CORSIA: Five Key Takeaways on What Eligibility Decisions Mean for Carbon Markets

by Sarah Leugers (Gold Standard/GreenAir Online) On March 13, the International Civil Aviation Organization (ICAO) announced that credits from Gold Standard and five other standards will be eligible for CORSIA, the aviation sector’s carbon market scheme, for the pilot phase 2021-2023. While Gold Standard believes the requirement for a carbon-intensive sector like aviation to take accountability only for emissions for growth compared to a baseline is insufficient, especially without more ambitious decarbonisation expectations, it is a testimony to the integrity of the voluntary carbon market that some of its standards are among those recognised for this new compliance mechanism. Drilling down deeper, the selection criteria yield five key takeaways that stand to set a new minimum bar in carbon markets, writes Gold Standard’s Sarah Leugers.

1. Only carbon credits with sustainable development considerations are credible.

We should now officially put to rest any debate that sustainable development is too complex to be central to carbon markets. If we are serious about climate justice then climate mitigation and sustainable development must go hand in hand.

As we have argued with the UN Sustainable Development Solutions Network (SDSN) and other partners in our guidance for measuring SDG impact, it is not credible to claim positive contributions to sustainable development without a) safeguards to ensure no negative impacts and b) independent verification. New tools that are expected to be used to retroactively demonstrate adherence to safeguards and contributions to sustainable development fall short of this credibility requirement.

2. Carbon credits are only appropriate for some types of Land Use activities, and even these must be managed with special caution.

While climate-smart management of land use is critical to meeting the goal of the Paris Agreement to balance emissions with sinks by mid-century, we must be deliberate in our use of market mechanisms towards this aim.

Despite the recent spike in popularity of nature-based solutions, spurred on largely by efforts from oil and gas companies seeking high volumes of cheap credits, it is telling that the number of CORSIA eligible land use credits is very low. CORSIA will accept no CDM credits from Afforestation/Reforestation (A/R) projects – highlighting the problems with permanence, as CDM projects have no compliance buffer, insurance, or other provisions to address permanence. Project-level REDD+ credits are also not eligible due to important concerns about leakage.

Gold Standard Verified Emission Reductions from A/R projects are eligible because of the management of both permanence and leakage. We have now applied these same principles to our new Soil Organic Carbon Framework Methodology with a goal of scaling this important new opportunity to sequester carbon in soils in the context of agricultural practices, grasslands and livestock management, and more.

3. Market mechanisms must be designed for resilience – striking the right balance to drive desired change.

Notably, CORSIA acknowledged campaigners who lobbied for vintage restrictions to avoid a glut of credits that would mean a low price that does not do what carbon pricing is designed to achieve: provide an incentive for further internal emission reductions. This structural weakness plagued the EU ETS for years as overallotment of allowances meant prices in the low single digits, providing no driver for change to most companies under the compliance cap. CORSIA seems to note this lesson by limiting eligibility to projects with start of first crediting, and hence vintages, to 2016 or later.

Climate impact in 2015 is as valuable as climate impact in 2017. Gold Standard’s view is that ICAO’s Technical Advisory Body (TAB) might have rather required the safeguards and sustainable development provisions with more rigour across some of the compliance mechanisms it has ushered in, rather than using the more blunt vintage restriction.

4. More than ever, it is critical to support vulnerable communities and drive finance to assist those least responsible for climate change yet most affected by its impacts.

Carbon finance has often overlooked the poorest communities that are also too often on the front line of a changing climate. This is the reason the German government supported Gold Standard in a programme of work including suppressed demand methodologies, microscale provisions and its objective observer programme, which grant flexible measures to overcome the barriers that had prevented carbon finance from reaching these marginalised groups. The trade-off to greater development impact is the potential for less precision in the emission reduction quantification.

For this reason, some of these activities are not eligible under CORSIA. It presents an opportunity to build in new conservative principles to ensure that these high-impact projects serving marginalised populations are not left behind in a transition to carbon markets of the future.

As CORSIA is a compliance mechanism, it is non-negotiable that corresponding adjustments are made in host countries as credits are sold to CORSIA buyers. While this does not have a direct bearing on environmental integrity of purely voluntary climate action, a growing number of civil society organisations maintain that corresponding adjustments do serve as a way to ensure that host countries recognise the climate action supported by the voluntary carbon market in their inventories or their domestic policies, to avoid unintentionally reducing the incentive for strong domestic policies. READ MORE