VCS GUIDANCE

8 October 2013, v3.1

Validation and Verification Manual

TABLE OF CONTENTS
1
1.1
1.2
1.3
1.4
1.5
2
2.1
2.2
2.3
2.4
3
3.1
3.2
3.3
4
4.1
4.2
5
5.1
5.2
5.3

INTRODUCTION ................................................................................................................................. 2
Overview ......................................................................................................................................... 2
Key Requirements and References................................................................................................ 3
Definitions ....................................................................................................................................... 3
Seeking Clarifications from VCSA .................................................................................................. 3
Overarching Validation and Verification Principles......................................................................... 4
ELEMENTS OF VALIDATION AND VERIFICATION PLANS............................................................. 5
Objectives ....................................................................................................................................... 5
Scope and Criteria .......................................................................................................................... 6
Materiality ....................................................................................................................................... 7
Level of Assurance ......................................................................................................................... 8
PROJECT VALIDATION AND VERIFICATION PROCESS ............................................................... 9
Pre-Validation Assessment ............................................................................................................ 9
Key Validation and Verification Requirements ............................................................................. 10
Key Elements of the Validation and Verification Process............................................................. 30
PROJECT VALIDATION AND VERIFICATION REPORTING.......................................................... 39
Report Templates ......................................................................................................................... 39
Reporting Level of Detail .............................................................................................................. 40
METHODOLOGY ASSESSMENT .................................................................................................... 41
Guidance on Key Elements of Methodology Approval Process ................................................... 41
Key Assessment Criteria .............................................................................................................. 45
Reporting Requirements ............................................................................................................... 52

APPENDIX 1: DOCUMENT HISTORY ....................................................................................................... 53

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1 | Introduction
1.1

OVERVIEW

Independent third-party validation and verification plays a vital role in upholding the integrity and quality of
greenhouse gas (GHG) emission reductions and removals achieved by VCS projects.
Validation/verification bodies (VVBs) have three main roles under the VCS Program: to validate projects,
verify GHG emission reductions and removals, and assess methodology elements under the
methodology approval process.
VVBs are eligible to provide validation and verification services under the VCS Program if they are
accredited under a VCS-approved GHG program, accredited under ISO 14065 for scope VCS by an
accreditation body that is a member of the International Accreditation Forum, or approved under the VCS
temporary accreditation program. The detailed accreditation requirements for VVBs are set out in the
VCS Program Guide. The VVB annual fee is set out in the Program Fee Schedule.
The objective of the Validation and Verification Manual is to provide guidance to increase the consistency,
quality and transparency of validation and verification of projects under the VCS Program and to provide
guidance on assessing methodologies under the VCS methodology approval process. The manual is
intended to be used in combination with the VCS Program documents that set out the VCS rules and ISO
14064-3 which sets out program-neutral requirements for validation and verification. The manual was
developed with the support of a working group.1
The manual does not contain VCS requirements but rather provides further clarification on VCS rules
and, in some instances, clarifications on the application of ISO 14064-3 requirements on validation and
verification as they relate to the VCS Program. In addition, the manual does not address ISO 14065 or
other VVB accreditation-specific topics, nor does it offer methodology-specific or sectoral scope-specific
guidance (although various project types are discussed as examples). VVBs must refer directly to the
applied methodology when conducting project validation or verification.
While VVBs are the primary intended users of this manual, the guidance presented in this manual is also
considered useful for project proponents and methodology developers.

The working group comprised of representatives from VVBs and the American National Standards Institute
(ANSI). Working group members were Ann Bowles, Tod Delaney, Todd Frank, Jared Nunery, Rainer Winter and
Siddharth Yadav.

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This document shall be updated from time-to-time and readers should ensure they are using the most
current version of the document.

