Are carbon credit quality indicators delivering?

February 24, 2025 - Research

Recent analysis covered in the State of Quality and Pricing report indicates that not all quality indicators are created equal. Calyx Global analyzed the quality of credits eligible for the ICVCM’s CCP label and CORSIA. The two efforts to separate wheat from chaff differ considerably in their approach.

The ICVCM is making an effort to set a minimum integrity floor by approving specific categories, defined as “project type + methodology” combinations. By contrast, CORSIA is focusing on approving carbon crediting programs. Such programs may have many methodologies in operation. Sometimes, CORSIA will exclude a particular methodology, but in general, it does not look methodology by methodology to ensure their robustness.

It is, therefore, not too surprising that our analysis shows the CCP label tends to be more reliable than CORSIA because the ICVCM is more granular in its analysis. In looking at the below distribution of Calyx Global GHG ratings, we see that the ICVCM, to date, has segmented the market for GHG integrity significantly better than CORSIA. A CCP-labeled credit is more likely to have a higher GHG integrity rating than those that will not receive the CCP label.

Distribution of Calyx Global GHG ratings.png
The average Calyx Global rating for a CCP-eligible project is an A, compared to a C for a project that cannot currently receive the CCP label. By contrast, the average Calyx Global rating for CORSIA credits is somewhere between a BB and a B.

Credits eligible for CORSIA’s first phase exhibit a slightly better distribution, largely due to the International Civil Aviation Organization’s (ICAO) decision to exclude renewable energy projects generating over 15 MW. However, a significant percentage of credits from CORSIA-eligible projects carry elevated GHG integrity risk (i.e., are C or D rated).

In both cases, ICVCM CCP or CORSIA, we caution that there are also eligible credits with high GHG integrity risk. This is particularly true for CORSIA-eligible credits.

Are CCP label and CORSIA-eligible credits more expensive?

CCP label and CORSIA eligible credit price premiums largely depend on market demand and supply constraints. These programs are nascent and, as of yet, unpredictable. Multiple complexities affect whether these credits command higher prices in the market.

For instance, according to S&P, some brokers estimate a $.70 to $2.00 per tCO2e price premium for CCP-approved landfill gas credits in Turkey, compared to non-CCP-approved credits with estimates expanding to $1 or more in the coming years. Other market participants claim CCP-approved landfill gas credits in Turkey currently garner no price hike [1].

According to Nico Curtis from ClearBlue Markets, "Trading activity for CCP-approved credits has been limited due to a restricted supply relative to the larger pool of non-CCP-approved credits. However, after adjusting for regional variations, CCP-approved credits command a substantial price premium, averaging up to 25%. This is illustrated by landfill gas projects in Latin America, where CCP-approved credits with vintages from 2019 to 2023 realize an average premium of $1.30 over the non-CCP-approved credits average price of $4.96. Similar price premiums have been observed in North American and Asian markets."

More to learn

The State of Quality and Pricing in the VCM includes many more findings pertinent to buyers, investors and project developers. Inside, readers will also find: