September 27, 2022
Japanese Bankers Association
JBA Comments on “Core Carbon Principles Assessment Framework and Assessment Procedure” by the Integrity Council for the
Voluntary Carbon Market (IC-VCM)
Questions

Comments

Part 3: Summary for Decision Makers
Purpose of this document
 The most important principles are covered in the draft CCPs and the draft Assessment
Are the most important principles, criteria and requirements included in thedraft CCPs and the draft Assessment Framework?

Framework.
 In order to use the CCPs to assess the quality of credits certified under existing carboncrediting programs (e.g., VCS/Gold Standard), it would be useful for the IC-VCM to issue

Are there principles, criteria and requirements that are not relevant or should

more detailed additional specific guidance according to credit types. For example,

not be included in the draft CCPs and draft Assessment Framework?

additional guidance would be appreciated for AFOLU-related projects, particularly where

Are there principles, criteria and requirements that are not included andrisks are greater/there are higher levels of uncertainty under the principles of permanence,

should be added?

robust quantification of emissions reductions/removals and prevention of leakage.
 Our concerns related to specific criteria and requirements (either too stringent or too broad)are covered in other comments.
 As of now, most carbon-crediting programs are not aligned with some of the initial

Are the requirements appropriately balanced between the initial and fullstringency thresholds. We believe that they should be introduced within an acceptablestringency thresholds to address outstanding integrity concerns affecting thetimeframe. We would welcome a phased approach, which could also provide visibility on

trust in the voluntary carbon market?

when the full criteria and requirement will be implemented to project developers and credit

What timeframe would you recommend for the duration of the initialusers. We emphasize the importance of relief support for credits (projects) that have beenthreshold, taking into account the time needed for carbon-crediting programs

registered before the CCPs were accepted by the carbon-crediting programs, as their

to revise standards, processes and procedures; carbon-crediting periods;

trading price might suffer because they are older.

issues related to legal contracts etc.?

 Our concern is that if the requirements are too stringent, the assessment would take timeIs this different for different areas of the draft Assessment Framework?

and might stop the development of the projects. Since the voluntary carbon-credit market

Are there other key considerations that should be explored?

is still small, we do not want the market to shrink/not grow due to stringent requirements.
 In order for potential buyers of credits and other market participants to assess the1Questions

Comments
compliance of different carbon-crediting programs and credit types against the CCP
criteria, and what areas may need improvement to meet both the initial threshold and fullstringency threshold, the IC-VCM should make public its assessment of the relativecompliance/alignment of existing programs and credit types in relation to the CCPs. This
would serve to increase the transparency of IC-VCM's validation/assessment procedures
and incentivise existing programs to continually improve internal processes/credit
methodologies to meet the quality standards proposed.

 We consider including not only CORSIA but also offset ratings specialists to understandthe variance/comparability of offsets from the same sector. Also, in order to ensure theShould the Integrity Council draw on assessments by the Technical Advisory
Body under CORSIA or any other comparable body?
If so, for which criteria and requirements would previous assessments ofcarbon-crediting programs and carbon credits be most relevant?

appropriateness and scientific rigour of methodologies utilized for specific project types,
the IC-VCM should draw on outside experts with subject matter expertise where required
to identify particular issues with regards to permanence and robust quantification when
there may be uncertainty or lack of consensus on the methodologies employed foraccreditation.
 The IC-VCM should act as a central source of standards for buyers to assess credibility(for REDD+, JREDD in particular).

F. Sustainable Development2

Questions

Comments

The Expert Panel of the Integrity Council considered alternative approaches
to assess alignment with Environmental and Social Safeguards requirements
for carbon-crediting programs during the initial phase. The options include:
Option 1): a risk-based approach to mitigation activity types building on IFC
risk categorisation;
Option 2): evidence of alignment with national regulatory framework;
Or
Option 3): a joint approach using option 1 and 2.
The Integrity Council seeks views from the public on this question to informwhether and how IFC risk categorization can help ensure a consistent Noting that the IFC safeguards are widely adopted and of sufficient level of detail to cover

approach by carbon-crediting programs to address safeguards in the draft

the major environmental and social risks associated with carbon credit projects, Option 1Assessment Framework in different jurisdictions and activity types.

