📄ICR Methodology Requirements v3.0
Summary
ICR serves as a framework for climate projects of any size, promoting environmental integrity through accelerating credible action and ensuring credibility, consistency, and transparency in quantification, monitoring, reporting, validation, and verification
Version no. | 3.0 |
Date of Version | 15. October 2024 |
Introduction
This document provides requirements for developing new methodologies under the ICR program. The purpose of this document is to support project proponents, methodology developers, and validation and verification bodies (VVBs) in developing and for assessing methodologies.
Objective
The objectives of this document are to:
provide accessible requirements applicable to all types of climate-related mitigation methodologies;
facilitate and promote transparency by all parties involved in the ICR, both emitters and project proponents;
ensure the quality and consistency of methodology design prepared by methodology developers and submitted to ICR for approval;
ensure consistency and quality of validation of new methodologies;
promote the development of methodologies of emerging climate technology and solutions and their access to the carbon markets, facilitating a fast transition to a low-carbon economy.
Reference standards
ICR methodology requirements are structured to be consistent with principles, requirements, and guidance of:
International Organization for Standardization ISO 14064-2.
Clean Development Mechanism/Joint Implementation (CDM/JI) and other GHG Programs.
ICR relies on terminology from reference standards. Further, CDM and other GHG programs set out principles regarding additionality and crediting mechanisms. In general, emerging methodologies shall fulfill the requirements of ISO 14064-2, and validation of methodologies shall be according to current versions of ISO 14064-3, ICR methodology validation and verification specifications, ISO 14065, and ISO 14066.
ISO 14064-2 is a project-based standard. However, new methodologies are subject to validation according to the requirements of ISO 14064-2 on a methodology level, not project level mutatis mutandis, i.e., application of a validated methodology on a project level should conform to ISO 14064-2. Further approval of an assessment by ICR according to the requirements of the ICR methodology requirements and ICR requirement document according to the ICR methodology approval process.
Scope
This document specifies principles and requirements for new methodologies and revisions under the ICR program.
Normative references
ICR requirement document
ICR methodology approval process
ICR validation and verification specifications
ICR definitions
ISO 14064-2, Greenhouse gases — Part 2: Specification with guidance at the project level for quantification, monitoring and reporting of greenhouse gas emission reductions or removal enhancements.
ISO 14064-3, Greenhouse gases — Part 3: Specification with guidance for the verification and validation of greenhouse gas statements
ISO 14065, General principles and requirements for bodies validating and verifying environmental information
ISO 14066, Greenhouse gases — Competence requirements for greenhouse gas validation teams and verification teams
Definitions
For the purposes of this document, the terms and definitions given in the ICR definitions apply.
Principles
The principles of the requirements are adapted from WBCSD/WRI, CDM, and ISO 14064-2. The development of methodologies shall adopt these as fundamental principles in their structure and application.
Relevance - Use data, methods, criteria, and assumptions that are appropriate for the intended use of reported information.
Completeness - Consider all relevant information that may affect the accounting and quantification of GHG emission mitigation.
Consistency - Enable meaningful comparisons in GHG-related information.
Accuracy - Reduce bias and uncertainties as far as is practical/cost-effective.
Transparency - Provide clear and sufficient information for reviewers to assess the credibility and reliability of GHG emission mitigation claims.
Conservativeness - Use conservative assumptions, values, and procedures to ensure that GHG emission mitigations are not over-estimated.
Impartiality – Impartial validation and verification of GHG emission mitigations by a competent accredited 3rd party organization.
This document further sets out the requirements and structure of methodologies to be consistent with CDM and other GHG programs, facilitating consistency in application of methodologies, project registration and issuances of ICCs.
General requirements
For a methodology to be approved under the ICR program, it shall demonstrate how it meets the requirements herein. Methodologies are approved according to the methodology approval process set out in the ICR methodology approval process.
