Understanding the Role of Permanence in Voluntary Carbon Markets

Defining Permanence for carbon credit

What is permanence in the VCM?

Permanence ranks as a critical criteria in evaluating carbon credits' effectiveness. As defined by the Integrity Council for the Voluntary Carbon Market, which establishes the Core Carbon Principles across the industry, permanence is described as follows : The GHG emission reductions or removals from the mitigation activity shall be permanent or, where there is a risk of reversal, there shall be measures in place to address those risks and compensate reversals.

Indeed, Permanence emphasises the enduring nature of carbon sequestration or emission reductions, ensuring that these achievements are not reversed post-investment. This includes both direct material risks, such as natural disasters and project mismanagement, and more subtle, long-term threats that could erode the permanency of climate benefits.

The logic behind permanence for carbon credit

This principle highlights the importance of sustained climate action, distinguishing between temporary benefits and those contributing meaningfully to long-term climate change mitigation. For carbon credits to be meaningful in the fight against climate change, they must guarantee that the greenhouse gas (GHG) reductions or removals they represent are sustained over time. Temporary reductions or removals have limited impact on the long-term goal of stabilizing and reducing atmospheric GHG concentrations.

For example, a reforestation project where trees are planted in an area prone to wildfires or illegal logging must have strategies in place to ensure these trees remain and continue absorbing carbon for the long term, addressing the concept of permanence.

Exploring the Scope of Permanence: Where It Applies in the carbon credit market

Categories with a risk of permanence reversal

As outlined in the ICVCM guidelines, Permanence must be ensured across various categories of mitigation activities to address material risks of reversal. Categories identified as having a material risk of reversal include :

• Storage and protection of carbon in biogenic reservoirs, such as conservation and avoided conversion (e.g., grassland/rangeland management, avoided deforestation), agricultural soil carbon sequestration, forestry sequestration (including improved forest management, afforestation/reforestation, agroforestry), and wetland and marine ecosystem restoration/management (including seagrasses, saltmarshes, mangroves, peatlands).
• Mitigation activities involving the displacement of non-renewable biomass, biochar, CCS (Carbon Capture and Storage) with geological storage, enhanced weathering, CCS with mineralization, and CO2 in concrete utilization are also considered for their material risk of reversal. These activities must have appropriate measures to avoid material risks of reversals.

Permanence risk for carbon avoidance and carbon removal credits

The concept of permanence applies to both carbon avoidance and carbon removal projects in the voluntary carbon market. However, its application can differ between these two types of project.

For avoidance projects, such as replacing a coal plant with renewable energy, the focus is on ensuring the emissions avoided are truly permanent—that the coal plant doesn't just move or resume operations elsewhere.

For removal projects, like reforestation or direct air capture, the concern centers on long-term secure storage of captured carbon. Challenges such as deforestation, forest fires, or leakage from storage threaten this permanence.

Why is permanence important to the carbon credit certification mechanism?

Permanence role for carbon market’s integrity

Permanence ensures the carbon market's integrity and effectiveness by guaranteeing that carbon credits represent real, lasting environmental benefits. This principle is crucial for maintaining investor trust and market credibility, as it provides assurance that investments contribute to tangible and verifiable climate impact. Rigorous monitoring and verification are required under permanence to confirm the durability of carbon savings, addressing concerns of over-crediting and enhancing transparency. Essentially, permanence upholds the market's credibility by ensuring that emission reductions or removals are genuine and sustained, preventing the re-release of stored carbon into the atmosphere.

Permanence impact for carbon credit buyer and project developers

More particularly :

• For the carbon credit buyer, Permanence ensures that emissions are truly reduced through the beneficial impact of projects financed by carbon credits, enabling buyers to responsibly offset their carbon footprint and support sustainable projects with confidence.
• For the project developper, Permanence enhances project credibility and financial sustainability, allowing developers to attract investments and ensure their projects deliver enduring environmental impacts, supporting their growth and contribution to climate action.

