Green Economy Priorities

S1: Green economy priorities is the only component assessed under Step Zero of the process, where a set of inputs per country are determined for use across all Project Profile Templates in the initial profiling exercise, and not assessed on a project-by-project basis. This criterion looks at the alignment of various project types with the country’s economic priorities, based on its indication of sectors to contribute to its green economy transition and its NDCs. The country-level assessments following the Guidelines for Country Systems developed alongside this paper can also be used in parallel, by taking the analyses for the criteria S2: Efficient permitting and adaptable standards. The analysis for the country assessment will focus on understanding the clarity of project implementation standards provided by host governments for project developers, by reviewing the basis for a country’s eligible project list, such as the project type’s potential supply, the country’s sectoral NDC commitments, and its perceived market demand. These can, therefore, inform the inputs required for the green economy priorities criteria under this guideline to map a list of project types indicated by the country as eligible for global VCMs.

The following input can be used as a reference:

• National green economy document or NDCs with indication of economic sector priorities and level of support/funding from government

Using this input, the following analyses serve as a guide for the assessment:

• Map project type against priority sectors outlined in green economy document or NDCs, such as to identify in the NDC roadmap or plan where the host country has indicated sectoral commitments with potential consideration for carbon market transactions to support its achievement; and
• Evaluate relative level of funding support from government to determine likelihood of financial and policy support for project type.

Guideposts for green economy priorities

Green economy priorities

The guideposts below provide guidance to rank project types from being fully aligned (5) to not aligned (1), thus indicating each project type’s alignment to the country’s green economy priorities. See Figure 2.1.

Figure 2.1. Guideposts for ranking project types’ alignment with green economy priorities

For countries whose green economy priorities are still in development, or where useful to the objectives of the exercise, two other potential factors can be used to assess the alignment of project types to a country’s priority:

• Supply capabilities: Evaluate current capabilities to effectively develop ERCs across project types.
• (Optional) Buyer priorities: Assess alignment of project type with potential buyer countries' priorities; to use for countries that are aiming to engage targeted country partners.

Should these additional factors be used, the project type’s rating for the criterion S1 can then take its average rating across these factors. The project’s overall rating will correspond to the rating levels used for the Project Profile Template, as indicated in Introduction to the Project Assessment Framework. A rating level of 4 to 5 will correspond to “high potential”, 3 to “medium potential” and 1-2 to “low potential”.   

Guideposts for supply capabilities

Supply capabilities

The following inputs can be used as a reference:

• Mitigation potential based on the sector’s incremental, conditional NDC mitigation projections; or
• [If credit issuances are available] Historical total credit issuances or experiences in carbon credit project development in the international carbon market.

Using these inputs, the following analyses serves as a guide for the assessment:

• Review NDC mitigation projections (total projected conditional mitigation for sector less total projected unconditional mitigation for sector) to evaluate the sector’s mitigation potential; and
• Review relative volume of historical credit issuances for project type across registries.

The guideposts below provide guidance on the project type’s rating for this factor, that will contribute towards its average priority rating. See Figure 2.2.

Figure 2.2. Guideposts for rating the country’s supply capabilities for each project type

Guideposts for buyer priorities

Buyer priorities¹

The following inputs can be used as a reference:

• Historical ERC memorandum of understanding (MoU) or partnership implementation agreements with buyer countries for indication of preferred type of carbon credits;
• Indications of interest via announcements or informal discussions on partnerships with the host country or countries similar to the host country; or
• [If ERC partnerships are limited or unavailable] Potential buyer countries' NDC for indication of mitigation priorities.

Using these inputs, the following analyses serve as a guide for the assessment:

• Review historical ERC-related MoU agreements, considering project types included, volume of carbon credits committed, and any exclusions or limitations on project types; or
• Identify potential buyer countries based on historical relationships, media announcements or inputs from informal discussions, and analyze potential buyer countries' NDC mitigation priorities; and
• Evaluate project-type alignment with preferred carbon credit types identified in historical ERC MoUs, potential buyer NDC or indicated interest.

The guideposts below provide guidance on the project type’s rating for this factor, that will go towards its average priority rating. See Figure 2.3.

Figure 2.3. Guideposts for rating the project type’s potential for alignment with buyer priorities

Footnote 1: This factor looks only at potential buyer countries at a government-to-government level. This does not include private sector buyers, which the rest of the criteria in the Framework are targeted towards by looking at key considerations from international VCM buyers, such as corporates.