INTERVIEW: CCP eligibility of nature-based carbon credits may be unveiled soon: TNC

The eligibility of nature-based methodologies for high-integrity labels, called Core Carbon Principle or CCP labels, will likely be unveiled in the next few months with at least an initial round of approvals, Will McGoldrick, Regional Managing Director for Asia Pacific of The Nature Conservancy (TNC), told S&P Global Commodity Insights in a recent interview.

Carbon market investors have been anticipating the awarding of high-integrity labels to help them identify reliable projects and carbon credits. In the past few months, Integrity Council for the Voluntary Carbon Market (ICVCM) has granted CCP labels to some niche methodologies and announced that renewable projects would not be CCP-eligible, but nature-based methodologies, which account for significant supplies in voluntary carbon market (VCM), are still in limbo.

“We should know in the next few months. ICVCM plays a crucial role as the first global regulator of the VCM. While we don’t expect perfect decisions in this first round of approvals, we support their role and are ready to mobilize our scientists and experts as needed,” McGoldrick said.

“Some nature-based methodologies may be immediately eligible, while others may require updating by the carbon standards,” he added.

TNC is an US-headquartered, non-profit environment organization that currently operates in 79 countries. Specific to carbon markets, TNC plays an active role in designing carbon methodologies and projects, sourcing philanthropic funding for high-risk, innovative projects, advising policymakers and fostering collaborations.

Significance of nature-based solutions

“We cannot reach our shared global climate goals without massive investment in nature and nature-based carbon markets in the near term. That is unequivocal,” McGoldrick highlighted.

TNC was founded in 1951, long before the carbon market was invented.

When asked whether he considered carbon market as the best solution for nature conservation, McGoldrick said there is no single fix for the massive global challenges, however, carbon markets are a crucial component among several important tools, including public finance, subsidy reform, debt-for-nature swaps, and private investment in a low-carbon, nature-positive economy.

“Both voluntary and compliance carbon markets have unique superpowers for tackling these crises: They can efficiently connect climate funders like companies or governments to urgent mitigation opportunities worldwide.”

“This connection allows those companies and governments, after exhausting available opportunities locally to reduce carbon or protect biodiversity, to extend their impact by financing global mitigation efforts," he said.

An ongoing reform

A global reform for the carbon markets began two years ago, with organizations such as ICVCM and Voluntary Carbon Markets Integrity Initiative (VCMI) identifying responsible ways for companies to use carbon credits. Some governments have also implemented stronger regulations, he added.

“This reform effort will likely take another couple of years. What we need today is for leading companies, NGOs, investors, and communities to collaborate and signal robust demand for high-quality carbon credits while the reform effort continues,” he said.

For example, Symbiosis Coalition brings companies together to commit to purchase 20 million tons of high-quality carbon credits in the next five years, he said.

Nine international NGOs, including TNC, have established the Southeast Asia Climate and Nature-based Solutions Coalition to scale up investments and deployment of nature-based solutions across the region, he said.

On the supply side, developing more demonstration projects funded through catalytic philanthropy is also essential, he highlighted.

“This will help buyers and investors see what nature-based projects can achieve when implemented with integrity and quality. It can also help market participants to better understand the complexities of nature-based projects and inform the development of more standardized methods and best practices to translate principles into credible impact for climate, nature, and people.”

Political uncertainty

Another hurdle in carbon markets is political uncertainty, especially when it comes to selling carbon credits to another country. Notably, governments in some project host countries have suspended carbon credit exports or asked for higher profit margins, which increased investment risks and signaled more host countries to follow.

TNC has operated in Asia Pacific for over 30 years, implementing programs in 15 countries and territories, including China and Indonesia, which, in many carbon investors’ eyes, have high barriers of entry and are difficult for foreign investors to participate.

“The investment risks vary from country to country and the market is responding accordingly. Ultimately, the carbon stored in natural systems has significant economic value and governments know this. As such, it’s not surprising that they want to make sure they manage these assets effectively,” McGoldrick said.

“Countries generally are focused on building capacity and project development, reviewing policies, safeguards, and linkages to NDCs [Nationally Determined Contributions, namely climate targets committed to UN], while also determining how to best mobilize international markets and capital.”

“In the long-term, this is a good thing, even if it means investment is slower than hoped in some instances,” he added.