INTERVIEW: CCP-labeled carbon credit supply to rise in 2026; ICVCM working toward standardization

The carbon market is expected to see an increase in supply of Integrity Council for the Voluntary Carbon Market's Core Carbon Principle-labeled credits, starting 2026, as developers complete transitioning their projects into new methodologies, CEO Amy Merrill told Platts, part of S&P Global Commodity Insights.

ICVCM is an independent global body that aims to improve the voluntary carbon market's integrity. It awards carbon projects with CCP labels based on 10 science-based principles for high-quality credits.

Merrill explained in the interview that the supply of CCP credits is low because some large programs haven't submitted significant volumes for assessment, as they wanted to transition those projects to new methodologies. For example, many forest credits, including REDD+, are transitioning to new methodologies.

The ICVCM has approved VM0048, a methodology that replaces several others. This mandatory transition, adopted by Verra, will transfer existing volumes and the credits issued will be CCP-labeled, Merrill said.

"New methodologies are designed with CCP in mind, but when they are approved, there's still no volume because the projects haven't started operating yet," Merrill said.

The market will start to see new volumes coming in from methods like biochar and the new methodologies ICVCM has been approving, she added.

"I actually think that those will come through the system pretty quickly, starting next year [2026]."

The Platts Biochar India's current-year assessment was steady from Oct. 17 at $140/mtCO2e on Oct. 21, while Nature-based avoidance in Southeast Asia was also assessed steady at $10/mtCO2e.

CCPs are more than just a rating. They are a system of assessment, assurance and oversight that simplifies the many standards in the market for developers and buyers by using strong methodologies that meet its criteria, creating a more transparent and comparable market, Merrill said.

Merrill highlighted the interplay between CCPs and existing programs like the Carbon Offsetting and Reduction Scheme for International Aviation, with many CCP-eligible programs aligning with CORSIA's rules.

"Our aim is to create a space where investors and buyers can confidently explore options, knowing they are operating within a framework of third-party meta-standard review and integrity," Merrill said.

The ICVCM established its Asia Pacific Hub in Singapore Oct. 16, Platts has reported.

"It enables us to be able to easily meet with one-to-ones with regulators, governments, businesses, communities and be able to respond to that need for really focused attention on building the region's hub for carbon markets with supply and demand," Merrill said.

Establishing its first physical office in Singapore will enable the ICVCM to support the city-state's carbon vision and foster regional coherence, harmonization, and interoperability of supply and demand across Southeast Asia, Merrill added.

Recognition as standard label

Identification of CCPs as a standard label for governments can help with interconnectedness, Merrill said.

"We saw in the [Singapore] tender that four of the five methodologies, I think, were CCP-approved methodologies. The public consultation by Singapore talked about the Core Carbon Principles. We are all getting to this point of recognizing that the CCP is a very useful global and regional interconnector," she said.

The ICVCM continues to work with the Singapore government to help bring about that harmonization. Singapore is looking closely at understanding that in the context of its own purchases, she said.

Commenting on the work ICVCM is doing on transition credits, emission reductions from projects like retiring coal plants early and replacing them with clean energy, Merrill said the company just completed a six-month round table with experts discussing the energy transition and the methodological principles.

"A group of experts who've discussed general issues around things like what happens to the grid, who gets the asset, how do you measure whether something has been achieved, how do you avoid leakage, and someone building a power plant somewhere else. What's the piece is how much just transition is needed."

Singapore is working on a separate firewall where the assessment process occurs. A methodology has been submitted for evaluation against Singapore's pilot framework. The ICVCM has been working with the Monetary Authority of Singapore's Transition Credits Coalition, Merrill said.

The upcoming methods will probably focus on reductions and removals, but it's hard to predict, Merrill said.

Addressing the concern regarding the lack of formal government recognition for CCP-labeled credits, Merrill said when a government consultation endorses the CCPs, it will signal to the developers that there is a market for CCP credit, which will enable them to make sure they design their projects on CCP-approved methodology.

"We're working with governments at different points. We're hearing that there are government programs that also want to try to make sure their methodologies can get CCP approval," Merrill added.

Revisiting cookstoves' fNRB

While the ICVCM has made decisions regarding the fraction of non-renewable biomass in cookstove projects, the body remains open to revisiting these as new methodologies are introduced, Merrill said.

"We expect the market to evolve. We know that the fNRB is present in various places in the market now, and we will continue to review it as new methodologies are introduced and as we look across the market."

However, Merrill said the ICVCM is unlikely to reverse a decision because projects are already progressing. If ICVCM collectively discovers something new, then it will respond accordingly over time.

The fNRB represents the portion of woody biomass fuel from non-renewable sources, which is crucial for calculating carbon credits. The ICVCM has established strict conditions, potentially reducing the number of carbon credits issued per project, in a bid to strengthen market integrity.