Verra approves first high-integrity cookstove carbon project in Papua New Guinea

Verra, the world's largest carbon credit issuer, has approved the first cookstove carbon project in Papua New Guinea (PNG), which is developed following Verra's revised, higher-integrity VMR0006 methodology, the project's proponent Tasman Environmental Markets (TEM) said in a statement June 20.

"TEM continues to work with the PNG and Singapore governments to finalize approval of the project under the PNG-Singapore Implementation Agreement," TEM said in the statement.

During last year's UN Climate Change Conference, or COP28, the government of Singapore signed an Article 6.2 Implementation Agreement with the government of PNG to enable Singapore-based companies to buy carbon credits from PNG's projects to offset up to 5% of the companies' liable emissions under Singapore's carbon tax regime.

On a global scale, Article 6-eligible carbon projects are still very limited, so this project is expected to be an important pilot to test how to bridge the voluntary carbon and the Article 6 markets.

TEM said the project is developed following the 1.2 version of VMR0006 methodology, titled "Energy Efficiency and Fuel Switch Measures in Thermal Applications." Such household projects get carbon credit issuance based on emission reductions directly from replacing household appliances, as well as from reduced firewood consumption and deforestation.

TEM's project in PNG is expected to deliver 299,206 mtCO2e of annual emission reductions, and the first crediting period is from Jan 1, 2024, to Dec 31, 2033, according to Verra's official database.

TEM will begin the first phase of the project in the southern Highlands province in the coming months. The project will distribute over 100,000 improved cookstoves to local communities and then expand across the country, where over 80% of all households still rely on indoor open-fire cooking, according to the statement.

"By bringing this clean cooking technology, it is estimated to avoid near 3 million mt of CO2 over 10 years, along with achieving significant health and environmental benefits," TEM said in the statement.

"Operating under the new methodology will improve the accuracy of our calculations and bolster the integrity of our credits, as well as deliver on multiple Sustainable Development Goals to the local communities," Adrian Enright, CEO of TEM, said in the statement.

Sustainable Development Goals, or SDGs, refer to a set of goals proposed by the UN, which is widely used to measure additional values brought by carbon projects. Household projects have been regarded as high quality as they can support SDGs like enhancing health conditions and well-beings of local communities. Nevertheless, there have been criticisms recently from the media and academics that some household projects have overestimated their emission reductions.

Subdued household project market

However, a few sources mentioned to S&P Global Commodity Insights that the activity in the household devices segment has been sluggish recently as buyers preferred purchasing more competitively priced renewable energy credits.

Offers in the cookstove segment have been largely stable in the market over the past few sessions, with a significant lack of firm bids or trades heard in the market, implying weakness in the market activity, sources said.

Further, VCS certified and GS certified cookstoves credits sourced from African regions with 2020+ vintages were indicatively valued by sources in the stable range on $4-$4.50/mtCO2e, with sources noting price parity between the two standards due to subdued demand in the sector.

According to market participants, the upcoming Core Carbon Principles (CCP) may inspire movement in the market once more methodologies are CCP-approved by the Integrity Council for the Voluntary Carbon Market (ICVCM)

Among the several categories across the voluntary carbon market listed in the ICVCM list of methodologies under review for CCP approval, version 1.2 of the VM0006 methodology was included as an "in-progress" multistakeholder-assigned assessment category, under the Efficient Cookstoves project category.

The ICVCM on June 6 tagged a total of 27 million carbon credits with the CCP marker, which belong to the Ozone Depleting Substances (ODS) and Landfill Gas Capture and Utilization categories.

"There is no activity to report," an India-based broker previously told Commodity Insights.

The Platts Household Devices Current Year price was assessed at $4.5/mtCO2e, up 20 cents on the day June 19.