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On July 27, 2022, the Integrity Council for the Voluntary Carbon
Market
(Integrity Council),1 an independent
governance body2 for the voluntary carbon market (VCM),
released its draft Core Carbon Principles (CCPs) and the related
Assessment Framework (including related Terms and Definitions) and Assessment Procedure for a 60-day public
consultation through September 27, 2022. The Integrity Council also
made available a related 5-minute video, offered and conducted public briefings, and issued a related press release providing additional background
and context for the CCPs. The Integrity Council also released a
helpful Summary for Decision Makers.

The Integrity Council had previously indicated that the CCPs would be
released last May and would become effective in Q3 2022. Currently,
the Integrity Council is targeting Q4 2022 for publication of the
official CCPs, Assessment Framework and Assessment Procedure,
following this public consultation.

The CCPs and Assessment Framework are intended by the Integrity
Council to “provide a credible, rigorous, and readily
accessible means of identifying high-quality carbon credits that
create real, additional and verifiable climate impact with high
environmental and social integrity.”

The Integrity Council believes that without a “definitive
global threshold standard for high-integrity carbon credits, the
voluntary carbon market (VCM) cannot meet its full potential to
deliver urgent climate impact in support of the Paris
Agreement” and that by “creating a standardised
benchmark, the draft CCPs and Assessment Framework [will] reduce
confusion and fragmentation, allowing buyers to more easily
identify high-quality carbon credits that meet their preferences at
transparent prices,” and “should also provide a clear
signal to suppliers about buyers' expectations to reduce
uncertainty and help direct investment decisions.”

The CCPs, once final, would presumably cover the various VCM
standard-setters, which include, for example, Climate Action Reserve, Gold
Standard
, Puro
Standard
, and Verra (or the “Verified Carbon
Standard,” which was formerly known as the “Voluntary
Carbon Standard” and is also known as “VCS”).
However, exactly how the Integrity Council intends to
“enforce” its CCPs is currently unclear, especially if a
VCM standard-setter declines to submit its standards to the
Integrity Council's Assessment Framework and Assessment
Procedure—a decision that likely turns on the perceived value
of the “CCP-compliant” assessment that a successful
application would permit.

In addition, it is possible that VCM exchanges and other trading
venues may require such a “CCP-compliant” assessment as a
condition to listing or trading that would compel or encourage such
applications. Of course, these issues are somewhat speculative and
are certainly affected by the Integrity Council's ongoing work
on the CCPs and, in particular, the likely controversial proposed
“high-quality” designation under the CCP.

Footnotes

1. The mission of the Integrity Council is to “set
and enforce definitive global threshold standards, drawing on the
best science and expertise available, so high-quality carbon
credits efficiently mobilize finance towards urgent mitigation and
climate resilient development.”

2. The Integrity Council is the effective
“successor” to the Taskforce on Scaling Voluntary Carbon
Markets whose activities we summarized in our related August 12,
2021, Legal Update “Voluntary Carbon Markets Integrity Initiative
Consultation Report Released
” and January 29, 2021,
Legal Update “Scaling Voluntary Carbon Markets: Taskforce
Releases Core Carbon Principles and
Roadmap
.

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This
Mayer Brown
article provides information and comments on legal
issues and developments of interest. The foregoing is not a
comprehensive treatment of the subject matter covered and is not
intended to provide legal advice. Readers should seek specific
legal advice before taking any action with respect to the matters
discussed herein.

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