would be preferred in general, while making necessary adjustments based on the level ofYour views will inform the design of the assessment process with the view torisk associated with project types and ensuring compliance with best practice standards.

attest that mitigation activity proponents effectively implemented safeguards

 We also believe that, where applicable, alignment with the national regulatory framework

while providing the opportunity for current market infrastructure to updateshould be sought (Option 3).

assurance systems’ capacities and processes.
Do you anticipate that there will be challenges in meeting the Sustainable
Development requirements in the draft Assessment Framework under the
initial threshold? If you do, could you provide information on thosechallenges.
Should mitigation activities created and managed by IPLCs be subject todifferentiated safeguards requirements? If so, how would you recommendthat the application of free, prior and informed consent (FPIC) is addressedin carbon-crediting program guidance and mechanisms to ensure that
relationships with IPLCs are based on informed consultation?

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Questions

Comments

G. Additionality
Additionality for project-level mitigation activities:
Are there alternative approaches to additionality that should be considered
and that are not covered under the current draft Assessment Framework?
Are there any specific criteria which the draft Assessment Framework shouldtake into account in its guidance on additionality?
The Integrity Council proposes in its draft Assessment Framework a risk- While we welcome the introduction of a risk-based analysis, we are unsure of how it willbased assessment of additionality, to be conducted by the Expert Panel by

be applied. Risks are country and activity specific, and we are not sure that carbon-crediting

project type, as a first step in the overall assessment of additionality for CCP.

programs are equipped to assess risk at this level given their pipeline of projects. At thisa) Please provide comment as to the feasibility and desirability of thisstage, the definition of risk is either too restrictive or too broad, giving way to interpretation

additional level of risk-based analysis by project type.

and discretion. We would recommend adopting a more flexible approach, whereb) In this assessment, the Integrity Council proposes to use as one data point

additionality would have to be justified project by project, according to general principles.

analysis of carbon prices. Please provide comments as to the feasibility of use Our concern is that if "no income, cost savings or benefits other than carbon creditof this indicator, and on the alternative use of marginal abatement costs forrevenues" or "very poor financial attractiveness" results in an assessment of "Very high",

this purpose.

it might be difficult for investors to invest in projects.

c) Please provide recommendations on additional means of assessing theadditionality tests carbon crediting Standards currently employ.

 For REDD+ activities, the existing methodology for measuring baseline leakage for VCS
REDD+ project-level should be included as a minimum, while additional requirements
should be carefully evaluated and verified by each project developer and third-party

Additionality for jurisdictional REDD+ activities:

verification and validation body (VVB) due to the higher levels of uncertainty related toHow should crediting under project-based REDD+ mitigation activities beapproaches for setting baselines.

considered within the scope of jurisdictional REDD+ programs?
Should there be a requirement to nest baselines of REDD+ projects on
avoided deforestation?
Should credit issuance by REDD+ projects be limited by the performance ofthe jurisdiction?

H. Permanence4Questions

Comments

The Integrity Council is open to views on the appropriate balance ofrequirements between the criteria applied to assess permanence, as well as
alternative approaches.

－Are there alternative approaches to permanence that should be considered andthat are not covered under the draft Assessment Framework?

K. Attributes
Should the Integrity Council consider the establishment of an attribute to We would welcome such an approach. Where possible, the IC-VCM should stipulate thedifferentiate credits according to the type of underlying mitigation activity?

attribution of credits according to the type of mitigation activity (i.e., removals vsIf so, at what level should types be differentiated (e.g., reductions vsreductions) at a minimum, and where a combination of types is utilized by a project,

removals, tech-based vs nature-based)?

sufficient labelling to ensure traceability.

