Carbon credits generated from renewable energy projects have failed to obtain a new quality label from a key oversight body, casting fresh doubt on popular emissions offsets favoured by multinational companies like Audi, Shell and Total.
The Integrity Council for the Voluntary Carbon Market (ICVCM) announced on Tuesday that eight renewable energy methodologies, which cover about a third of the carbon credits available on the voluntary market, cannot use its “Core Carbon Principles” (CCP) seal of approval.
The ICVCM, an independent watchdog, aims to address widespread concerns over the quality of carbon credits after many projects have been accused of overstating their climate and societal benefits. It is assessing groups of offsetting projects to determine whether they comply with the CCP criteria, which are designed to identify and encourage high-integrity carbon credits that meet requirements on governance, emissions reduction and sustainable development.
The body said existing standards are not strict enough on judging whether renewable energy projects need the funding generated by selling carbon offsets in order to go ahead – a concept known as “additionality”. But it emphasised that renewables like solar, wind and hydropower are key to tackling climate change and carbon credits “still have a role to play” in financing them.
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Since the eight methodologies were designed as long as 20 years ago, the cost of renewables has collapsed, and their profitability in many parts of the world has rocketed, meaning they are more likely to make money without needing extra revenue from selling carbon offsets.
The ICVCM said that “for several years, carbon market experts have noted concerns about the additionality of many renewable energy activities and the difficulties in transparently demonstrating the additionality of these activities approved under existing methodologies”.
Major carbon-credit registries like Verra and Gold Standard stopped accepting new grid-connected projects in 2019, with the exception of those located in least-developed countries (LDCs).
But pre-existing renewable energy activities continue to generate a sizeable chunk of all the offsets available on the registries.
According to a recent analysis by Carbon Market Watch, over 280 million renewable energy credits are available in the voluntary carbon market. If companies and individuals used all those credits, that would compensate on paper for emissions equivalent to the amount of carbon dioxide Thailand released into the atmosphere last year.
Inigo Wyburd, a policy expert at Carbon Market Watch, called the ICVCM’s decision “a positive step”. “It sends a clear message to tackle the issue of the many low-quality credits still in circulation and undermining the market,” he told Climate Home.
Despite long being written off as largely worthless by climate experts, renewable energy credits are still popular among corporate buyers.
Fossil fuel majors like Shell and Total, automakers and cruise operators were among the biggest purchasers of renewable energy credits over the last 12 months, an analysis of Verra’s database shows.
In one transaction last year, German carmaker Audi used nearly 100,000 carbon credits generated in 2021 from an Indian solar project to claim that its handover of electric vehicles in Europe and the United States was “CO2 neutral” despite the emissions involved in producing them.
Japanese parcel delivery service Yamato Transport Company and public entities like Australia’s Brisbane City Council and Western Sydney University also relied on renewable offsets to claim carbon neutrality in 2023.
Because of earlier concerns about whether carbon offsets generated by renewable energy deliver the emissions reductions they claim, their price has been falling over the last two years.
According to data provider MSCI, the average price is just $2 per tonne of carbon dioxide equivalent reduced – less than half the price of offsets derived from projects aiming to protect forests, tackle methane emissions or promote energy efficiency. Renewable energy credits are likely to see further falls in price after the ICVCM’s rejection.
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But Amy Merrill, CEO of the ICVCM, left the door open to better renewables methodologies obtaining CCP approval. She called on carbon crediting programmes to develop methodologies “that better reflect the rapidly changing and variable circumstances around renewable energy deployment”.
“While renewable energy costs have fallen dramatically around the globe over the past decade,” she said, “they have not fallen evenly across all countries and high up-front expenses and other barriers mean that there are still many places where it is difficult to deploy renewable capacity.”
The cost of renewables is particularly high in remote rural parts of developing countries without access to the electricity grid, on islands with small populations and in areas where the authorities are hostile to renewable energy for ideological reasons, particularly in parts of the US. Methodologies enabling projects in these places would have the best case to get CCP approval, market experts told Climate Home.