Methodologies shall ensure conservativeness, entail scientific integrity, technical advancements and are scientifically proven and supported with peer-reviewed literature and research. Methodologies shall encourage ambition over time; encourage broad participation; be real, transparent, conservative, credible, and below ‘business as usual’; avoid leakage where applicable; recognize suppressed demand. Methodologies shall include relevant assumptions, parameters, data sources, and key factors. Methodologies shall also consider uncertainty, leakage, policies and measures, and relevant circumstances, including social, economic, environmental, and technological circumstances, and address reversals where applicable.
Methodologies may be developed by project proponents, stakeholders, or ICR and should include participation by sectoral experts. Methodologies shall be validated by a VVB, accredited for the sectoral scope the methodology applies to and be approved by ICR through the ICR methodology approval process, confirming application under the ICR program and its conformity to the requirements herein, and ISO 14064-2. Methodologies shall demonstrate how they meet the requirements in this document and ISO 14064-2 at a methodology level. Methodologies shall be written clearly and concisely.
Methodologies shall adopt the ICR methodology description template in as much detail as possible, though ICR will allow for different structures of methodologies. Methodologies may apply modular approaches and/or tools for specific tasks and different approaches for demonstration of additionality and baseline, clearly stating how the modules and/or tools are to be utilized. Methodologies may refer to and utilize modules and/or tools that other GHG programs have approved if their application conforms to ISO 14064-2 and ICR requirements. The methodology description provides the structure of the methodology, and separate modules and/or tools are used to perform specific methodological tasks.
ICR methodologies and methodologies under other GHG programs may be revised under the ICR program. Methodology revisions are applicable when only minor alterations to an existing methodology are required to describe project activities appropriately. Methodology revisions are also applicable when an existing methodology can be materially improved, which includes comparing existing and proposed revisions to show that changes will deliver material improvements resulting in greater accuracy of measurement of GHG emissions mitigations, improved conservatism, and/or reduced costs. Methodology revisions follow the ICRs methodology approval process.
Methodologies shall include sufficient information on their application and evidence to allow readers to see how applying the methodology results in mitigating climate change. Methodology developers may exclude information on intellectual property rights and/or confidential information important for the application of the methodology in the published methodology. However, all relevant information demonstrating conformity to the ICR methodology requirements shall be provided to the VVB and ICR and the methodology shall provide enough details to allow readers to fully understand how it delivers claimed benefits.
Methodology components
Other methodologies and sources
Methodology developers shall list all methodologies reviewed during the methodology development, both those of similar nature and those utilized in constructing the proposed methodology, along with modules/tools/regulations. It shall be demonstrated how the proposed methodology or revision differentiates from the referred methodologies.
Summary description of the methodology
The methodology developer shall provide a summary of the proposed methodology where essential components and associated project activities are described generally.
Definitions
Methodologies may set out defined terms in addition to those already included in the ICR program to help users understand the context of the methodology and improve its readability. Methodologies shall not define terms that are already included in the ICR program. ICR definitions shall be applied and referenced.
Applicability conditions
Applicability conditions define conditions where the project activities can be applied, e.g., geographic location, technology, and any other conditions where the methodology may or may not be applicable.
Boundary
Methodologies shall establish criteria and procedures for describing and determining project boundaries, identifying GHG sinks, source and reservoirs (SSRs), and justifying any inclusion or exclusion of GHG SSRs. The boundary shall include GHG SSRs controlled by the project proponent and GHG SSRs related to or affected by the project activity.
The methodology developer shall consider sections 6.3 and 6.5 of ISO 14064-2 for establishing criteria and procedures for determining the boundary.
Baseline scenario
The baseline scenario represents activities in the absence of the project activity and associated GHG emissions. The baseline scenario shall be determined to allow for an accurate comparison between the GHG emissions that would have occurred under the baseline scenario and the GHG emission mitigations achieved by the project activities.