L. Alignment with the Paris Agreementa) Should the voluntary use of carbon credits require host country
authorisation to ensure association with corresponding adjustments? Should
this be conditional on specific circumstances or use cases?

 a) While we believe that this should be the case, we also recognize that most countries dob) Should the voluntary carbon market levy a share of proceeds to assist

not have the resources to implement this. This might lead to significant delays in approval,

developing countries most vulnerable to climate change to meet the costs ofdefeating the purpose of the activities supported through crediting. This could be includedadaptation?

as an additional attribute, or additional measure to avoid double counting.

c) Should the voluntary carbon market provide a contribution to overall b) and c) We recommend that this remains voluntary (up to the issuer).

mitigation of global emissions, through the cancellation of carbon credits atissuance or other similar provisions?

Part 6: Assessment Procedure
2 Assessment of carbon-crediting programs
5Questions

Comments There are many cases in which credit ratings are given without permission, and there are

Should the Integrity Council reserve the right by exception to assess programs
unsolicited, at its own discretion, based on publicly available information?

usually more unsolicited cases than requested ratings. However, unlike financial
information in credit ratings, if the evaluation is based on carbon credit-related information,
which is not mandatorily disclosed, it may be necessary to introduce additional measures
to ensure objectivity and neutrality (e.g., public disclosure of assessed material).
 We welcome such an approach. We emphasize the need for visibility for project developers

The Integrity Council is considering the use of conditional approval toexpedite initial threshold uptake, where a program can commit within aprecise timeframe to fully implement initial threshold requirements. During
such timeframe, carbon-crediting programs will be granted CCP-approved
status. When and how should pledges or commitments be presented,
monitored and what sanctions should apply in case of non-fulfilment?

regarding when additional thresholds will be implemented and how credits approved
before such thresholds are implemented will be treated.
 Pre-approval of existing carbon-crediting programs should be based on a transparent
assessment of the relative alignment of crediting programs with CCP principles, identifying
areas for improvement where required to meet the initial threshold. Particularly where there
are gaps related to the initial threshold, a specific timeframe during which existing
programs apply should be set, upon which commitments and the progress of suchcommitments should be subject to review on a comply or explain basis.

Other comments
Part 1: Introduction

 Since there are a number of related risks for the type of mitigation activity (non-P.13

permanence etc.), we believe that it would be ideal if the risks were listed by hierarchy or"Inherent Risk"

order of significance, rather than simply tagging the risks.

Part 3: Summary for Decision Makers
P.2"The Integrity Council recognises that some carbon-crediting programs will
likely meet a significant number of the criteria and requirements, particularly We would like to know which specific carbon-crediting programs will likely meet thecriteria and requirements.

those indicated for the initial threshold"Part 3: Summary for Decision Makers
P.6

 Persistence/tracking through secondary market trading of offsets needs to be considered.

"C. No-Double Counting"6

Questions
Part 3: Summary for Decision Makers

Comments
 Would the IC-VCM outline a single standard approach for the treatment of reversals so

P.13

that ideally VVBs can assess the reversal cause/risk and determine the impacted loss in"H. Permanence"

sequestered CO2 that can then be applied to offsets within the registry?

Part 3: Summary for Decision Makers
P.16“I. Robust Quantification”

 Given some VVBs have started providing verification ex-ante, there need to be clear
guidance/expectations within the CCPs.

“ex-ante crediting”
Part 4: Assessment Framework
Criterion 1.8 in general If changes to national regulations (for example, the sudden prohibition of the sale of offsets
in Papua New Guinea this year) result in inconsistencies with CCPs, would changes to theCCPs be considered?

Part 4: Assessment Framework
Criterion 2.1 Table 10 f)

 Is our understanding correct that revised methodologies would only apply to new projects,"The carbon-crediting program shall require all quantification methodologies

and existing projects would be able to continue under the methodology that was approved

to be reviewed and updated at least every five years to verify that they

when those projects were registered?

continue to ensure environmental integrity."
Part 4: Assessment Framework
Criterion 2.2 Table 11 g)

 Conservativeness is not clearly defined. For example, does it mean that the calculation of"To ensure conservativeness, the carbon-crediting program's general program

reduction/removals should be done based on the most conservative assumptions? (Whoprovisions shall require (rather than only in its specific quantificationassesses how conservative assumptions are? What are acceptable benchmarks?)

