Sep 6, 2023

Share Framework aims to build trust in controversial voluntary carbon markets, by helping companies buy the right amount of credits to make credible net zero claims Carbon credits agency BeZero Carbon has published a new framework for how organisations purchasing credits can calculate how many carbon credits they need to redeem to make credible net zero claims. The firm published its new methodology in a white paper this morning, arguing it represents a "first of a kind, financial markets framework" for carbon credit buyers which would guide them on how best to 'retire' credits based on project-level quality. A carbon credit is retired when a buyer has redeemed the one tonne of carbon reduction it represents against its carbon footprint. Once retired, the permit can no longer be sold or transferred, and will be listed as such on carbon credit registries so as to avoid double counting. BeZero Carbon's discounting methodology is designed to help buyers of carbon credits understand how many credits they should purchase to make a tonne-based claim, by enabling them to account for the risks involved in different carbon credit projects. The new methodology sets out an estimated discount factor for each rung of Be Zero' Carbon's eight point carbon credit rating scale, which can be used by credit buyers and resellers to calculate an "over-purchasing factor" per tonne of carbon required. The methodology aims to help counter long-standing criticisms of the voluntary carbon market, which has seen campaigners allege that some carbon removal and reduction projects fail to deliver promised emissions savings, and as such allow  corporates to make over-inflated 'carbon neutrality' claims. For example, a company that purchases carbon offsets from a forest project that is later wiped out by a forest fire may have already accounted for offset credits that have become worthless. A number of international standards bodies are working to shore up integrity on both the supply and buy sides of the voluntary carbon market in a bid to rebuild trust and unlock much-needed finance for critical carbon removal projects around the world. BeZero Carbon's new methodology aims to complement these standards by helping companies better understand and spread the risk associated with different carbon offset projects. The raitings agency said that creating a language for project-level risk was "vital" to the evolution of the voluntary carbon market, noting the assumption that all carbon credits are equal was leading to questionable net zero claims which were in turn eroding trust in the market. "One of the biggest challenges facing the voluntary carbon market is that all carbon credits have been treated as equal - this is simply not the case," said Sebastien Cross, chief innovation officer and co-founder of BeZero Carbon. "Everyone knows quality isn't binary. But we lack the framework and tools to reflect the fact that some credits perform better than others. "A risk-adjusted approach allows customers to select the quality of credits they invest in. This is essential to tackling a lack of confidence on the demand side, and helping scale the voluntary carbon market effectively." BeZero Carbon said the risk-based claims management methodology complemented the BeZero Carbon Rating, its flagship eight point rating system which assesses the efficacy of carbon credits sold on the voluntary carbon market.