The Quickguide

to Carbon Market
Integrity

V1 / June 2025
The carbon market
is in transformation

As a nascent market, Recently, concerns have been These concerns have led to more This Quickguide is designed to
it is still evolving. raised as to whether some demand for projects with a higher help you better understand quality
projects deliver the climate level of assurance around how and integrity, simplifying what can
impact they claim to, as well as they are measured, managed be a complex ecosystem.
Rules, standards and practices uphold high levels of and reported.
are constantly being tested transparency, good governance
and improved
and ethical practices. These are called ‘high-quality’ So you can engage with the
projects market with confidence
This is called market ‘integrity’
A way to fund climate action
Since the industrial revolution, companies Since then, the carbon market has grown into a global system
supporting a wide range of tools to reduce or mitigate the impacts of
have been allowed to emit greenhouse gases climate change and a globally recognised mechanism to finance the
into the atmosphere at no cost. large-scale decarbonisation of entire sectors.

Carbon credits seek to put a price on this pollution by encouraging While credits are a key component of some markets, such as the
companies to invest in projects that avoid or remove greenhouse voluntary carbon market, many compliance markets, like the EU ETS,
gases (GHGs) from the atmosphere. In the context of the voluntary operate primarily through allowances.
carbon market, these credits can be used by companies to fund
climate action beyond their value chain or neutralise their residual Under the right conditions, the voluntary carbon market has the
emissions. That is, the emissions they are not yet able to reduce potential to become a trillion-dollar industry by 2050.
via decarbonisation.

In doing so, carbon credits create a financial incentive for companies

to reduce their emissions, while funding projects that aim to improve
the lives of people and the planet.

This system of carbon credit creation and trading is called the carbon
market. While its origins date back to 1970s, the carbon market
became a truly global phenomenon following the 2015
Paris Agreement.
A quick history
$723M
total reported
transaction value
of the VCM
in 2023

The US Clean Air Act The Montreal The Kyoto Protocol EU member states The Paris Agreement The carbon market At COP29, the
trials trading of Protocol allows for establishes the agree to a European sees countries set is now a globally Rulebook for Article 6
certificates for limited emissions mechanisms needed Union Emissions climate targets that established of the Paris Agreement
facilities emitting trading, with a cap to support Trading System will limit global mechanism. is finalised and the
lead, sulphur dioxide and trade system international (EU ETS) to help warming to 1.5 But concerns around Paris Agreement
and nitrous dioxide. established for compliance carbon achieve emissions degrees. It also integrity lead to Crediting Mechanism
It is later amended to ozone-depleting markets, allowing reduction targets establishes the global scrutiny and is created,
include a cap and substances, developed countries agreed under the framework for force a market establishing a new
trade system, adding including CFCs. to buy credits from Kyoto Protocol. Article 6, whereby reformation to UN-approved
an overall limit to projects in countries can trade deliver better trust benchmark for quality
emissions. developing countries. mitigation outcomes and transparency. in the carbon market.
with each other. This endorsement by
the UN firmly
establishes carbon
markets as a pivotal
mechanism to meet
the Paris goals.
Simple definitions

Climate project Carbon credit Carbon market Quality Integrity

A project that generates A tradeable certificate A specialised type of market The credibility of a claim In addition to quality,
carbon credits. generated by a climate that facilitates the buying made about impact the levels of
project. and selling of carbon credits. created. transparency, good
Examples include wind governance and ethical
farms and reforestation One carbon credit practices that have
projects. They do so by represents the avoidance, been upheld.
either avoiding greenhouse reduction or removal of
gas emissions (GHGs), one tonne of carbon
reducing them or removing dioxide or its equivalent in
them from the atmosphere. other greenhouse gases.

To generate carbon credits

a project must be certified
through rigorous standards
and verified by independent
third-party auditors.
Why buy
carbon
credits?
Organisations buy carbon credits 1. Compliance 2. Voluntary
for two main reasons: To meet regulatory requirements, such To meet climate targets voluntarily
as an international airline seeking to set by the organisation as part of its
meet its obligations under CORSIA. climate strategy.

These two ‘markets’ are becoming increasingly merged or interoperable, with the
carbon market evolving towards a unified structure. With this evolution, focus is
shifting towards understanding different use cases rather than motivations for
purchase. This includes categorising markets by their instrument type, such as
project-based or allowance-based markets.
What is a
high-quality Real Additional Measurable

carbon
Emission reductions are Activities that avoid or The impact is quantifiable
proven to have genuinely remove emissions using recognised monitoring
taken place. would not have been practices and methodologies,
funded without the sale against a credible emissions

credit?
of carbon credits. baseline.

One where the underlying project

is proven to be:
Verified Permanent Unique No harm
An independent, Emission reductions Only one carbon credit can To be certified under
third-party auditor must and removals must be be associated with the recognised standards,
be able to verify that the permanent. reduction or removal of the project must cause no
emission reductions Sequestration projects 1 tonne of CO2e. No ‘double harm to local communities
have taken place. must be permanent for counting’. or ecosystems.
at least 100 years.

