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This marks the second ARR methodology to be approved after Verra’s new VM0047 ARR methodology was approved in December 2024. But credits have yet to be issued under Verra’s approved methodology, meaning the ACR approval will bring the first CCP-approved ARR credits to market.
Approximately 7.8 million credits have been issued under the ACR ARR methodology, which have now been CCP labeled. Just over 4 million of those credits have already been retired, leaving just under 3.8 million newly tagged CCP credits now in the market.
Some conditions to the approval remain, however: ICVCM’s CCP tag can now be applied to credits issued to projects verified for conformance that plant native species on degraded lands to sequester carbon and contribute to an ecosystem with broad environmental benefits and avoid potential negative impacts, ACR said in a press release.
“It’s conditional for projects only that have natural forest establishment and reforestation projects,” Pedro Martins Barata, ICVCM governing board member, told Fastmarkets in an exclusive interview on Wednesday July 16.
“The approval for natural forest projects is easier in terms of additionality, because there are no other significant income streams in these projects. So, these projects tend to be highly additional, they depend on carbon credits,” Barata said.
“This is not to say that other project activities following this methodology that are not natural forests could not be high quality, but the question is could we devise a way of figuring out those that had a very low risk of non-additionality? We couldn’t and so therefore it is typical that we will find these conditions in some cases,” he said.
To determine the order of CCP approved methodologies – ARR, Reducing Emissions from Deforestation and Forest Degradation (REDD+), Improved Forest Management (IFM) and renewables, among others – ICVCM categorizes them according to their size and complexity.
“These different categories, depending on their complexity, were assigned different working groups within the ICVCM,” Barata told Fastmarkets.
“In parallel with this consultation, we were doing our own assessment. So, the prioritization was very much by the size of each category in the market,” Barata said. “The two early priorities were REDD+ and renewables, IFM and ARR were also part of the initial batch.”
Barata noted that “ARR was one of those that took quite a long time, and the reason was that the number of methodologies involved very specific issues, and some of those categories are very diverse.”
Thursday’s ARR announcement follows the approval of Verra’s VM0047 and VM0048 methodology under ICVCM’s CCPs.
“There are no credits under the [VM0048] methodology issued to date. VM0047 likewise is a new methodology for ARR; while we have approved it, there are no credits issued under VM0047,” Barata said.
“This is the first time that, as soon as the approval is made, the ACR can identify those projects that it applies to,” he added.
From Thursday onward, the CCP label on ARR credits is available on the ACR registry.
US-based GreenTrees is the only project on the ACR registry to date that has issued credits under the newly approved methodology.
Vintage 2020 credits from GreenTrees were offered at $30.50 per tCO2e earlier in the year. No new offers have been reported to Fastmarkets since the CCP approval, and it remains to be seen whether sellers will increase offers now that the credits are CCP tagged and whether buyers will be willing to pay a premium.
But ICVCM is already reporting some correlation between CCP-tagged credits and price premiums.
“There seems to be a splitting of the market into high and low quality, so that price premium is increasing,” Barata said.
ACR will continue to engage with ICVCM throughout their assessment process, with the aim of securing CCP approval for other methodologies across their portfolio, the registry said in a statement.
ICVCM has noted market support for CCP labels, acting as a key metric to determine high quality in the voluntary carbon market (VCM).
“I think the theory of change here is that we need to be thorough in our assessment. So, as we have more of these methodologies approved, there will be a natural shift of interest toward these methodologies,” Barata said.
“Our first indications coming from the carbon crediting programs and from market observers is that we are indeed seeing an increase, both in terms of buying interest into these credits from these methodologies […] and the development of projects that are being submitted under the new methodologies,” he said.
Thursday’s approval will ease supply constraints to some degree, but ICVCM noted that encouraging new high-quality supply remains a priority for the wider VCM.
“Some [CCP-approved methodologies] will have volume and they will marginally ease supply constraints. But I think the real way to ease that supply constraint is actually to get new supply onto the market, and that will take time,” Barata said.
“We’re seeing some vindication that there’s a flight to quality, […] according to some surveys of buyers, even last year, 40% of buyers were already specifically conditioning in their RFPs [requests for proposals] or in their orders to intermediaries that they were looking for CCP-labeled credits,” he said.
Other market participants have also told Fastmarkets that companies are increasingly including mention of CCPs when putting out RFPs. Even when not explicitly requiring the tag, some have looked to exclude credits from methodologies that have been rejected by the ICVCM.
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