of project performance by qualified verifiers.
Step 10: Risk Management and Liability — To address potential risks and uncertainties, projects may need to incorporate risk management and liability procedures. Obtaining insurance, offering financial assurances, and making contingency plans to manage risks and assure the integrity of the project’s emission reductions or removals are all examples of this.
Step 11: Compliance and Transparency — Transparency is a major principle of VCS, and projects must report their GHG emissions or reductions, project activities, and other pertinent information to Verra through the VCS register. This information is available for public scrutiny, assuring the project’s accountability and reliability.
Step 12: Renewal and Revalidation — VCS certification is normally valid for a set length of time after which the project must be renewed and revalidated in order to keep its certification. This includes updating project documentation, going through another round of validation, and continuing to meet VCS monitoring, reporting, and risk management standards.
It should be noted that the VCS certification process is complex and time-consuming, and it necessitates rigorous adherence to VCS requirements, procedures, and guidelines.
What’s Next After VCU’s Verification?
Following the acquisition of a VCS certification for your project, you may take the following actions to maximise the benefits and value of your certification:
- Sell Certified Carbon Offsets: Promote your certified VCUs in the voluntary or compliant carbon markets to potential purchasers interested in reducing their carbon footprint. In your marketing materials, emphasise the legitimacy and openness of your VCS certification, and include the VCS logo and certification information to indicate your project’s compliance with stringent requirements.
- Sell or use Verified Carbon Units (VCUs): Consider selling your VCUs to buyers who are looking to offset their own emissions. To sell your certified VCUs at a reasonable market price, you can arrange contracts with buyers or engage in online carbon offset marketplaces. You can also use your VCUs to offset your own emissions, proving your dedication to sustainability and climate action.
- Report and Communicate Results: Using the VCS register, regularly report your project’s performance and emissions reductions or removals to Verra, as well as any other relevant stakeholders or partners. To demonstrate your dedication to sustainability and environmental care, clearly describe the results and impact of your approved project.
- Maintain Continuous Monitoring and Reporting: Monitor and report on the performance of your project on a regular basis to ensure that you are in compliance with VCS requirements. This includes periodic verification by qualified verifiers to ensure your certification’s credibility and integrity. Maintain current knowledge of any changes in VCS requirements or procedures to guarantee timely compliance.
- Consider Other Certification Options: Look into additional certifications or badges that complement your VCS certification, such as other recognised carbon standards or sustainability certifications. This can improve your project’s marketability and credibility, attracting a broader spectrum of purchasers or investors.
- Continue to communicate with local communities, stakeholders, and partners to maintain social and environmental protections and to resolve any concerns or feedback. Proactively discuss and show your project’s beneficial social and environmental consequences to gain stakeholders’ trust and support.
- Keep an eye on market trends, regulatory developments, and emerging opportunities in the carbon offset and sustainability sectors. This can assist you in making educated decisions regarding the administration and use of your certified VCUs, allowing you to maximise the value of your certification.
By following these procedures, you may use your VCS certification to verify the credibility of your carbon offset project, open up market prospects, and contribute to global climate change initiatives.
You can check VCS in the compliance market through this link and before you can start your own VCS project, this link can provide you with some sort of expectations and what to expect before beginning the process.
VCS Valuation and Performance Outlook
Credit issuance and credit retirement are two key actions in the context of carbon markets and voluntary carbon standards such as the VCS.
Credit issuance — is the creation and distribution of carbon credits, also known as confirmed Carbon Units (VCUs), to projects that have achieved confirmed emission reductions or removals. VCUs represent the quantity of greenhouse gas (GHG) emissions avoided or reduced as a result of the project.
Credit retirement—is the voluntary removal of carbon credits from circulation when a firm or organisation chooses to do so, generally to demonstrate its dedication to carbon neutrality or environmental goals.
Proper credit issuance and retirement processes are critical for preserving the integrity and openness of the carbon market, as well as demonstrating a company’s genuine commitment to decreasing its carbon footprint.
According to Verra’s 2021 Annual Report, a total of 1,775 projects were registered by the end of 2021 across different regions. Asia accounted for the highest percentage, representing 69% of the registered projects, followed by South and Central America at 14%, and Africa at 7%.
A thorough examination of the VCS programme reveals a significant growth in credit issuance throughout the years, totaling over 835 million credits, as well as a comparable trend in credit retirement, totaling over 439 million credits. What does this mean?
The considerable increase in credit issuance shows that more projects are producing verifiable emission reductions or removals. This could be attributed to rising demand for carbon credits as a tool for mitigating greenhouse gas emissions, which is being pushed by corporations’, organisations’, and governments’ commitments to sustainability and carbon neutrality.
Similarly, the credit retirement trend, suggests that credits are being retired voluntarily, demonstrating a commitment to environmental sustainability and a desire to go beyond offsetting emissions. This could be due to a greater awareness of, and choice for, high-quality credits that fulfill stringent standards and contribute to genuine and additional emission reductions or removals.
Overall, the data suggest that the VCS programme is becoming more widely recognised and adopted as a credible and effective means of addressing climate change through verified emission reductions or removals, as evidenced by the growing number of registered projects and the significant volume of credits issued and retired.
Conclusion
In conclusion, Verra’s VCS has been lauded for its stringent criteria and efforts to ensure credibility, transparency, and trustworthiness in carbon credit projects.
However, subsequent investigations by The Guardian, Die Zeit, and the non-profit SourceMaterial have cast doubt on the authenticity of Verra’s “avoided deforestation” carbon credits.
Verra stated in reaction to the article that they are still dedicated to REDD methodology, with a July-September 2023 update scheduled in response to a year-long consultation. Once approved, existing REDD projects will implement the upgrade.
Verra actively works to enhance standards through expert consultations, respects criticism and is proud of the good impact of REDD on deforestation, biodiversity, and Paris Agreement obligations.
With ongoing conversations about double accounting and other difficulties, serious discussions about how to maintain the integrity of the carbon credit market and keep it from devolving into “green moral hazard” are required to ensure that greenwashing in the carbon market industry is reduced.
*Green moral hazard refers to the dangers of misrepresenting or misusing environmental efforts in order to appear environmentally conscious while delivering no meaningful results.
Shaqib Shahril is a Climate Finance Policy Consultant, whose views and opinions expressed in this article are solely his own and do not represent the position or views of the company he works for. He offers his own unique perspective and understanding on the subject matter discussed in this article.