The methodology shall require the application of one of the following approach(es) for determining the baseline, accompanied by a justification for the appropriateness of the choices:
A performance-based approach, taking into account the following:
Best available technologies that represent an economically feasible and environmentally sound course of action, where appropriate;
An ambitious benchmark approach where the baseline is set at least at the average emission level of the best performing comparable activities providing similar outputs and services in a defined scope in similar social, economic, environmental, and technological circumstances;
An approach based on actual or historical emissions, adjusted downwards to encourage ambition over time.
The methodology developer shall consider section 6.4 and A.3.4 of ISO 14064-2 for determining the baseline scenario. For the baseline scenario, methodologies may utilize tools approved under the CDM.
Additionality
Methodologies shall establish a procedure for demonstrating additionality, where they demonstrate alignment with the requirements and additionality structure (levels) of section 6.4.1 of the ICR requirement document v.6.0. Methodologies may demonstrate additionality using a standardized tools or refer to projects demonstrating additionality at the project level.
Methodologies shall:
apply and reference an appropriate and high integrity additionality tool approved under an approved GHG program,
develop a full and detailed procedure for demonstrating and assessing additionality directly within the methodology.
The methodology developer may develop a standardized tool for demonstration of additionality (see Appendix II).
See further additionality requirements in section 6.4.1 of the ICR requirement document v6.0.
Quantification of GHG emission mitigations
Net GHG emission mitigations achieved by projects are the basis for the volume of ICCs that can be issued, where baseline GHG emissions and project GHG emissions and/or removals must be accurately quantified in order to determine net emission reductions and/or removals achieved by projects. Methodologies shall therefore set out procedures for quantifying these GHG emissions and/or removals. Methodologies shall establish criteria and procedures for quantifying GHG emissions mitigations for all selected GHG SSRs identified in the project boundary.
Methodologies shall establish separate criteria and procedures for quantifying net GHG emission mitigations for the selected GHG SSRs for both the project (including leakage) and the baseline scenarios. Quantification of net GHG emission mitigations generated by the project shall be based on either of the two options:
The difference between the GHG emissions and/or removals and GHG SSRs relevant for both the project and the baseline scenario.
The difference between carbon stocks and GHG SSRs that are relevant for both the project and the baseline scenario.
Methodologies shall establish procedures to quantify leakage where the potential for leakage is identified. When quantifying GHG emissions and/or removals achieved by the project, the sum of GHG emissions resulting from project activities and leakage shall be withdrawn.
Where appropriate, net GHG emission reductions and removals, and net change in carbon stocks, shall be quantified separately for the project and the baseline scenarios for each relevant GHG and its corresponding GHG SSRs.
Where there’s a risk of reversals, the methodology shall establish criteria and procedures to identify, assess and quantify associated risk.
The methodology developer shall consider sections 6.7 and 6.8 of ISO 14064-2 for establishment of criteria and procedures for quantification of GHG emission mitigations.
Monitoring
Methodologies shall describe data and parameters available at validation, i.e., those fixed for the duration of the project crediting period, and data and parameters that are measured and monitored for verification, i.e., those monitored during the project crediting period. Furthermore, methodologies shall describe the criteria and procedures for obtaining, recording, compiling, and analyzing monitored data and parameters.
The methodology developer shall consider section 6.6 and 6.10 of ISO 14064-2 for establishing criteria and procedures for monitoring.
Implementation of a project
For consistency in the application of the methodology at the project level, the methodology developer shall design a project following the requirements of ISO 14064-2, the criteria and procedures established under the proposed methodology, and the ICR requirement document. The project may be designed for demonstration of the methodology application only.
The methodology developer and/or a project proponent shall use the ICR project design description (PDD) template to provide details of the project and its GHG emissions mitigations, including schematics, specifications, and a description of how the project mitigates GHG emissions with the application of the proposed methodology. The project proponent shall follow the instructions provided in the template and ICR requirement document.
