Read more in the May 30 edition of Invert Insights.
The Integrity Council for the Voluntary Carbon Market (ICVCM) released a new report with recommendations based on findings from their Continuous Improvement Work Program (CIWP). The CIWP on Permanence report explores how to ensure the long-term durability of carbon credits, meaning that reduced or removed carbon stays out of the atmosphere over meaningful timescales. It addresses the risk of reversals (where sequestered carbon is re-released) and how to mitigate such risks effectively and consistently across the carbon market. The consultation group featured stakeholders from leading carbon registries, NGOs, academic institutions, private sector experts, and international organizations like Verra, the University of Cambridge, and the UN Environment Programme.
The report highlights 6 core recommendations:
Develop standard definitions for reversals. In future refinements to the Assessment Framework, it was recommended that the ICVCM should include a standard definition of what is classified as an avoidable reversal and what is classified as an unavoidable reversal. This would help ensure a minimum market threshold for how reversals are classified and handled, while minimizing moral hazard, preserving flexibility for crediting programs to tailor buffer operations, while still maintaining consistency on the core definitions and enable clearer guidance on who bears responsibility for reversals and under what conditions pooled buffer reserves should be drawn upon.
Review the liability for monitoring cessation. The ICVCM’s Assessment Framework (Criterion 9.3) requires programs to treat monitoring cessation as an avoidable reversal, but it does not specify how much liability should result from it. The second recommendation is that the ICVCM should clarify that cessation of monitoring and verification should result in a compensation liability equal to the amount of credits the project had previously contributed to the pooled buffer reserve. This approach offers a clear, enforceable baseline: if monitoring stops, the project forfeits all contributions made to the buffer reserve. It’s worth noting that some CIWP participants argued for a more conservative approach, requiring cancellation equal to all credits issued by the project, not just buffer contributions. However, consensus was reached on the buffer-contribution level as the minimum.
Stress test buffer reserves. Currently, the ICVCM requires the use of pooled buffer reserves but does not mandate stress testing to verify their robustness. The recommendation is that the ICVCM should pilot stress testing for pooled buffer reserves, and based on the results, consider whether and how to incorporate mandatory stress testing into the Assessment Framework. The goal of the stress test should be to determine the sufficiency and resilience of buffer reserves across various conditions, and include the standardization of best practices across programs. It will also help encourage transparency and stakeholder trust and provide the ICVCM with data to refine and reassess its thresholds and guidance.
Standardize risk assessments. Under Criterion 9.4 of the ICVCM Assessment Framework, carbon crediting programs must assess reversal risk and determine buffer contributions accordingly. However, no standardized guidance is provided by the ICVCM on the types of risks that must be evaluated, what data sources are acceptable, and how frequently risk assessments must be updated. As a result, each program has developed its own tools, methods, and standards, which vary significantly in scope, quality, and assumptions. The report recommends that the ICVCM provide guidance on the types of risks that must be addressed, the frequency reporting should be done, and the acceptable data sources to be used in project-level risk assessments conducted by carbon crediting programs.
Extend the monitoring and compensation periods. The report recommends that ICVCM should explore mechanisms to extend monitoring and compensation beyond 40 years, distribute liability, and incorporate novel approaches to permanence risk management. The report suggests linking monitoring to credit vintage rather than the project start and introducing new compensation models which will spread liability across multiple actors, not just project proponents.
Develop an innovation sandbox. The report suggests the ICVCM should explore creating an innovation sandbox to pilot new, innovative updates to CCP-Approved methodologies while maintaining CCP-Approval status. The hope is that this opportunity will enable methodological innovation (e.g., new reversal risk management models, MRV technologies, digital tokens) and avoid penalizing programs that want to test improvements or emerging technologies while maintaining market confidence and regulatory integrity by containing the risks of innovation within strictly defined parameters.
As for what’s next, a second phase of the CIWP on Permanence (focused on Monitoring and Compensation) will begin in 2025, and those recommendations will be used to refine the Assessment Framework and guide broader market evolution.
Invert Insights.
💡 This evolution reflects the market’s need for longer-lasting, scientifically sound, and financially stable carbon mitigation solutions. Standardizing frameworks and guidelines will boost investor confidence and credit quality and make crediting programs more transparent, accountable, and better aligned with climate integrity goals. It’s important to note that while standardization is crucial, there still needs to be flexibility for innovation and evolution of the voluntary carbon market.
💡 While minimum standards are being proposed, many project developers and proponents are already meeting and exceeding those standards for their projects. For example, Invert’s Bonos Jaguar del Mayab carbon projects, developed in partnership with the Earth Lab and BanC02, work to protect and revitalize the forests of the Yucatán Peninsula for 100 years.