These quality principles are expected to keep evolving, especially with the introduction of
the Core Carbon Principles from ICVCM and the upcoming standard under the Article 6.4 Click here for the ICVCM
Paris Agreement Crediting Mechanism (PACM). Core Carbon Principles
Who determines quality and integrity?
In the carbon market there are no standardised definitions for quality and integrity.
Instead, it is determined by a combination of organisations, standards and frameworks.
These can be clustered into four main groups:

Informers Standard setters

Organisations that provide Entities that set standards and methodologies for climate projects and
guidelines on what constitutes conduct verifications with the support of independent third-party auditors.
a high-quality carbon credit. In this group, we also include carbon asset developers who apply the
standards and additional quality checks.

Informers Certifications & standards Regulatory bodies Regulators

Government or regulatory
ICROA European Commission bodies that establish and
International Carbon
Reduction and Offset Social Carbon Woodland Clean Development United Nations
enforce regulations for the
Alliance Carbon Code Mechanism (CDM) use of selected carbon
ICAO credits types.
ICVCM The International Civil Aviation Organization
Verified Carbon Standard American Carbon Australian Carbon
The Integrity Council for - A Verra Standard Registry Credit Units
the Voluntary Carbon
Market
Climate Action Reserve Gold Standard Puro Earth
CCQI
Carbon Credit Quality
Rating agencies Rating agencies
Initiative Calyx Global BeZero Renoster Sylvera Independent third-party
rating agencies that analyse,
evaluate and rate credits.
Carbon asset developers 3rd-party auditors

TÜV SÜD Det Norske Earthood

Veritas (DNV)
The project lifecycle
Below is the typical process a project goes through before
carbon credits can be sold. It shows when quality checks
take place and who is responsible.

Project development and registration Carbon credit issuance and commercialisation

Project planning Project design Public consultation Registration with the Monitoring Third-party Issuance Commercialisation
and third-party certification standard and reporting verification
validation
The project owner and The carbon asset developer The draft PDD is submitted Following a review by the A monitoring and An independent Subject to the Issued credits are sold
carbon asset developer drafts the Project Design to the certification standard certification standard, verification third-party auditor certification on the voluntary market
ask for written approval Documentation (PDD) in for public consultation. the PDD and validation framework is set up verifies the standard’s and value is returned to
for the project and alignment with standard and report issued by the by the carbon asset emission acceptance of the the project.
ownership of its resulting methodology requirements. An independent third-party independent third-party developer for the reductions claim. monitoring and
credits from auditor validates the PDD's auditor are registered on periodic reporting of verification Risk rating agencies
a designated national The document presents the adherence to the selected a public registry. the project’s reports, tradable assess the integrity of
authority. Whether this project’s eligibility, methodology and emission reductions. credits are issued carbon credits issued.
step is required depends additionality and emission standard requirements. to a public registry.
on the country, activity reduction calculations, as
or standard. well as any relevant
co-benefits, negative This part of the process repeats each monitoring
environmental impacts and period and for each subsequent issuance
stakeholder consultations.
Where can things When can things
go wrong? go wrong?
Risks arise when one or more of the quality principles The two project steps with the highest risk are:
on page 7 are compromised.
The most common risks usually relate to:
When the methodology is defined
• Additionality: Absence of financial additionality test
requirements or lack of periodic reassessment requirements
Additionality • Measurability: Accurate measurement of emission reductions
may be compromised by lack of rigorously defined baseline
Inability to prove that the project would not have happened without the assumptions, insufficiently detailed monitoring requirements,
financial support of carbon credits or technological or methodological limitations
• Safeguards: Lack of clearly defined requirements for local
stakeholder consultation or for assessing environmental
Measurability co-impact

Inaccuracies in how the carbon impact is calculated, leading to unintentional

over-crediting. That is, estimating higher GHG reduction or avoidance than
the project actually offers
When the project is implemented
• Additionality: A shift in market conditions or change of
financing needs may invalidate original assumptions,
Safeguards undermining a project's claim to additionality
• Measurability: Technological or methodological limitations may
• Social safeguards protect the rights, livelihoods and well-being of local prevent accurate measurement of actual emission reductions
communities • Safeguards: Local stakeholder engagement may be insufficient
• Environmental safeguards ensure projects do not harm ecosystems, or delayed, leading to social harm
biodiversity, or water resources
Different Renewable energy projects
Renewable energy projects have historically played a significant role in the voluntary

projects pose
carbon market as they contribute to the decarbonisation of national grids, particularly in
emerging economies. However, they have come under increased scrutiny regarding their
additionality risk. While carbon credits may once have been needed to instigate a
project, that may no longer be the case in certain countries as renewable energy
projects become commercially viable on their own. To mitigate this risk, major carbon

different risks
standards have tightened eligibility criteria for RE projects since 2019/2020, limiting
eligible locations mostly to Least Developed Countries.

Community and household projects

Due to their varied implementation
Includes cookstoves, biodigesters and safe water access projects. In addition to climate
and measurement, different types of benefits, these projects typically contribute substantial social co-benefits for local
communities. While these projects generally demonstrate high confidence on
projects carry distinct levels of risk. additionality, this project type is subject to measurability risks, including overestimation
of emission reductions due to variability in adoption rates and broader challenges
related to monitoring. This is currently being addressed via an ongoing sector-wide
debate, with the input of key decision-making bodies, including the UNFCCC.

