The analysis focuses on evaluation of ten existing carbon credit mechanisms, which relate to climate-friendly agriculture. The aim is to identify strengths and weaknesses these mechanisms, and assess them suitability for financing measures in the field of climate-friendly agriculture. The report analyses the mechanisms in terms of their ability to ensure environmental integrity, the sustainability of the results achieved, and their contribution to climate change mitigation.

Selection and range of mechanisms:

• The analysis includes leading mechanisms (e.g. American Carbon Registry, Climate Action Reserve, Gold Standard and Verra Voluntary Carbon Standard).
• Mechanisms with are also included smaller market size (Care Peat, Nori, Ökoregion Kaindorf).
• In addition to non-governmental mechanisms, mechanisms in the context of three government systems.
• Mechanisms vary in geographical scope; some are global, others operate in Europe, the USA, Australia and Canada.
• Most methods have been developed or updated after 2018.

Key findings and shortcomings:

• Quantification:
  • The methods have weak monitoring requirements and sampling.
  • Insufficient baselines they do not allow for reliable and conservative quantification of results.
  • That threatens environmental integrity emission credits issued.
  • Uncertainty should be assessed and taken into account when measuring or modeling.
  • Six methodologies does not take uncertainty into account.
  • Some methodologies take uncertainty into account by reducing the number of credits issued.
• Additionality:
  • Methods do not guaranteethat the projects and their mitigating effects are additional.
  • It is unlikelythat the methods under consideration would ensure that the projects are truly additional to standard practice.
  • Many measures are common practice, financially viable, and are supported by the Common Agricultural Policy (CAP).
  • Assessment common practice will not be sufficient in itself to rule out non-additional measures.
  • Financial and regulatory additionality pose the greatest risks.
• Impermanence:
  • Methods they do not providethat the mitigation results will be permanent.
  • Only three of the mechanisms considered have measures to protect mitigating measures for the period at least 40 years old.
  • Sustainability is essential for environmental integrity, but in climate-smart agriculture it is difficult to achieve.
• Double counting:
  • The methods have significant shortcomings in preventing double counting.
  • Information about credits and their uses are insufficient.
• Environmental and social standards:
  • It is unlikelythat the methods would ensure environmental and social standards.
  • Positive influences for sustainable development are rare.
  • However, there are also good examples, which could be implemented in all methods.

Details on individual methodologies:

• One methodology does not set specific eligibility criteria for project registration (Kaindorf).
• There are no clear rules for the three methodologies project boundary definitions and greenhouse gases (ERF, Kaindorf, Nori).
• Most methodologies uses project-specific baselines.
• Four methodologies they do not assume any updating of baselines during the crediting period (Alberta, ERF, LbC, Nori).
• Some methodologies have been established rules to prevent baseline modification in case of reversal (ACR, Alberta, ERF, GS, LbC, Nori).
• Some methodologies assess additionality against market penetration rates.
• Some methodologies they use too loose penetration tests (e.g. CAR with 50%).
• Some methods will introduce temporary carbon credits, which expire after a certain time.
• Five methodologies relies on monitoring and compensating for reversals.
• Three methodologies they use alternative mechanisms to compensate for reversals (Kaindorf, Alberta, LbC).
• Only one methodology has a mechanism to address reversals for a period of 100 years (CAR).
• For four methodologies Monitoring and reversal compensation obligations apply 10 years or less after the end of the credit period (GS, VCS, Nori, CarePeat).
• Six methodologies has rules on the liability of project owners for intentional distortions (ACR, CAR, ERF, GS, Nori, VCS), but only some they cover the period after the end of the crediting period.
• Six methodologies has established reserve funds to compensate for unintentional reversals (ACR, CAR, ERF, GS, Nori, VCS), but not all are sufficiently capitalized.
• For most methodologies are not established measures to address reversals in the event of insolvency the project owner or the termination of the certification program.
• Only four methodologies they have risk assessment established.
• Seven out of ten methodologies has redesigned registration system.
• Six methodologies has rules in place for preventing double registration under various programs (ACR, Alberta, CAR, GS, Nori, VCS).
• Three methodologies have rules in place for preventing double application of credits according to Article 6 (ACR, GS, VCS).
• Six programs has robust third-party audits (ACR, Alberta, CAR, GS, LbC, VCS).
• For eight programs robust processes are in place, including public consultation, for development of new quantification methodologies.

Analysis conclusions:

• Assessed methodologies insufficiently addressed key challenges such as quantification, additionality and impermanence.
• Compensatory approaches are not suitable to finance climate-friendly measures due to concerns about environmental integrity.
• For climate-friendly agriculture they do not recommend compensation.
• Alternative approaches based on results such as contributions and public funding, are considered more suitable.

Recommendations for certification systems:

• It is necessary increase transparency and robustness methodologies.
• They should introduce stricter monitoring requirements and sampling.
• Methods should use realistic baselines.
• It is necessary strengthen the rules for security additionality and permanence.
• They must be implemented mechanisms to prevent double counting.
• It is necessary improve environmental and social standards.
• Regularly update penetration rates and define the reference area.
• Establish rules for accountability project owners and reserve funds.
• Secure transparent registration systems a third-party audits.

Overall, the report points out that current carbon mechanisms have significant shortcomings in promoting climate-friendly agriculture. It is necessary a more thorough and comprehensive approach, which takes into account not only climate impacts, but also broader environmental and social aspects. Spring