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Verra has announced that it will revise some of its additionality requirements “to address the deficiencies noted by the ICVCM”.
The registry plans to submit its new rulebook to the watchdog and give existing projects the possibility of updating their quantification of credits accordingly. “This is part of our commitment to providing a path for all VCS [voluntary carbon standard] projects that wish pursue a path to CCP labelling,” Verra said in a statement.
A Gold Standard spokesperson said ICVCM’s rejection of the methodologies was “ambiguous and potentially harmful to high-quality renewable energy carbon credits on the market today” as different regions across the world still face various financial and technical barriers making carbon finance necessary.
They added that Gold Standard would consider the ICVCM assessment framework among other inputs in its next review of relevant methodologies.
The ICVCM’s negative assessment of existing renewable energy credits could also have repercussions for the new United Nations carbon mechanism currently under development.
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Renewable energy projects make up four-fifths of all projects seeking a transfer from the old Kyoto-era Clean Development Mechanism (CDM) into the new market system being set up under Article 6 of the Paris Agreement, Climate Home revealed last January.
The projects need formal authorisation to proceed from the countries where their activities are located.
Carbon Market Watch’s Wyburd said ICVCM’s rejection of the renewable energy methodologies “will hopefully send a few shock waves” to the countries having to make those decisions. “Given their profound shortcomings, these credits should not be given a new lease of life under the future UN mechanism,” he added.
At the same time, the ICVCM approved other methodologies to capture methane from landfills and to detect and repair methane leaks in the gas industry. That means 3.6% of unretired carbon credits have now been approved to use the CCP label.
Audi, Shell, Norwegian Cruise Lines, Western Sydney University and Aviva did not respond to a request for comment on the impact of the ICVCM’s renewables decision. Total declined to comment.
(Reporting by Joe Lo and Matteo Civillini, editing by Megan Rowling)
The post Renewable-energy carbon credits rejected by high-integrity scheme appeared first on Climate Home News.
Renewable-energy carbon credits rejected by high-integrity scheme
Claver Gatete is Executive Secretary of the UN Economic Commission for Africa. Jason Veysey is Energy Modeling Program Director and Senior Scientist at the Stockholm Environment Institute. Lisa Sachs is Director of the Columbia Center on Sustainable Investment at Columbia University.
The case for global energy transition has rarely been clearer. The closure of the Strait of Hormuz earlier this year exposed the cost of unplanned, fossil-dependent systems, while the falling cost of renewables, the rising penetration of electric vehicles, and the growing value of demand flexibility have made the direction of travel obvious. The benefits of a clean, secure, integrated system are no longer in dispute. What remains unclear is how to build it.
Countries around the world have called for faster renewable energy deployment and alternative energy arrangements. A secure, affordable, resilient, decarbonised system requires specific investments in specific places in a specific sequence, optimised across sectors and borders. But very few governments have the analytical foundation to translate those imperatives into investment.
The two instruments that are supposed to determine investment priorities for decarbonisation – Nationally Determined Contributions (NDCs) and country platforms – cannot answer the most basic question facing any country undertaking an energy transition: what should the energy system look like?
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To close this gap, every country needs a bankable, economy-wide optimisation model for its energy system. A model is not a plan, but it can help answer the critical question of what the future energy system should look like. It shows how optimal scenarios vary as assumptions and policies are adjusted, calculates investment requirements and sequencing, and quantifies how system costs are affected by assumptions, policies, and exogenous variables like trade policy and financing terms.
Tool for efficient investment
Optimisation is a simplified way of simulating an energy system, but it can be an extremely powerful tool for moving energy planning from reactive (how do we manage the disparate actions in the energy system?) to intentional (what energy system underpins our national objectives?). A model can show how optimal scenarios vary as assumptions and policies are adjusted, and how investment requirements are quantified and sequenced.
