Comparing demand for REDD and ACM0002 carbon credits

Tuesday, 05 Dec 2023

Large-scale grid-connected renewable energy projects developed under the ACM0002 methodology produce some of the most popular carbon credits on the market today, despite concerns about their GHG integrity. In this blog post, we consider how the demand for ACM0002 credits has increased, in stark contrast to the demand for REDD credits, which has steeply declined recently. 

In the graphs below, we see the retirements of ACM0002 credits, compared to the retirements of REDD credits and all other voluntary market credits, have increased.

Figure: Volume of voluntary credit retirements

Source:  Ivy S. So, Barbara K. Haya, Micah Elias. (2023, May). Voluntary Registry Offsets Database, Berkeley Carbon Trading Project, University of California, Berkeley.

The change in retirement of credits reflects an unsurprising shift in demand away from REDD credits. A variety of factors may have influenced this shift. For one, REDD projects have faced more public criticism recently, as concerns for their greenhouse gas integrity and lack of social safeguards have surfaced. These stories have raised awareness of the risks posed by REDD projects, and may have influenced buyers to turn away from REDD credits.

However, big headlines, or a lack thereof, don’t always tell the whole story. Similar to REDD, ACM0002 projects are not highly rated under Calyx Global’s framework. Below is a snapshot of our ratings distribution to date for ACM0002 and REDD projects.

 Figure: Ratings distribution for ACM0002 and REDD projects

It is also worth noting that, for most countries, ACM0002 projects tend to become less additional over time, as the cost and other barriers to renewable energy drop and such projects become an increasingly attractive investment (even without carbon funding). 

While renewable energy projects tend to perform slightly better than REDD in our ratings, both project types tend to have relatively low ratings in the Calyx Ratings system. The primary concerns for the greenhouse gas integrity of ACM0002 projects differ from those of REDD projects. Renewable energy projects tend to face high risks of non-additionality, whereas REDD projects tend toward higher risks of over-crediting. Nevertheless, concerns related to greenhouse gas integrity drive down the ratings for both of these project types.

It is important to investigate each project type and project uniquely as there are a range of risks and benefits to each. 

Whatever your carbon credit choice, Calyx Global is here to help you make an informed one. If you’re considering a large-scale grid-connected renewable energy project, chances are high that it utilizes the ACM0002 methodology. Read more about this methodology and how we rate projects utilizing it here:

*More information on the risks associated with ACM0002 projects can be found in our recent Ratings Framework Explainer for this project type.

About the author

Calyx Global

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