What is double counting in carbon credits?
Double counting occurs when a single carbon credit – representing one metric tonne of carbon avoided, reduced, or removed from the atmosphere – is counted multiple times. This issue can take several forms:
- Double selling: a carbon credit is sold to more than one buyer, either by mistake or intentional.
- Double issuance: a carbon credit is certified under two different standards, leading to the issuance of two certificates. This could also be a mistake or intentional.
- Double claiming: a carbon credit is claimed by two entities, typically the host country where the project is located and the country or organisation financing the project.
Preventing double counting in the voluntary carbon market
Climate projects in the voluntary carbon market (VCM) are certified according to project standards such as the Verified Carbon Standard or the Gold Standard, which prohibit double counting. These strict project standards prevent double issuance of carbon credit through independent auditor reviews and a one-time issuance in a central registry. These registries, which are run by states, organisations, or non-profits, retire carbon credits, preventing them from being sold or reused.
To be registered and certified as a climate project under one of the internationally recognised standards, each project must meet three additional criteria alongside preventing double counting:
- Environmental and financial additionality: carbon credits are valid only if the project relied on essential financial support and would not have occurred without it.
- Durability: the project provides a long-term contribution to reducing carbon emissions, ensuring lasting climate benefits.
- Regular independent audits: recognised auditors (Validation and Verification Bodies, VVBs) validate climate projects, ensure compliance with established criteria, and verify the actual amount of carbon emissions reductions achieved.
Avoiding double counting of scope 3 emissions
Double counting of carbon emissions can occur when two or more companies in the same value chain report the same emissions in the same scope.
For example, a clothing manufacturer sells its products to a retailer. The retailer contracts a logistics company to transport the goods from the production site to its warehouse. In this scenario, the manufacturer and retailer account for these emissions as part of their scope 3 emissions, while the logistics company reportes them under its scope 1 and scope 2 categories.
The risk of double counting mainly applies to scope 3. The Greenhouse Gas Protocol therefore recommends that a single company assume sole responsibility for the reductions through a contractual agreement.
Corresponding adjustments at the country level
To avoid double counting carbon credits between countries that have ratified the Paris Agreement (double claiming) via Article 6, an emissions reduction certificate must be accompanied by a corresponding adjustment by the host country. This means that the country in which the emissions reduction took place deducts it from its inventory and transfers it to the purchasing country.
In the VCM, which exists independently to the compliance market, companies use carbon credits for voluntary climate action, not countries. This means that the problem of double counting does not arise and the use of corresponding adjustments in the VCM is therefore optional.
How to guarantee single counting
When a company finances a climate project from the ClimatePartner portfolio, ClimatePartner ensures that carbon credits are collected and retired under the supervision of an independent auditor. This process guarantees that each credit is only used once, eliminating the possibility of resale within ClimatePartner’s system.
For more information on climate projects and the VCM, check out the deep dives at the ClimatePartner Academy.