Optimisation models can treat the energy system and the sectors it serves as an integrated whole, optimising across sectors and projects in ways that can be mutually reinforcing. If considered independently, growth in industrial demand, transport electrification, and digital infrastructure can add stress to the energy system. But an optimised plan can arrange these and other changes in an efficient, synergistic way.
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New load can be added where low-cost power is available; industrial customers can ensure the viability of investments in energy supply; electric vehicle charging policy can smooth load curves and reduce costs for all consumers.
Additionally, optimisation modeling can also change the financeability of investments. Taken alone, each project faces uncertainty about the rest of the system, which raises the cost of capital and causes projects to stall or unwind after contracts are signed. A coherent, optimised plan makes visible the coordination that private capital would otherwise have to bet on: identified offtake, sequenced and committed transmission, contracted power supply, and so on.
What COP31 and COP32 should do
The upcoming COPs in Turkey and Ethiopia can shift the center of gravity of international climate cooperation from fragmented commitments to planning. Three moves are urgently needed.
First, optimised, economy-wide, long-term energy system planning must be the foundation on which any meaningful NDC, country platform, or finance commitment rests. NDCs are typically drafted by environment or single-line ministries, with limited cross-sectoral input from ministries of energy, finance, and planning. They contain targets, derived from sectoral strategies or national commitments, not from an analytically grounded picture of what the energy system should look like and what investments would make it work. Country platforms are generally a portfolio of investments assembled from existing project pipelines, rather than derived from a system-level analysis of what an optimised, decarbonised energy system would require.
Second, recognise regions as a key planning unit. Modern integrated energy systems are inherently regional. Renewable endowments are unevenly distributed; balancing variable supply across borders lowers aggregate cost, reduces redundant backup capacity, and unlocks economies of scale no individual nation can achieve. Many energy investments in Southeast Asia, East Africa, Southern Africa and Central Asia may only be financeable in a regional context. Assessing domestic infrastructure without regional optimisation perpetuates the perception that decarbonisation is more expensive than it is.
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Third, finance the planning capacity. A coordinated commitment by multilateral development banks, bilateral donors, and philanthropic partners to help every region and its constituent countries develop and maintain their own modelling capability, with open-source tools and regional analytical hubs, would close the most consequential gap in the current architecture. The cost is small relative to current spending on country platforms, failed project preparation, and misallocated infrastructure investment.
This includes supporting regional institutions such as the ASEAN Centre for Energy, the African Energy Commission, regional power pools, and the Latin American and Caribbean Energy Organization to determine what optimised regional systems require. Country-by-country pledging, repeated at every COP, will not deliver what meaningfully integrated systems can.
The 2026 energy crisis made the cost of unplanned, fossil-dependent systems newly visible. That window of clarity will close. The international community should seize the moment to build the planning foundation that has been missing for thirty years, rather than commissioning another round of NDCs or pledges, striving for outcomes neither was designed to deliver.
The post Every country needs a model to help optimise its energy transition appeared first on Climate Home News.
Every country needs a model to help optimise its energy transition
The world is currently experiencing what is expected to become the strongest El Niño on record – dubbed a “super El Niño” by many.
El Niño is the warm phase of a recurring climate pattern in the tropical Pacific that releases heat from the ocean into the atmosphere.
This temporarily raises global temperatures and reshapes rainfall and extreme weather around the world – impacting the lives of billions of people.
The current El Niño event began in June and is expected to last into 2027.
El Niño is part of a wider climate pattern called the El Niño-Southern Oscillation (ENSO) cycle.
The ENSO cycle also has a cool phase, known as La Niña, as well as a “neutral” phase. El Niño and La Niña events typically last between nine and 12 months, but can go on longer.
Below, Carbon Brief explains how the ENSO cycle works, its impacts on extreme weather and global temperatures and why this El Niño event is projected to be the most intense since records began.
