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What is the vintage of a carbon credit?

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The ‘vintage’ of a carbon credit is a topic often discussed but not always fully understood.

What is a vintage?

The vintage of a carbon credit is typically referred to as its vintage year. It can be thought of similarly to the vintage of a bottle of wine.

In essence, the vintage of a carbon credit corresponds to the year in which the environmental benefit of that credit has been delivered. This refers to the avoidance, reduction or sequestration of carbon dioxide resulting from the project.

A typical project will have a crediting period of 5-10 years. Therefore, credits issued from that project will span that duration of vintages.

Does the vintage of a carbon credit affect its quality?

Whilst more recent vintages tend to price at higher levels (as explained below), this isn’t a guarantee of higher quality.

In previous posts, we have written about the tenets of a high-quality carbon credit. The Integrity Council of the Voluntary Carbon Market’s (IC-VCM) Core Carbon Principles (CCPs) are one representation of these tenets. Vintage is not specified within the IC-VCM’s CCPs. The reason being the vintage of a carbon credit should not necessarily infer information regarding its quality.

The Gold Standard (GS) has backed this argument, too. It states that it shouldn’t matter whether an emission reduction has taken place this year or five years ago. The GS even argues that emissions avoided or reduced five years ago are more valuable. This is because it has lessened the environmental impact of emissions over time. Avoiding older vintages unfairly disadvantages project developers who chose to take on risk at an earlier stage of the voluntary carbon market.

The broad market consensus is that the rigour of the standards issuing carbon credits has improved over time. Hence, this is one of the main reasons more recent vintages are broadly perceived more favourably.

Additionally, there is more demand for more recent vintages from corporates. Often, they look to offset their emissions with credits of a vintage year matching the one in which the emissions took place.

However, there are also proponents of the benefits of carbon credits from earlier vintages. Two of these are that:

  • Earlier carbon credit projects took on higher levels of risk as the VCM was less developed.
  • The longer CO2 remains in the atmosphere, the greater its warming potential. Thus, earlier credits could provide a larger environmental benefit.

How does the vintage of a credit affect its price?

Whilst we have highlighted the two sides to the argument, there is a clear correlation regarding the vintage of a carbon credit and its price. Resultingly, more recent vintages typically price more highly.

Figure: Market discounts on older vintages
Figure: Market discounts on older vintages

Vintages and commoditisation of carbon credits

Vintage of carbon credits often ranks highly on the list of purchasing criteria for carbon credit purchases from specific projects. However, more recently, efforts to commoditise carbon credits have emerged in the VCM, where a vintage year period (e.g. 2016-2020) can be specified.

This application has taken place under the CORSIA framework for international aviation and also for standardised products such as the Global Nature Token (GNT) which is traded on AirCarbon Exchange (ACX).

Where can I learn more about vintages?

Plannet Zero can help you better understand vintages through a range of training sessions and workshops. If you would like to gain more insights into the voluntary carbon market, please get in touch with one of the members of our team. Alternatively, you can sign up to get our Carbon and Renewable Energy Bulletin by emailing to request your free copy.

Additionally, Net Zero Markets launched a product earlier this year. The GER has a unique approach to tackling the question of vintages in the VCM. Read more about it in our blog post, here.


Edited by Peter Albin

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