Developing a Project
VCS allows for Grouped Projects, which are similar to the CDM's Program of Activities. Grouped projects bring together several instances of the same activity into one Project Description, and allow new instances to be introduced as the project proceeds. This allows projects to start before every instance is identified and to bring more instances into the project as they are added. For example, a project installing solar PV systems in homes does not need to identify and include all homes in the Project Description before starting the project. Rather, new households can be added as the project proceeds. Project monitoring is done through one central information system, and the Project Crediting Period starts on the date the first (installed) system begins reducing GHG emissions. Systems installed later only earn credits for the remainder of the Project Crediting Period.
All AFOLU projects are required to conduct non-permanence risk assessments and Reduced Emissions from Deforestation and Degradation (REDD) and Improved Forest Management (IFM) projects are required to conduct market leakage assessments. The outcomes are validated by a VCS Validator (and are subject to the VCS Methodology Approval Process in some circumstances, as described in the AFOLU Requirements) and provide the basis upon which buffer credits are set aside. Buffer credits are non-tradable and are maintained in an AFOLU Pooled Buffer Account to cover the risk of unforeseen losses in carbon stocks across the AFOLU project portfolio. Further details on the process for assignment, release and cancellation of buffer credits are available in the guidance document Registration and Issuance Process.
The only entities who can apply to have a VCS project registered and VCUs issued are the project owner or an entity to which the project owner has assigned sole right to the GHG emission reductions or removals for the entire project crediting period, or the Authorized Representative of either of these two entities. The only exception to this is as specified under the grandparenting process described in the Registration and Issuance Process (this document also gives details on Authorized Representatives). The project owner is defined as the Project Proponent stated in the Project Description and validated by the validator as having ownership of the project and original right to the project’s GHG emission reductions or removals.
Once projects have been validated, a Project Proponent can request that the project be registered under the VCS. The VCS Registry administrator will check all project documents to ensure due process has been followed and will then request that the project be listed on the VCS Project Database. The project registration process is described in full in the Registration and Issuance Process. This document explains the roles of the various actors and the steps involved in VCS project registration and VCU issuance.
Once projects have been validated and their GHG emission reductions or removals verified, a Project Proponent can request issuance of VCUs. The VCS Registry administrator will check all project documents to ensure due process has been followed and will then issue VCUs into the account of the Project Proponent. The project registration process is described in full in the Registration and Issuance Process. This document explains the roles of the various actors and the steps involved in VCS project registration and VCU issuance. Project registration and VCU issuance can be done simultaneously.
In order to register under the VCS Program, projects must open an account with a VCS registry operator, complete project validation and submit project documents to the registry operator. The registry operator will check all project documents to ensure due process has been followed and will then request that the project be listed on the VCS Project Database. For more details on registering projects and requesting VCU issuance, see the Project Registration and VCU Issuance document.
The VCS Program makes a distinction between two groups: a) non-AFOLU projects and Agricultural Land Management (ALM) projects focusing exclusively on emissions reductions of N2O, CH4 and/or fossil-derived CO2 and b) AFOLU projects excluding the ALM projects focusing exclusively on emissions reductions of N2O, CH4 and/or fossil-derived CO2. For the first group, the Project Crediting Period is a maximum of ten years, with the possibility to renew this twice. For the second group, the Project Crediting Period is a minimum of 20 years, with a maximum of 100 years.
The definition for project proponent is "the individual or organization that has overall control and responsibility for the project, or an individual or organization that together with others, each of which is also a project proponent, has overall control or responsibility for the project." Correctly identifying the project proponent is crucial in the VCS project registration process because:
1. The project proponent must sign the Registration Representation (in which the PP makes a unilateral representation standing behind the project description and the ERs that will stem from the project) and the Issuance Representation (in which the PP makes a unilateral representation standing behind the monitoring report and the ERs it is having issued). Thus, the VCS registry administrator needs to know exactly who the project proponent is, and therefore that the correct entity has signed these representations.
