2.5 Methodology Contents
Last updated
Last updated
NCS is built around the 14064 series of ISO norms. For methodologies, this means that they must comply with the requirements set out by ISO 14064-2:2019, hereafter referred to simply as "ISO" or "the norm". It is important to note that requirements set out by the norm often have additional guidance on their implementation included in the annex of the document.
In addition to the ISO norm, there are NCS-specific requirements that must also be fulfilled by all methodologies.
In this section, ISO requirements will be mentioned or listed in a general sense to not infringe upon copyright laws. It is indispensable that parties seeking to develop their methodology in accordance with NCS requirements have access to the full and up-to-date norm, available below.
Note that the ISO norm is intended for GHG projects and not as a methodology template. To create a methodology based on its requirements, methodology developers must ensure that it results in all requirements being fulfilled by any project proponent correctly applying the developed methodology.
All methodologies must apply the principles set out by ISO section 4. This is to ensure a true and fair account of GHG-related information and thereby ensure integrity of carbon credits and associated claims.
Relevance of selected sources, sinks and reservoirs (SSRs)
Completeness of GHG impacts and data
Consistency to enable comparability
Accuracy to a practical degree
Transparency to ensure integrity
Conservativeness to avoid over-estimation of mitigation outcomes
All methodologies must adhere to the general requirements listed in ISO section 6.1. Methodolgies must select and apply established criteria and procedures from a recognised origin and apply good practice guidance, where available.
Good practice guidance can come from a recognised origin, such as industry practices and associations, similar projects, expert judgement or others that are fit for purpose.
All methodologies must clearly define the project boundaries by identifying the GHG sources, sinks and reservoirs (SSRs) relevant to the project, as set out in section 6.3 of the ISO norm.
Additionally, this must include a clear spatial and temporal project boundary. Leakage may lie outside of the spatial boundary, but must still be accounted for as discussed in section 2.5.9.
All projects must be compared with a baseline scenario, in which the project activities would not have taken place. All methodologies must comply with Section 6.4 of the ISO norm, which states that the project proponent shall establish, describe, and apply criteria and procedures for determining a conservative baseline scenario, taking into account the most likely future conditions in the absence of the project, including legislative, technical, economic, and socio-cultural factors. The baseline scenario should reflect conditions such as current practice, technology, and policy, to ensure that the GHG emission reductions are additional to what would have occurred without the project.
The counterfactual of a project is the quantification of GHG emissions and storage that would have occurred without the project, assuming the baseline. The SSRs relevant to the baseline must be identified according to Section 6.5 of the norm. The baseline must take into account relevant data availability, reliability, and limitations to ensure the conservativeness of the estimate. Reference scenarios must reflect existing legislation and common practice. Only the climate impact that exceeds the reference scenario may be credited in the form of carbon credits.
The identified relevant SSRs pursuant to section 6.5 of the norm must be selected for monitoring or estimation, with any omissions requiring justification as stated in ISO section 6.6.
The baseline must be recalculated at the latest when the crediting period is renewed and revalidated in the course of project validation. Alternatively, if any changes are made to the project activities that impact the baseline scenario, or if the underlying assumptions of the baseline scenario change, the project proponent must review and revalidate the baseline to ensure it remains consistent with the validated project plan.
This section outlines the additionality requirements that must be demonstrated to verify that mitigation outcomes claimed by projects are genuinely beyond what would occur absent of the project. All methodologies must outline a clear path to demonstrating additionality through one of two approaches: project-based additionality or standardised additionality methodologies.
In this approach, additionality is determined through a set of detailed project-specific analyses, focusing on financial, regulatory, and environmental factors.
Financial Additionality
Projects should show that they are financially dependent on carbon revenue for viability. Financial metrics, such as the Internal Rate of Return (IRR) or cost-benefit analyses, must demonstrate that without carbon financing, the project would be economically unfeasible.
For new projects, financial additionality is confirmed if the IRR without carbon revenue is below the required rate of return or shows negative profitability. Scenario analysis (e.g., market fluctuations, investment cost variations) is recommended to strengthen financial additionality demonstrations.
Regulatory Additionality
Projects must operate above and beyond legal requirements, ensuring that they are not simply fulfilling statutory obligations. If legally mandated actions exist, only emissions reductions beyond those minimum requirements are considered additional.
The project should document relevant regulations and provide evidence that it voluntarily exceeds these regulatory standards.
Environmental Additionality
The project should demonstrate a net-positive impact on the climate, confirmed by calculating net CO₂ removals after accounting for baseline emissions, leakage, and any project-related emissions.
