Approximately 10 years ago, World Bank analysts predicted that by 2025 or 2030 regional carbon markets would merge into a large single and global market. This prediction was formulated in the context of compliance carbon markets forming up at the time in Europe, North America, Australia and elsewhere. 

While this has not materialised, and the compliance carbon markets are still operating at national or regional levels, the voluntary carbon market (VCM) is not growing any simpler.  

Although the VCM is more global, in its impact and dynamics, the increasing number of carbon certification schemes, has made it more complex. 

As explained in our carbon finance handbook, the role of most carbon certification standards is to perform three fundamental functions: 

• Develop, approve, and update rules, principles, and requirements defining the conditions under which carbon credits can be delivered. 

• Review carbon offset projects against these rules, principles and requirements. 

• Operate a registry system that issues, transfers, and retires carbon credits. 

While the VCM had been operating with approximately 6 certification schemes for nearly 15 years (from 1996 to 2010), the recent years have seen the rise of numerous competing standards.  

This can be explained by several factors: 

• The need for sectorally-specialised schemes offering fewer and more focused tools and methodologies with a range of simplifications, such a unique methodology for all projects and emission reduction tool with pre-populated emission factors. This is notably the case with the Woodland Carbon Code, Moor Futures, and the World Bank’s Forest Carbon Partnership Facility, all established in 2011, and respectively specialised in afforestation, peatland and REDD+ project development, and more recently with the Hemp Carbon Standard and Peatland Protocol in the United Kingdom.  

• The need for culturally adapted schemes: not everyone can work in English. Domestic or regional schemes can be rendered more accessible when available in the local language (e.g., French, Spanish, Japanese, etc.). This is the case with the French scheme, Label Bas Carbone, set up to support the ecological and energy transition in hard to abate sectors (e.g., agriculture, transportation, forestry), or the J-credits scheme, a Japanese language scheme specifically adapted to the cultural norms of the country.  

• The need for contextually adapted schemes: domestic or geographically specialised schemes can provide a range of default and locally relevant values that simplify the process of certification and verification. For example, ART TREES, provides a support framework to help nations build domestic REDD programmes. Another context-specific example is the Australian Carbon Credit Unit Scheme (former Emission Reduction Fund) designed to catalyse the transition to net-zero by 2050. 

• The need for less resource-intensive processes: as the leading schemes grow in complexity to accommodate their stakeholder needs for integrity, this creates room for less sophisticated as well as more innovative schemes. This is notably the case with the Global Carbon Council or CerCarbono, perceived to be simpler copies of the UN’s Clean Development Mechanism and the VCS; or Canada’s CSA, which only requires projects to account for emissions following ISO protocols. 

Considering that 7 new carbon certification schemes have seen the light of day in 2023, as many as the four previous years combined, it is anticipated that the number of standards will keep growing, before eventually consolidating, as was the case with the merger of Gold Standard and CarbonFix, and to so some extent the VCS and Climate Community and Biodiversity standard. 

This first visual shows the 37 schemes run by organisations set up as non-for-profit. 

The most recent trend in the carbon certification landscape is the rise of a new breed of standards: vertically integrated and commercial carbon certifications schemes. 

They are distinct from traditional certification schemes as they have a more commercial approach, led by a business-like setup and often providing a vertically integrated (or end-to-end) approach, including: 

• setting the rules to issue carbon credits against GHG emission reductions – as traditional schemes do 

• onboarding mitigation activities without the need for technical third parties – by providing both technical assistance and user-friendly interfaces to do so  

• approving mitigation activities – as traditional schemes do 

• issuing carbon credits – as traditional schemes do 

• and often providing them with a dedicated marketplace or match-making service 

A lot of them apply to small scale, highly replicable activities with more diffuse sources of emissions. These mostly apply to: 

• Agriculture (e.g., regenerative agriculture and soil carbon) 

• Engineered and long-term carbon dioxide removal (e.g., enhanced weathering, mineralisation, biochar) 

• Smallholder tree planting and forest management (e.g., in fragmented landscapes) 

They also have the particularity of making a greater use of technology to: 

• Monitor impacts (e.g., through LiDAR, satellite imagery) 

• Come up with new impact concepts (e.g., tonne-year for forest management projects) 

• Tokenise and facilitate transactions via blockchain 

The number of schemes is likely to grow significantly over the next few years as the market is still nascent… 

With the dozens of carbon certification standards out there it can be hard to understand their varying scopes.  

While they all operate with a slightly different focus, these can be categorised as follow: 

• Land Use, Land Use Change, and Forestry (incl. agroforestry, land management, ARR) 

• Conservation & REDD+ (incl. project & jurisdictional) 

• Carbon Dioxide Removal (incl. engineered carbon removal, biochar) 

• Industrial GHG emission reduction and energy efficiency 

• Methane Capture (incl. waste handling and disposal) 

• Renewable Energy 

• Domestic Energy Efficiency (incl. cookstoves, efficient lighting, water access, building energy efficiency) 

This visual gathers the 48 schemes identified as currently in operation, in no specific order:

The success and development of each standard is dependent on their level of ambition and their approach to certification, which, in turn, dictates their traction in the marketplace. 

Generally speaking, the older the certification standard, the larger the number of projects they have been able to certify, nevertheless: 

• Some geographically focused standards (e.g., American standards, etc.) are trailing behind some of the newest standards (e.g., Global Carbon Council) 

• Some geographically focused standards have gained a lot of traction within a short amount of time (e.g., Label Bas Carbone in France with 575 since 2018) 

• Some technologically innovative standards are gaining traction and scaling up rapidly (e.g., Universal Carbon Standard – UCR) 

• A fair number of standards have yet to find scale, even after quite some time (e.g., Plan Vivo, City Forest Credits, CredibleCarbon, NFS) 

A lot of these standards are still in the process of creating a market share for themselves. 

In this visual, we break down the size of certification standards based on the number of projects they have certified/registered:

CONCLUSION  

Through this analysis, we aim to shed some light on the complex world of carbon certification standards at a time where financial sponsors and buyers of carbon credits are looking for clarity and visibility over the quality of their investments and purchases.  

HAMERKOP’s experts have more than a decade of experience working with the carbon market ecosystem, including reviewing and supporting the creation of new certification standards and methodologies and supporting project developers in selecting the right standard for them and designing their climate change mitigation intervention accordingly. If you are looking for support in this space, we can help, reach out to us. 

This is a highly dynamic space and if you know of a scheme that would fit on these maps, do let us know as we will update this map regularly!