Afforestation, Reforestation and Revegetation (ARR)

ARR projects offer a cost-effective and scalable solution for carbon sequestration
through the restoration and expansion of forest ecosystems. There are two types of ARR
projects, community-based and commercial. They both offer different types of benefits
and risks: For example, community-based ARR are primarily designed to support
tree-planting on private lands belonging to small-scale owners and usually demonstrate
high confidence of additionality. However, these can be exposed to permanence risks if
landowners withdraw from the project. This is usually mitigated through ongoing
monitoring and stakeholder engagement, where applicable.
What about price?
Whilst there is some correlation between price and quality,
quality is not the only contributing factor.
Generally, the project type determines the price range. Within this price range, the quality
rating is an important factor for the final price, but not the only one. Other factors include:

Supply and demand Project location Co-benefits created Standard applied

Like all markets, carbon credit prices are affected by Some locations are more expensive to The added value of social and economic Some standards are more expensive to
supply and demand for each type of credit establish and run projects in outcomes often comes with higher implement than others
implementation costs

Purchasing arrangement Vintage year Project size

Pricing can vary depending on the terms of the Can affect pricing due to evolving buyer Projects that generate a higher number of
offtake and contracting structures preferences and use cases credits tend to enjoy economies of scale
Which type of Project attributes
Some credit buyers have a preference for a certain type of project. For example,

credit is right
a travel company might prefer credits that regenerate habitat, while a technology
company might prefer technology-based credits.

Variables here include:

for you?
• project location
• co-benefits created
• vintage

Risk
All carbon projects involve some level of risk, but that doesn’t mean low quality.
That depends on many things, including What matters is how risks are managed. High-integrity credits come from
your appetite for risk. Typically there well-designed projects with strong safeguards and monitoring. When done right,
higher-risk projects can deliver high-quality, high-impact results.
are three considerations. Variables here include:
• project type
• standard applied
• ongoing monitoring and risk management

Price
Price is generally a consideration for all buyers. Many choose a mix of higher cost
credits that could be close to home or support a certain technology, then match
them with lower cost credits to create an overall more affordable portfolio.

Variables here include:

• credit availability
• purchasing arrangements available
• supply and demand dynamics
Your quality What to check Questions to ask

checklist Project type • What is the project type?

• What are the common risks and benefits of this project?

This handy checklist will help you Standard applied • What standard was the specific project developed under?
understand what to ask before
purchasing carbon credits.
Core Carbon • Has this standard or program been assessed by ICVCM for
It’s worth noting that not meeting one of Principles label adherence to the Core Carbon Principles Assessment
these criteria does not necessarily disqualify Framework?*
a project. The final decision depends on your • If so, what was the outcome? Is the standard or methodology
credit preferences, price sensitivity, risk CCP-eligible?
tolerance and ability to manage risks.

Quality and integrity aren’t about avoiding

Carbon asset • What extra quality checks or assessments has the carbon asset
risk, they’re about managing it well. developer implemented and what’s the outcome?
developer

Third party rating • Has an independent third-party rating agency rated this project?
• If so, what is the rating?
*Note that ICVCM’s methodology assessments are ongoing and, as of
now, the number of CCP-eligible methodologies and available credits
remains limited.
How South Pole ensures quality
South Pole follows industry standards and conducts additional quality and risk
assessments. Results are shared with buyers via a consolidated integrity report
by project and open, transparent conversations.

First safety layer Additional safety layer Quality control Transparency

Our projects follow international carbon South Pole conducts additional quality Our quality control includes a rigorous We empower you to make informed
certification standards to uphold stringent and risk assessments on projects and nine-steps process: decisions by providing integrity reports
requirements set by these standards. These discloses the results to our clients, on each project, as well as open,
are, in turn, verified by independent enabling informed decision-making 1. Adverse media screening transparent conversations.
third-party auditors. and enhanced risk management of 2.Initial technical carbon review
each portfolio. 3. Initial social and environmental impact
review
4.In-depth assessment by an independent
risk expert
5. Know Your Counterparty (KYC) screening
6. Project partner engagement*
7. Validation by our independent risk team
8. Definition of mitigation actions*
9. Monitoring and regular review

*Where South Pole is the carbon asset developer

Want to know more? #1
expert in carbon projects,
globally

We can help. We can also

advise on
• Biodiversity credits
• Biomethane credits
• Credible claims

Plan
Understand the fast changing market,
• Sourcing strategy
• Portfolio planning Driving As a pioneer of the global carbon
market, South Pole invests heavily to
integrity
• Net-Zero integration
plan a future-ready portfolio. ensure the quality and verifiability of
all certificates.

Purchase • Carbon credits (tech-based,

nature-based, industrial)
Choose purchase-ready carbon credits • Energy Attribute Certificates
& environmental certificates • Other environmental certificates

Invest • Nature-based removals

• Tech-based removals
Secure a long-term stream
• Article 6 credits
of carbon credits
Read another Quickguide
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