#WHO ISSUES CARBON CREDITS VERIFICATION#

According to the Commission’s explanatory memorandum on the CRCF Regulation Proposal, part of the revenues of the European Union’s Emissions Trading System (“EU-ETS”) are directed to the Innovation Fund, which helps businesses invest in innovative clean technology – including carbon removals. Hence, the CRCF Regulation Proposal creates a system of accreditation similar to that of notified bodies under the EU product rules.Īt this stage, it is not yet clear how carbon offsets created through carbon removal projects applying the methodologies and certificate schemes set forth under the CRCF Regulation Proposal may serve as an alternative mechanism to meet the EU’s GHG emissions reduction targets. These certification bodies may only be accredited by national accreditation bodies in the EU Member States. Moreover, certification schemes may only use accredited third-party certification bodies to verify project developers’ and users’ carbon removal assessments. All service providers of certification schemes must submit annual records of their activities to the Commission, and communicate any attempted fraud they identify.

The CRCF Regulation Proposal requires certification schemes to be recognized by the Commission.

#WHO ISSUES CARBON CREDITS VERIFICATION#

Thus, the CRCF Regulation Proposal would require carbon credit project developers and potential users to conduct their own assessment of the carbon removal in accordance with the “QU.A.L.ITY” principles and the methodologies prepared by the Commission and then submit that assessment for independent verification through a certification scheme. requires companies to subject their certification to independent third-party verification through a certification scheme.requires that certification methodologies comply with these requirements, and provides the Commission with powers to establish the methodologies and.sets out quantification, additionality, and long-term storage requirements that products must meet to be certified.In particular, to ensure the transparency and credibility of the certification process, the CRCF Regulation Proposal: These criteria guide the requirements of the CRCF Regulation Proposal.

The CRCF Regulation is based on four quality criteria (carrying the “QU.A.L.ITY” moniker): In effect, the proposed scheme is only intended to operate for carbon removals that take place in the EU/EEA.

The Proposal contains rules to monitor, report and verify the authenticity of carbon removals taking place inside the EU/EEA. The European Parliament and Council are currently considering for adoption the CRCF Regulation Proposal that the Commission presented in late November 2022. Regulation for a Carbon Removal Certification Framework We discuss these developments and opportunities for public comment below. Opportunities remain for companies to express views that may shape the final contours of these regulations. The CRCF Regulation Proposal and the upcoming ESRS will help to expand sustainable and verified carbon removals and encourage investment in technological innovation.Ĭompanies turning to the VCM to reach their net zero goals, and others active in the generation, trading, and use of carbon credits, will want to follow these initiatives closely. The EU’s aim of regulating carbon credits coincides with its push for carbon neutrality by 2050, and a related significant proliferation of companies publicly committing to achieve “net-zero” emissions by mid-century, which has triggered an uptick in strategic purchases of carbon credits in the voluntary carbon market (“VCM”). In effect, the draft ESRS that the Commission is considering for adoption require subject entities to disclose GHG removals and GHG mitigation projects financed through carbon credits. These two regulatory initiatives are closely tied to each other.

Second, the European Commission (“Commission”) is in the process of adopting standards (the so-called “ESRS”) for the EU’s mandatory ESG reporting regime-the Corporate Sustainability Reporting Directive (“CSRD”)-that will also cover disclosures on companies’ use of carbon credits (including as emission offsets) and their quality.

First, the European Parliament and Council are considering for adoption a Commission for a Regulation on a Carbon Removal Certification Framework (“CRCF Regulation Proposal”).

The European Union (“EU”) is coming closer to adopting mandatory rules for companies that use carbon credits.

Who issues carbon credits