Carbon removal technology corporations, Meta and Calyx Global, issue alert over potential "phantom credit" issues linked to the carbon removal boom.
In the realm of carbon markets, a critical issue has come to light: the need for improved embodied emissions accounting in engineered carbon dioxide removal (eCDR) projects. This is a pressing concern, as projects that fail to account for these emissions accurately may overstate their climate benefits, leading to questionable credits and a lack of trust in the market.
Gold Standard, Puro.Earth, and others allow for amortization of embodied emissions over decades, enabling projects to issue credits for years before becoming truly net-negative. However, this practice can result in the issuance of "phantom" credits that do not reflect real climate benefits.
To ensure transparency and credibility, several reforms are essential. Firstly, projects must undertake upfront, full accounting of embodied emissions. This means rigorously calculating all carbon emissions associated with the construction, operation, and maintenance of eCDR infrastructure, including energy and materials used. This prevents the issuance of "phantom" credits that do not reflect real climate benefits.
Secondly, registries and project operators should provide comprehensive, publicly accessible data on resource use, such as water and energy consumption, and environmental impacts linked to eCDR projects. This includes commitments to clean energy sources and water-saving technologies to mitigate indirect emissions.
Thirdly, there is a need for improved alignment and standardization across registries. Harmonizing accounting rules related to embodied emissions between different carbon credit registries will reduce inconsistencies and increase market trust. Standard methodologies should be adopted to uniformly capture and amortize embodied emissions over the project lifetime.
Lastly, participants in the voluntary market (buyers, investors, regulators) must demand greater scrutiny of embodied emissions reporting and require credible validation before purchasing eCDR credits.
Registries like Verified Carbon Standard (VCS), American Carbon Registry (ACR), and Climate Action Reserve (CAR) do not require embodied emissions accounting, leading to credits that are almost always overstated. Conversely, Isometric is the only registry that allows upfront accounting, but it is rarely chosen.
The risk of "phantom removals" is not just theoretical. If embodied emissions are amortized and a project ends prematurely, the carbon debt remains unpaid, and the credits already sold continue circulating in the market. This situation could lead to the sale of credits as if a project has already removed CO2, when in reality the atmosphere still has more CO2.
The new report from Meta and Calyx Global warns of a critical blind spot: many eCDR projects do not properly account for embodied emissions. This oversight could jeopardise the promise of eCDR and lead to the creation of more questionable credits.
By fixing embodied emissions accounting now, registries and buyers can ensure that eCDR meets its promise and avoid creating more questionable credits. The voluntary carbon market is a growing market for eCDR projects, offering lasting, long-term carbon storage. However, without proper embodied emissions accounting, the credibility of these credits is at risk.
Interest in engineered removals has exploded, with purchase agreements for future eCDR delivery growing significantly in recent years. Buyers see eCDR as more durable and technically verifiable, but without proper embodied emissions accounting, the credibility of these credits is at risk.
The Meta-Calyx Global paper calls for immediate reforms to strengthen eCDR crediting integrity, including requiring upfront accounting, lifecycle transparency, buyer safeguards, and registry reform. By addressing this issue, we can ensure that the carbon credits we buy truly deliver the climate impact we expect.
[1] Meta and Calyx Global. (2023). Embodied Emissions in Carbon Markets: A Call to Action. [Online]. Available: https://www.calyxglobal.com/reports/embodied-emissions-in-carbon-markets-a-call-to-action [2] Puro.Earth. (2023). Embodied Emissions Accounting in Carbon Markets: A Guide for Project Developers. [Online]. Available: https://www.puro.earth/resources/embodied-emissions-accounting-in-carbon-markets-a-guide-for-project-developers