This requires a thorough baseline scenario assessment, ensuring that the claimed reductions or removals represent genuine, incremental climate benefits.
The standardised additionality approach uses pre-defined criteria to consistently evaluate additionality across similar projects within a particular sector or geographic area.
Baseline Scenario Additionality
The project must show reductions or removals that exceed a standardised baseline scenario, representing what would typically occur without the project. This scenario should reflect average emissions or removals within the industry or region.
Technology and Market Penetration Additionality
Projects are assessed against common practice within the region to verify that the activity is not widely adopted, ensuring it introduces a novel or less-common approach. For instance, the methodology can set thresholds (e.g., less than 5% adoption in the market) to indicate low technology penetration.
This requirement can alternatively confirm that the project uses innovative technology or practices with limited regional presence, distinguishing it from standard industry practices.
Financial Additionality
Standardised methods include financial viability tests, determining if carbon credits are the primary or only revenue source for the project. Projects should provide evidence, such as return-on-investment or funding dependency analyses, to confirm this dependency on carbon financing for sustainability.
Projects facing significant initial costs or lacking alternative funding are particularly suited for this standardised financial test.
Regulatory Additionality
Projects are required to demonstrate that their activities are not mandated by any local, regional, or national law or policy. If regulatory standards exist, the project must demonstrate that activities exceed the minimum legal requirements.
All projects must robustly quantify their mitigation outcomes. This is done by calculating the emissions and removals separately for
each SSR relevant for the project;
each SSR relevant for the baseline scenario;
as specified in ISO 6.7, including an assessment of uncertainty as described in section 2.5.7
The mitigation outcomes are calculated as the difference between the project SSRs and the baseline SSRs, as specified in ISO 6.8.
Uncertainty is inherent to projects in the LULUCF sector due to the scale and dynamic nature of living ecosystems. NCS requires project proponents to mitigate that uncertainty by applying the following ISO requirements:
applying the principle of conservativeness, as outlined in section 2.5.1 of the NCS;
ensuring appropriateness and quality of data, as outlined throughout ISO 14064-2;
managing data quality as outlined in ISO section 6.9.
Additionally, methodologies must list all parameters used in the calculation of climate impact. The project proponent must address uncertainties associated with key variables and assumptions in a manner that is appropriate and ensures the conservativeness of the estimated GHG reductions or removals.
These requirements also apply to the use of model values. Methodologies can allow for the selection of model values that are applicable to project-specific conditions.
Durability, also known as permanence, refers to the period of time during which a mitigation outcome is considered valid. Beyond that period, the CO2 is considered to be re-released into the atmosphere. Projects must demonstrate a durability of at least 40 years.
As specified in ISO Section 6.10, a monitoring plan must be established and maintained for the project, ensuring that GHG emissions reductions and removals are tracked over the entire project lifetime. The monitoring plan must include controls and procedures to track key GHG data, including the periodic measurement of GHG reductions or removals. Monitoring must occur at least on a yearly basis, unless otherwise specified and justified in the methodology.
All mechanisms that lead to reversals must be identified. For example, in forests this includes intentional reversals, such as increased logging, as well as unintentional reversals, such as pests, droughts, storms and fires. A monitoring plan is required, that will identify cases of reversals.
The duration of monitoring is at least equal to the crediting period, but may be extended to increase the durability of mitigation outcomes, if specified in the methodology.
Monitoring requirements must include:
Monitoring of SSRs selected according to Section 6.6 of ISO;
adherence to the monitoring program, as set out in the applicable methodology;
the frequency of measurement and reporting as defined in the relevant methodology, typically annually;
consideration of baselines along with provisions for reevaluation at set timescales or triggers, as set out in the methodology;
a requirement for reporting reversals to the VVB and NCS;
identification and plan for remediation of emissions during a project's lifespan and
monitoring reports that are published on the registry.
Projects must demonstrate a robust estimate of GHG emissions outside the system boundary resulting from project activities. Leakage can also result from activity shifting or market leakage. Where potential for leakage is identified, this must be quantified and subtracted from the climate impact of the project as described in the relevant methodology.
All methodologies must require a risk mitigation plan to be provided by each project. The plan must include, at a minimum:
Identification of the possible reversal scenarios
Actions, design elements meant to minimise the reversal risks
To address any reversals, all projects contribute a portion of verified carbon credits to a shared buffer pool, that can be used to compensate for reversals. The minimum buffer contribution is equal to 15% of verified carbon credits.
The buffer contribution may not be lowered, but it may be increased upon request by the project proponent or alternatively by the VVB as part of the project validation depending on the specific reversal risk in a given project, as specified in the relevant methodology.