Validation
Validation of methodologies is the process of evaluating the proposed new methodology and its reasonableness of assumption, limitations, and methods included with its application and how it will support a statement of the outcome of the implementation of a project and its activities based on its application. Further evaluation of its conformity to ISO 14064-2, the ICR methodology requirements, and the ICR requirement document. All proposed methodologies are subject to validation of the proposed new methodology and the PDD developed following section 7.
Validation shall be conducted according to ISO 14064-3 and ISO 14065 and ICR validation and verification specifications. The validation report shall be made public.
Validation of the methodology may be in conjunction with validation of a PDD and verification of GHG emission mitigation outcomes. Further details on methodology validation are available under section 11 of the ICR validation and verification specifications
Validation bodies
VVBs are eligible to assess the proposed new methodology and accompanied PDD if they meet the accreditation requirements set out in ICR validation and verification specifications and have signed an agreement with ICR
The VVB shall hold such accreditation for the sectoral scope(s) applicable to the proposed methodology. Where the methodology falls under more than one sectoral scope, the VVB shall hold accreditation or approval for validation or verification (as applicable) for all relevant sectoral scopes.
Methodology revision
ICR methodologies and methodologies approved under other GHG programs may be revised.
Revision of a methodology is applicable when the project activity is similar to project activities under an existing methodology, and changes needed to include the project activity in question to the existing methodology are reasonable and non-extensive. Methodology revisions are also applicable if a methodology can be improved so that changes will deliver material improvements resulting in greater accuracy of measurement of GHG emissions mitigations, improved conservatism, and/or reduced costs.
Methodology revisions shall be prepared using the ICR methodology description template. They shall follow the ICR methodology approval process and are subject to conformity to all ISO 14064-2, requirements in sections 5 - 8, and the ICR requirement document.
Appendix I – Document history
Version | Date | Comment |
1.0 | 19.2.2022 | First version. |
2.0 | 14.10.2022 | Second version. |
3.0 | 15.10.2024 | Structure and readability improved. Reference to ICR validation and verification specifications and ISO 14064-2 for further guidance. Validation specifications for methodology validation now available in section 11 of ICR validation and verification specifications After public consultation, development of standardized tools added and minor clarifications. |
Appendix II – Standardized methods additionality
When developing standardized methods, the methodology developer shall consider which levels of additionality are relevant to the methodology and derived project activities. The standardized method shall be structured in alignment with section 6.4.1 of the ICR requirement document v.6.0. The methodology developer shall consider that it shall demonstrate that when applied the project meets at minimum, meet level 1, and either 2a or 2b. It shall also meet one additional level from 3, 4 or 5.
Level 1 - ISO 14064-2 GHG emissions additionality:
The project activities shall be additional compared to the baseline scenario. Referencing the baseline scenario and the quantification of the underlying methodology should be sufficient in demonstrating alignment.
Level 2 – Statutory additionality
The project activities shall be additional to statutory requirements, or statutory requirements are systematically not enforced if imposed. The methodology developer shall consider the applicability conditions applied for the methodology and consider statutory requirements within the applicable geographical area where the methodology is applicable. The methodology developer shall consider if applicable geographical area aligns with either:
Level 2a additionality – Statutory additionality
Level 2b additionality – Non-enforcement additionality,
and identify specifically.
The method may also stipulate demonstration of statutory additionality at the project level.
Level 3 additionality – Technology, institutional, common practice additionality
The project shall implement climate actions that are subject to barriers to implementation or accelerate the deployment of technology or activities.
The methodology developer shall demonstrate that the project activity has reached low penetration within applicable geographical area compared to the maximum capabilities applying the equation:
Where
is penetration of the project activity in year y, in geographical area i.
is adoption of the project activity in year y, in geographical area i.
is the maximum adoption potential of the project activity in year y, in geographical area i.
shall be lower than 5%.
