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The Importance of Integrity in Scaling a High-Impact VCM

The Importance of Integrity in Scaling a High-Impact VCM

(How) can emerging digital technologies help build a high-integrity voluntary carbon market?

The Rocky Mountain Institute and Climate Collective have released their VCM Landscape Guide addressing just this. They shine the spotlight on critical issues with the integrity of carbon project data and the integrity of market activity – both areas where new technologies, such as blockchain, and digital monitoring, reporting, and verification (D-MRV) can make a huge difference!

Key findings of the VCM landscape guide

Current integrity issues

How emerging technology can help address these issues

Key findings of the VCM landscape guide

The VCM is growing. But it needs to improve so it can have the required impact on climate goals. Currently, stakeholders continue to struggle with deciding on credit quality and fair pricing due to process and data issues.

These issues include:

  • Measurement uncertainty over climate impacts
  • Subjective interpretation of data
  • Data hidden behind paywalls
  • A lack of definitive integrity metrics for credits

Luckily, software-based tech solutions can help address these issues. They can, for example, improve alignment on credit quality or send price signals to the market. If these technological solutions are applied correctly, they can help catapult the VCM to its full potential, so it can deliver climate solutions at scale.

Current integrity issues in the VCM

Two pillars of integrity determine the quality of any carbon credit claim in relation to its climate impact. These are process integrity and data integrity, and we explore them further below.

Integrity pillars; VCM Landscape guide by Climate Collective & RMI

The VCM’s current struggles with effectiveness and performance are a result of the flaws, strengths, and gaps of data between these two pillars.

What is process integrity and why does it matter?

Process integrity refers to the belief that a trustworthy and transparent credit certification process involves independent and separate entities that ensure reliable and impartial results in the Voluntary Carbon Market.

The following limitations negatively impact effective process integrity:

  • Complex local realities where unique projects face different implementation contexts
  • Centralized methodology creation, which means projects must be vetted by large, slow-moving institutions
  • Lack of accessible data due to things like paywalls
  • Inadequate data and quality literacy, which invites human error and inaccuracies
  • Lack of clear guidance for buyers, which makes purchasers hesitant and unsure of what constitutes good quality carbon

All of these issues mean one thing: the VCM ecosystem continues to struggle with inconsistencies, conflicts of interest, and a lack of transparency. And this, in turn, leads to a lack of trust and to many questions around credit integrity.

What is data integrity and why does it matter?

Data integrity refers to accurate, reliable, transparent, and verifiable social and environmental data. It also includes the governance and flow of this information within a system.

Key challenges with data integrity hinder the accurate valuation and pricing of carbon credits. These challenges include:

  • Measurement uncertainty – much of the measuring is done locally, without utilizing the latest MRV technology
  • Subjectivity, as different people will interpret the same data differently
  • Opacity, with data recorded in dense PDFs or behind paywalls
  • Lack of definitive metrics, which means that data cannot be accurately equated to a specific quality benchmark

These challenges result in carbon credit prices that are largely disconnected from the credit’s climate performance. And they usually don’t reflect the cost of being brought to market by a project developer.

Both pillars – process integrity and data integrity – need to be addressed, so overarching quality claims are possible.

For example: If the underlying data of a credit is flawed, a flawless process will not compensate for the credit’s fundamental data shortcomings.

And if a credit has near-perfect data, but the process to issue and sell it is opaque, unreliable, or clunky, the market will struggle to connect the quality credit with buyers that are willing to pay a premium for those quality attributes.

How emerging technology can help

Bringing greater integrity to the VCM is a task that can be tackled by

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