2. The project record on the VCS project database lists the project proponent, so again it is important that it is clear who that entity is.
Thus, a VCS Project Description must state who the project proponent is and the VCS validation report needs to confirm this. The Project Description must not call the project proponent a "project owner", "project participant" or anything else. It is acceptable to have multiple project proponents if there genuinely are multiple entities with control and responsibility for the project. Where a CDM PDD is used, the VCS validation report must make it clear who the project proponent is. Hence, if the PDD contains a number of project participants, the VCS validation report must make it clear who is the project proponent. To be clear, the carbon aggregator/consultant or the CER/VCU buyer is generally not the project proponent. Such entities generally do not have overall control and responsibility for the project and are not in a position to sign the Registration/Issuance Representations.
US renewable energy projects are eligible under the VCS. However, such projects can be competitive with conventional energy sources (eg, wind power projects in specific parts of the country) so it is important that projects clearly demonstrate their additionality. It is therefore expected that an investment analysis is applied, not just a barrier analysis (step 2, not just step 3, when using the CDM additionality tool).
Other than in exceptional circumstances, just presenting a barrier analysis is not considered sufficient to demonstrate the additionality of US renewable energy projects. Likewise, the common practice analysis (step 4 of the CDM additionality tool) should be carefully followed to show that the project is not common practice. For example, given the prevalence of wind projects in specific parts of the country, a wind project would need to show clearly why it faces barriers not faced by other wind power projects in the region and why it is unique compared to those other wind projects.
Also note that where US renewable energy projects apply a small-scale methodology, it is expected that a full-scale additionality assessment be performed, as per the requirements above (ie, use of a small-scale additionality tool is not sufficient).
All projects approved under the VCS must be additional, and the additionality requirements are those set out in the methodology that the project uses (eg, the CDM Tool for demonstration and assessment of additionality or another tool). Project Proponents proposing new methodologies can use the VCS additionality guidance given in Section 4.6 of the VCS Standard to define new approaches for the demonstration of additionality, either within the methodology or as a separate tool (both of which are subject to the VCS Methodology Approval Process). However, projects using existing methodologies are required to follow the additionality requirements set out in the methodology they are using. As such, the VCS additionality guidance is not a substitute for the additionality requirements set out in the methodology being used.
Yes, Canadian projects are eligible, and VCS rules do not require projects in Canada to cancel Assigned Amount Units (AAUs) for VCUs issued. In July 2009, the VCS Board decided that Canadian projects were very unlikely to result in double counting of VCUs with AAUs because Canada was so unlikely to achieve its Kyoto Protocol reduction commitment. Therefore, the Board decided that Canadian projects are eligible and do not need to cancel AAUs for VCUs issued.
See more details on the Canada decision, or see the general applicability criteria for double-counting requirements.
What are the requirements for addressing double counting in scenarios where there are multiple entities along a project’s value chain who could claim ownership of GHG emission reductions and/or removals?
Double counting of GHG emission reductions and/or removals may occur in scenarios where there are multiple entities along a project’s value chain who could claim ownership of such reductions/removals. For example, in an energy-efficient lighting project, GHG emission reductions could be claimed upstream by the equipment manufacturer, downstream by the end user, or by intermediaries such as retailers and distributors. It is important that the risk of such double counting is assessed at the methodology level, and that appropriate procedures are set out at the project level to address the issue. Where necessary, agreements between the project proponent and all other potential claimants of the GHG emission reductions and/or removals, including end users, should be developed to establish clear ownership of the reductions/removals. However, where upstream entities such as equipment manufacturers claim GHG emission reductions and/or removals, end users do not have to be included in the project boundary if:
- it is neither realistic nor feasible for end users to claim GHG emission reductions and/or removals as in the case of grid-connected renewable energy generation, and
- monitoring arrangements are adequate to ensure that quantification of GHG emission reductions and/or removals is based on the actual consumption of the product and/or equipment that results in the reductions/ removals.
- Who We Are
- How It Works
- Generate VCUs
- Validation & Verification
- Program Documents
- Press Room