Confronting the Challenges of Permanence

Challenges to ensuring permanence in carbon offset projects encompass environmental, economic, social, political, regulatory, technical, operational, and financial aspects:

• Environmental Risks: Key issues include natural disasters such as wildfires, hurricanes, floods, or pest infestations that can devastate carbon sinks, especially in forestry projects, and the impacts of climate change, which may alter ecosystems' ability to sequester carbon.
• Economic and Social Factors: Changes in land use due to economic pressures or inadequate community engagement can undermine carbon sequestration efforts.
• Political and Regulatory Changes: The permanence of carbon sequestration efforts can be jeopardized by policy shifts or regulatory changes that alter land use priorities or diminish conservation protections. Additionally, political instability can erode long-term commitments to project goals.
• Technical and Operational Challenges: Effective monitoring and verification are essential to ensure ongoing project compliance and effectiveness, presenting technical and financial challenges. The phenomenon of carbon leakage, where reductions are offset by increases in emissions elsewhere, and the accurate quantification of carbon stocks, are significant hurdles.
• Financial Constraints:  Long-term funding and investment are vital for project sustainability. Variability in carbon pricing or financial difficulties can threaten projects, while the costs associated with implementing risk mitigation measures, like buffer reserves or insurance, require additional investment.

These challenges highlight the complexity of guaranteeing permanence, requiring comprehensive strategies to address risks across multiple fronts to ensure that carbon offset projects deliver sustained benefits.

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Framing and Implementing Permanence in the VCM Market

Compensation mechanism

1. Risk Estimation and Mitigation: The ICVCM mandates the use of a clearly defined methodology to estimate reversal risk and requires mitigation measures to address potential reversals effectively. By incentivizing proactive risk management, this approach aims to minimize the likelihood of reversals occurring.
2. Criteria Definition: Clear criteria are established to distinguish between avoidable and unavoidable reversals. This ensures transparency and consistency in evaluating the permanence of carbon credits, facilitating trust and confidence in the certification process.
3. Buffer Reserve Implementation: To mitigate the risk of future reversals, the ICVCM requires the establishment of a pooled buffer reserve. A minimum proportion of carbon credits is allocated to this reserve, serving as an insurance policy to compensate for any reversals that may occur during the project lifecycle. Public disclosure of reserve contents enhances transparency and accountability.

Monitoring and compensation period

1. Monitoring Period: Mitigation activities must undergo monitoring for at least forty years, ensuring continuous oversight.
2. Reversal Reporting: Proponents must monitor and report any reversals, promptly compensating for avoidable ones.
3. Credit Issuance Suspension: Issuance halts until avoidable reversals are compensated, preventing invalid credits.
4. Buffer Reserve Use: The program can tap into the reserve if reversals are unaddressed, safeguarding credit credibility.
5. Extended Period Consideration: Longer monitoring up to one hundred years is open for consideration, reflecting evolving best practices.

Compensation for reversals

The ICVCM mandates that either the carbon-crediting program or the mitigation activity proponents cancel a carbon credit for each tonne of CO2 equivalent that is reversed.

How the Riverse Standard Rules validate permanence

Overall approach of Permanence in Riverse Standard Rules

Riverse adopts a distinct strategy designed for European Greentechs, emphasizing the transition to a circular economy by applying permanence criteria solely to carbon removal projects. Permanence is ensured when a project's carbon removal remains stable for the agreed duration, set at a minimum of 100 years. This stringent 100-year requirement demonstrates Riverse's commitment to selecting only high-quality projects, emphasizing its dedication to securing a long-lasting, positive impact on the climate. By insisting that carbon remains sequestered for over a century, Riverse aims to support initiatives that offer genuine, enduring benefits for environmental sustainability and are eligible for carbon removal credits.