methodologies) …"Part 4: Assessment Framework
Criterion 2.2 Table 11 h)"The carbon-crediting program shall require in its general program provisions(rather than only in its specific quantification methodologies) that existing Are there any exceptions where a recent regulation is not yet applied or not sufficiently
enforced?

government policies and legal requirements that lower GHG emissions (e.g.,
feed-in tariffs for renewable energy, minimum product efficiency standards,

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Questions

Comments

air quality requirements, or carbon taxes) be included when determining thebaseline emissions."
Part 4: Assessment Framework
Criterion 3.5 in general
Part 4: Assessment Framework
Criterion 4.2 Table 18 (Full)"…the more recently issued credits are to be cancelled."
Part 4: Assessment Framework
Criterion 4.4"No double claiming with mandatory domestic mitigation schemes"
Part 4: Assessment Framework
Criterion 7.1 Table 26 a) – c)"The carbon-crediting program has procedures in place which requiremitigation activity proponents to..."Part 4: Assessment Framework
Criterion 8.2 in general
Part 4: Assessment Framework
8.1.1 Table 37 "Very high" We believe that the oversight of VVBs should also include the ability to retroactively
cancel or declassify/downgrade credits certified by a VVB in breach of their performancestandards.
 Is our understanding correct that the holder of this ‘soon to be cancelled credit’ would
receive no compensation?
 This should include regional mandatory mitigation schemes (not just domestic) for regional
blocs, such as ASEAN's scheme.
 The requirements are for the carbon-crediting program, but is our understanding correctthat most information would need to be submitted by the program owners? If so, what kindof support would the program owners receive from the carbon-crediting program?
 How is probability quantified? We understand that the assessment is likely to be mostly
qualitative and thus do not understand how the proposed values will be used.
 How would you define "very poor financial attractiveness"?
 What happens when the legal requirement does not affect the financial viability of theproject? For example, a legal requirement was adopted after the project was registered –Part 4: Assessment Framework

however, the legal requirement does not affect project cashflow (positively or negatively)

Criterion 8.4 in generaloutside of revenues from the sale of carbon credits. In this case, does that mean thatinvestors have to take the risk that a project may become non-viable if in the medium term
legal requirements change and carbon credits cannot be issued anymore?

Part 4: Assessment Framework What mitigation activities are you referring to? Please provide an example.

8Questions

Comments

Criterion 9.1 Description"Types of mitigation activities that do not have a risk of reversal (inherentlyleading to permanent reductions and removals) and do not require anymeasures to address reversals." There are very few credits addressing these requirements as of now. Are there
Part 4: Assessment Framework

proposed/possible remediation pathways to support project owners in implementing those

Criterion 9.2 (and section 9 in general)and ensuring that credits can continue to be issued (and trusted) for ongoing projects? What
does "sufficient incentives" mean?

Part 4: Assessment Framework
Criterion 9.3 Rationale"Once a credit expires, and has been retired by a buyer, the buyer is obligatedto replace it."Part 4: Assessment Framework
10.1 Step 1: Systematic assessment of the quantification approaches

 We understand this way of thinking. However, if the buyer is obligated to replace a retired
temporary credit, what is the merit for the buyer to buy such credit? Also, temporary
crediting could result in several temporary credits at risk of reversal not being appropriately
cancelled in the registry, and timing lags and delays could inflate the registry poolsignificantly.
 There is no 10.1.1. Therefore, this makes it hard to understand the structure of 10.1.
 It is unclear what scientific scenarios would be the basis of such assessment ofcompatibility with reaching net zero emissions by 2050. For example, it is not clear

Part 4: Assessment Framework
Criterion 11.1
"Transition towards net zero emissions"

whether biomass should be entirely excluded or just non-renewable biomass. Also, what isthe definition of "biomass"? What use of biomass is the subject of this passage? For use inagriculture, power, materials and fuels, biomass can be a sustainable alternative to oil, gas
and coal if the biomass is waste material and/or sustainably managed. Any assessment
should be based on science and greater definition of alignment with net zero would bepreferred.

(End)

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