The potential for maximum adoption is restricted by various factors, each presenting its own limitations on the overall adoption of a project activity. Determining the factors that affect adoption may be constraints imposed by the supply of raw materials or energy resources required for the activity, limitations set by the technical efficiency of the project activity, reliability or quality of service provided by the project activity compared to its alternatives, limitations based on the availability of suitable locations for executing the project activity, demand for the product or service, existing infrastructure and market price.[1]
And/or, demonstrate that the project activity is not a common practice within the applicable geographical area applying the equation:
Where,
is common practice indicator in year y, in geographical area i.
is the number of projects that apply technology different from the technology applied by the project activities.
is the number of projects of similar nature as the project activity[2], in year y, in geographical area i.
shall be lower than 20% and shall be less than 3.
When determining the following applies,
The projects shall be located in the same geographical area.
The projects shall apply the same measure as the proposed project activity.
The projects shall use the same energy source/fuel and feedstock as the proposed project activity, if a technology switch measure is implemented by the proposed project activity.
The plants in which the projects are implemented produce goods or services with comparable quality, properties and applications areas (e.g. clinker) as the proposed project plant.
The projects started commercial operation before the start of development of standardized method[3].
And/or, demonstrate that the project activity is subject to barriers applying step 2 of CDM Methodological tool: Combined tool to identify the baseline scenario and demonstrate additionality[4].
Level 4 additionality – Financial additionality
Financial additionality is a criterion to assess the additional environmental benefits of a climate project seeking support or financing within a climate mitigation framework. It determines whether the project's GHG emission mitigations would not have occurred without the financial incentives or support provided by the GHG program. The methodology developer shall consider if either:
Level 4a additionality – financial additionality I
Level 4b additionality – financial additionality II
is applicable and identify specifically.
Level 4 additionality – Financial additionality I
Projects are considered level 4a additional if they face financial limitations that can be mitigated by revenues from the sale of carbon credits where carbon credit revenues are reasonably expected to incentivize the implementation of projects or carbon credit revenues important in maintaining the projects' operations' ongoing financial viability post implementation. A project is Level 4a financially additional if the project activity results in higher costs or relatively lower profitability than would have otherwise occurred in the baseline scenario and the project activities are not common practice in the project’s geographical area.
The standardized method shall apply procedures for investment analysis outlined in the CDM Tool for demonstrating and assessment of additionality[5], Steps 1, 2 and 4 of the tool shall be followed.
For step 1b the developer can rely on additionality level 2 determination.
For step 4 the developer shall rely on additionality level 3 common practice determination.
Level 4 additionality – Financial additionality II
Projects are considered level 4b additional if they face significant financial limitations that can be avoided by revenues from the sale of carbon credits, where carbon credit revenues are the major or only source of revenues. Carbon credit revenues are a precondition for the implementation of the project and/or carbon credits revenues are essential in maintaining the project operations and ongoing financial viability post-implementation and the project activities are not common practice in the project’s geographical area.
The standardized method shall demonstrate that the project activity face significant financial limitations that can be avoided by revenues from the sale of carbon credits, where carbon credit revenues are the major or only source of revenues:
The gross annual revenue of the project activity, excluding revenue from the sale of carbon credits, shall not exceed five percent of the capital expenditure.
The project shall not be a common practice following 2. from additionality level 3 above.
Level 5 additionality – Policy additionality
The project is considered level 5 additional if its implementation goes beyond its host country's climate objectives and lies outside the scope of the climate action strategy towards the host country's NDCs.
The standardized method shall demonstrate that the project activity address GHG emissions that are outside the scope of the host-country’s national GHG inventory or establish procedures for attaining a letter of confirmation for corresponding adjustment subject to section B of Annex II of COP26 decision -/CMA.3 on Article 6.2.
Ref. activity penetration, Verra methodology requirements v.4.4 ↑
Including both projects registered with a GHG program and who are not, studying other GHG program registration and information available from governmental institutions or industry associations. ↑
Ref. common practice, CDM Methodological tool Common practice, v.03.1 ↑
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