More generally, at Riverse, Permanence is ensured through:

• a commitment period: the Riverse Certification team and project developers determine the duration a mitigation activity commits to, and then whether the credit faces reversal risks. Commitment periods are the duration over which sequestration activities have permanence horizons, and differ from crediting periods (the timeframes during which avoidance or removals are eligible for issuance as verified carbon credits). A commitment period justified by reliable scientific and technical sources
• a contribution to the provision pool: all projects must contribute 10% of their verified credits to the provision pool. In case of carbon removal reversal or failure to deliver a project, these credits will replace the canceled credits.
• reliable information: the project must disclose all information required to calculate the commitment period
• risk assessment: an evaluation of the risk of reversal, outlining potential causes for reversal and their likelihood. Projects shall specify the type of mitigation activities they are operating: avoidance, removal or both. Projects must categorise their activities as either avoidance, removal, or both, and particularly for removal projects, they need to detail their reversal risks across five categories: Social, Economic, Environmental, Technical, and Administrative. Each category encompasses specific risks, such as disputed land tenure, political instability, insufficient finance, environmental disasters, failure of technical implementation, and inadequate project coordination capacity. Projects are required to assess and label each risk as low, medium, or high, considering both listed and additional relevant risks.

Requirements for projects with high permanence reversal risk

Our methodology mandates that projects with a significant risk of reversal undertake a multi-decadal commitment to carbon removal. This involves:

• Adopting effective carbon removal strategies and technologies based on scientific evidence.
• Committing to long-term financial investment to support and maintain these initiatives over several decades.
• Implementing a comprehensive monitoring and reporting framework to evaluate progress and effectiveness.
• Staying adaptable to incorporate advancements in science and technology.

Such a commitment ensures a sustained, effective response to mitigate climate change risks over an extended period, addressing and minimizing the potential for reversals.

Applying Permanence: Diverse Project Examples

At Riverse, we engage with diverse verticals within the European Greentech sector, tailoring our approach to permanence to ensure relevance and effectiveness across the board. This nuanced strategy underscores our commitment to the circular economy and the unique challenges and opportunities it presents.

Riverse approach of permanence for Biochar carbon credit project

For instance with biochar projects, Riverse mandates that the sequestered carbon must remain intact for more than a century. This requirement is rigorously verified through laboratory analyses, focusing on the biochar's hydrogen to organic carbon ratios. The current methodology specifically considers the application of biochar to agricultural soils for carbon sequestration, utilizing scientific models to calculate the long-term storage of carbon based on its chemical composition and environmental conditions.

Riverse approach of permanence for Biobased construction material project

With bio-based materials for construction, Riverse adopts a comprehensive view. The permanence of composite materials is determined by the lifespan of the entire product, with a pathway for individual components to be considered based on their recyclability or potential for reuse. This perspective ensures that all bio-based construction materials meet Riverse's standards for avoidance credits, bypassing the strict permanence criteria yet undergoing a detailed risk assessment across various categories to secure their sustainability. For example, IsoHemp's hempcrete blocks are recognized for their 100-year carbon sequestration capability, a testament to the material's durability and environmental benefit. This project underwent a comprehensive risk assessment, which revealed moderate risks associated with social factors, such as the possibility of buildings being renovated or demolished before their projected lifespan. Economic risks were deemed negligible, given the lack of ongoing costs post-construction. Environmental considerations highlighted the minimal combustibility of the product, while technical and administrative factors were assessed to ensure the project's long-term viability and effectiveness in carbon storage. Despite these risks, the enduring potential for carbon sequestration through reuse or landfill storage further underscores the project's alignment with our permanence criteria.

Through this narrative, Riverse not only sets a high bar for permanence in carbon sequestration projects but also weaves a story of commitment, innovation, and responsibility towards achieving a lasting positive impact on the climate. This approach not only reflects the stringent selection of quality projects but also Riverse's dedication to fostering a sustainable future through the lens of European Greentechs and the broader transition to a circular economy.

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