400 Calyx Ratings: What have we learned?

Tuesday, 06 Jun 2023

It’s been a busy season for Calyx Global! We are proud to announce that as of last week, we have reached our 400th project rating.  Upon reaching this milestone, we take a moment to reflect on some of the lessons we’ve learned while rating these 400 projects. 

#1 - It’s tough to “have it all” when it comes to an individual carbon credit

Our ratings currently appear on Salesforce Net Zero Marketplace. In the past month we announced our first A-rated credits on that platform, which include two projects that destroy ozone-depleting substances. These projects have high GHG integrity – in part because they are inherently ‘fit’ for carbon markets: there is no incentive other than carbon revenues for this activity, there is no non-permanence risk, there are little to no risks of overlapping claims or ‘leakage’, and the emission reductions are relatively easy to measure. But these projects will likely never receive our highest ratings on their contributions to SDGs (Sustainable Development Goals). In order to have credits that represent a range of qualities from high GHG integrity to high SDG benefits, it might be necessary to build a portfolio of different credits with different attributes.

#2 - For renewable energy, not all projects are created equal

The carbon market is an incredibly dynamic space, often driven by public perception. In the past we’ve noted “Ugly duckling” project types (i.e. landfill gas projects) that get overlooked because they lack the sentimental appeal of more charismatic projects. On the other hand, we have also noted recent media coverage deeming certain project types (REDD+ and Renewable Energy) to have low integrity.  

As we’ve advanced with our ratings of large-scale renewable energy projects in particular, we have increased our database to include over 50 large-scale renewable energy projects. Our ratings confirm that these projects tend towards lower integrity than some other project types. In the Calyx system, the average score for ACM0002 renewable energy (RE) projects so far is a “D” rating, while “C+” is the highest rating a large scale grid connected renewable project has received – which can be higher than credits in other categories, including some “ugly duckling” projects. 

While there will always be risks to additionality for renewable energy, the higher-rated projects in this category mitigate their risks by including a well-documented investment analysis and evidence that carbon credits made a significant impact in their investment decision. They also clearly outline that carbon revenue was considered before financial decisions for the project were made. The technology also must not make up a significant portion of the electrical grid. 

Figure: Calyx GHG Integrity Ratings for 56 Large-Scale Renewable Energy Projects

We wholeheartedly believe that accountability and quality must drive the future of the carbon market. We also note the wide diversity of GHG integrity across and among project types. Although we can observe trends in carbon credit quality by project type, ratings for each individual project are absolutely necessary to determine the true greenhouse gas integrity of carbon credits. 

#3 - SDG ratings also have high variability

One thing we have confirmed along the way is that not all project types are the same, and this also applies to our SDG ratings. Project types differ in their interest in pursuing SDG certification and certainly regarding the quality of reported SDG contributions. REDD and Cookstoves projects have the highest SDG certification rate (79% and 65% respectively) of our ratings and have shown to have a greater variety in the overall SDG rating, with projects scoring anywhere from 1 to 5 stars. Undoubtedly, the best project type in terms of SDG contributions continues to be REDD; 51 out of 64 REDD projects assessed have SDG certification, and the most common rating among this type of project is 3 stars. 

We will continue to share lessons learned as we progress towards our next milestone!  Follow us on LinkedIn to get regular updates, or sign up for our monthly Newsletter on our Blog page.

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Calyx Global

This article includes insights and input from multiple experts in Calyx Global.