Calyx Global has rated credits from a Myanmar cookstove project that is the first to transition from the Clean Development Mechanism (CDM) to the Paris Agreement Crediting Mechanism (PACM). Our assessment of the first credits issued by this Program of Activities (PoA) reveals similar issues to other cookstove projects: over-crediting derived from an overestimated fraction of non-renewable biomass or fNRB. The project rating fell into Tier 3 of the Calyx Global ratings system, indicating significant risks to GHG integrity. 

Rating the first cookstove credits under PACM: new mechanism, similar risks

The PoA, called “Clean Energy Program Supported by the Republic of Korea” (CDM 10415), has a similar GHG risk profile as other cookstove credits rated by Calyx Global. The over-estimation of fNRB is a driving factor for over-crediting, which tends to have the largest impact on GHG integrity of cookstove credits, as found across 164 Calyx-rated cookstove projects.

On the other hand, this project had characteristics that positively affected its GHG integrity. The credits were clearly additional, as carbon finance played a critical role in enabling project implementation and the project technology was not widely adopted across Myanmar. Finally, there were marginal risks related to non-permanence and overlapping claims.

This project’s rating could improve – and even become a Calyx Tier 1 rating – if it reduced its emission reductions claim. In the image below, we demonstrate how the majority of cookstove project ratings could, in fact, improve if there was no over-crediting risk. We took our current ratings for cookstoves (noting that some still have risks associated with additionality, permanence or overlapping claims) and assumed there was no over-crediting risk and the distribution changes substantially.

Coming soon: new cookstove methodologies under the PACM

CDM 10415 was originally registered under the CDM applying the AMS-II.G. methodology (version 8). This methodology, among others, has received criticism for its lack of robust requirements to guard against over-crediting. As a result, the methodology was recently rejected by the ICVCM’s Core Carbon Principles (CCPs) GHG integrity assessment.

Under the PACM, cookstove projects can apply the AMS-II.G. methodology for a grace period until the end of 2025, at the latest. This grace period allows certain projects to continue generating credits, providing predictability for investors in projects such as CDM 10415 for a period of time.

However, after the end of 2025, PACM projects will be required to apply updated methodologies currently under development by the UNFCCC. We expect these methodologies to include more robust and comprehensive guidance to enhance the accuracy and integrity of GHG emission reductions, addressing weaknesses in the earlier CDM methodologies. Thus, despite the risks we have noted for the first cookstove credits under the PACM, future projects may have higher GHG integrity as new methodologies are implemented. Calyx Global will continue to monitor these developments and communicate our findings.

What’s next

As the cookstove sector responds to concerns about GHG integrity, new initiatives such as the PACM must balance the need for high GHG integrity with the need to drive climate finance to vulnerable communities. While investors need assurance about the financial stability of cookstove carbon credits, the quality of these credits cannot be overlooked and 1 tonne of CO2 equivalent should be accounted for as such, with minimal error.

Our first assessment of a transitioning PACM project highlights the ongoing need for project-specific assessments of GHG integrity. Although the PACM may soon include stricter methodological requirements for GHG integrity of cookstove carbon credits, for now, GHG integrity – and especially over-crediting – remains a key concern at the project level.

The voluntary carbon market continues to evolve. Integrity standards both within and outside of the context of PACM are improving. As this evolution takes hold, we expect to see more high-integrity cookstove projects on the market.
 

For more on cookstove projects, see:

What cookstove and biodigester projects are CCP label eligible
Transitioning the VCM towards Article 6 - a cookstove example
4 steps to higher carbon credit ratings for improved cookstove projects
Cooking up Quality: Carbon credits from efficient cookstove projects face integrity issues worth fixing
The Calyx Global Improved Cookstove Ratings Framework