The post Explainer: How the ‘super El Niño’ will reshape the world’s weather appeared first on Carbon Brief.
https://interactive.carbonbrief.org/el-nino-explainer/index.html
The second-largest reservoir in the US reached a record-low water height on Saturday – just days after the country’s largest reservoir broke its own record.
Both Lake Mead and Lake Powell are located on the Colorado River.
They provide water for populations across seven US states in the south-western US, with around 40 million people getting some or all of their municipal water from the Colorado River.
The river also provides water for around 5.5m acres (22,258 square kilometres) of farmland across Colorado, Arizona, California and the other states in the river basin.
Experts tell Carbon Brief that climate change, population growth and over-consumption are all contributing to the current record-low levels of the reservoirs.
Record lows
At full capacity, Lakes Mead and Powell can hold a combined 68 cubic kilometres of water – enough to supply all household consumption in the contiguous US for nearly 1.5 years. However, the water level in both reservoirs has been declining for decades.
The chart below shows the water level of Lake Mead, in metres above mean sea level. The reservoir, which began to fill in 1935 following the construction of the Hoover Dam, has a “full pool” maximum capacity of 347.60 metres. The water level in Lake Mead reached a record low of 317.11 metres on 7 August.
The following chart shows the water level of Lake Powell, in metres above mean sea level. Lake Powell’s full-pool level is 1,127.76 metres.
While the reservoir reached its maximum capacity several times in the 1980s, it has not done so since. On 15 August, the water level in Lake Powell was recorded at a new record-low of 1,072.87 metres.
Both reservoirs have continued to decline in the days since breaking their respective records. The downward trend will largely continue in both lakes until next spring, when the snowpack in the mountains of the Upper Colorado River Basin begins to melt, says Dr Jack Schmidt, a senior research scientist at Utah State University’s Center for Colorado River Studies. He tells Carbon Brief:
“The big dilemma of the moment is that we’re only in the middle of August, and we have no assurance of what the coming winter will be. The only thing we can be sure of is that we will be depleting overall total basin reservoir storage from now until, roughly, early April.”
Compounding factors
The record lows across the two reservoirs are the result of several compounding factors, experts tell Carbon Brief.
Since the turn of the 20th century, the amount of water flowing along the Upper Colorado River has declined by about 20%. Research suggests that half of this decline can be attributed to human-induced climate change.
Most of the river’s streamflow comes from the snowpack of the Upper Colorado River Basin, which stretches across five western US states but is primarily located in Colorado and Utah.
This region has been gripped by a historic “megadrought” for more than a quarter of a century. Nearly half of the megadrought’s intensity over 2000-18 is attributable to climate change, according to a 2020 study.
At the same time, the increasing population in the US south-west has put added pressure on the Colorado River’s water supply. The number of people obtaining some or all of their water from the Colorado system has grown by 15 million (around 60%) since 1992.
Schmidt tells Carbon Brief:
“There’s an ultimate cause of the present water crisis, and there’s a proximate cause. The ultimate cause is a warming climate, a warming planet and a pretty clear correlation between warming conditions and decreased runoff in the Colorado River Basin.
“The proximate cause is that in this messy democratic republic of ours, big policy decisions that match the variability of the climate occur painfully slowly – with intense political negotiations – and only incrementally.”
On 31 July, the US Bureau of Reclamation, which manages water resources in the western US, released an environmental impact statement on its proposed post-2026 strategy for managing Lakes Powell and Mead. The strategy itself has not been released yet.
Schmidt notes that the statement does appear to give the Bureau flexibility to “respond to crisis” by reducing the delivery of water to several states. However, he adds:
“They acknowledge it won’t work if we just stay critically dry, and of course every climate model for the 21st century, especially with a continually warming planet, says that that’s exactly what’s going to happen.”
The post Analysis: The two largest reservoirs in the US have hit record-low levels appeared first on Carbon Brief.
Analysis: The two largest reservoirs in the US have hit record-low levels
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