1.2

KEY REQUIREMENTS AND REFERENCES

The VCS Program provides the standard and framework for independent validation of projects and
methodologies as well as verification of GHG emission reductions and removals, based on ISO 14064-2
and ISO 14064-3. The key requirements of the VCS Program are described in the following documents:

VCS Program Guide

VCS Standard

AFOLU Requirements

ODS Requirements

Jurisdictional and Nested REDD+ (JNR) Requirements

Program Definitions

Other procedural requirements are described in the following documents:

Registration and Issuance Process

Methodology Approval Process

AFOLU Non-Permanence Risk Tool

These documents are available on the VCS website and are updated periodically when VCSA releases
program updates. New requirements are effective immediately upon release, though, where appropriate,
a grace period may be provided to allow stakeholders sufficient time to transition to the new
requirements. VVBs must refer directly to the VCS website for full information on program updates.
Further information specifically for VVBs will be made available on the VVB Portal (a password-protected
informational website for VVBs).

1.3

DEFINITIONS

Definitions and acronyms that apply to the VCS Program are set out in the VCS document Program
Definitions.

1.4

SEEKING CLARIFICATIONS FROM VCSA

VVBs that need clarification directly from VCSA can access the VVB Portal via the VCS website. The
portal lists responses to common VVB questions. If no responses are provided to the particular question,
VVBs are encouraged to submit their questions directly to VCSA at [email protected].

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For responses to proprietary or commercially sensitive questions, VVBs may contact a VCSA program
officer directly. Where VVBs use clarifications provided by VCSA staff or clarifications provided in this
manual as a basis for interpreting VCS rules, they must also provide a direct reference to the VCS
requirement set out in the VCS Program documents to which the clarification applies. Clarifications
provided by VCSA staff or in this manual are not decisions and should not be misinterpreted as approvals
or consultations of specific project activities.

1.5

OVERARCHING VALIDATION AND VERIFICATION PRINCIPLES

Overarching principles are useful for helping VVBs understand the overall goals of the VCS Program and
ISO 14064 requirements. The principles serve as guidance for VVBs where project- or methodologyspecific requirements are not fully prescriptive.
While ISO 14064-3 principles do not constitute auditable
criteria, VCS principles form mandatory criteria that the VVBs
must consider when validating or verifying projects, or
conducting methodology assessments. For example, where a
project does not use data and methods that enable meaningful
comparisons of GHG related information, the VVB must note it
as a non-conformance with the VCS principle of consistency.

Keep in mind
The VCS Program principles are:

Relevance

Completeness

Consistency

Accuracy

Transparency
In some cases, VVBs may need to use professional judgment
Conservativeness
in applying the VCS principles. For instance, the principles of
Explanations of these principles
accuracy and conservativeness are interrelated and often the
are set out in the VCS Standard.
principle of conservatives serves as a moderator to the
principle of accuracy. The accuracy principle implies that VVBs
must assess whether uncertainties with respect to GHG measurements, estimates or calculations have
been reduced as much as is practical and measurement and estimation methods are used in a manner
that avoids bias. The conservativeness principle implies that assumptions, values and procedures used in
the project or methodology do not result in an overestimation in the quantification of net GHG emission
reductions and removals. Therefore, where the data or procedures associated with the project or
methodology have uncertainties, VVBs must apply the conservativeness principle.

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2 | Elements of Validation and

Verification Plans
When a VVB is approached to conduct a validation or verification, the VVB and its client must come to
agreement on the objectives, scope, criteria, level of assurance and materiality of the validation or
verification assessment. These five elements form the basis for validation or verification plans and
associated sampling plans. Such agreements must recognize VCSA as one of the primary intended users
of project descriptions, monitoring reports and resulting validation and verification reports.
Prior to finalizing an agreement, a VVB is required to follow the steps included in ISO 14064-3. The
various steps include determining risks to team member impartiality and determining whether the VVB
can assemble a team with competencies and resources appropriate for completing the scope of work.

2.1

OBJECTIVES

Overview
The first step in conducting a validation or verification is to establish the objectives and identify the GHG
assertion to be assessed as part of a validation or verification. Assessment of these assertions against
the requirements of the VCS Program, the applied methodology and ISO 14064-2 is the core objective for
any project validation or verification. The objectives may vary depending on whether the engagement is a
validation or verification. The scope, criteria, level of assurance, and materiality of the validation and
verification assessment should also inform the objectives.
Key Elements
2.1.1

Validation Objectives

Validation involves the assessment of a project description wherein VVBs must assess the following:

Project conformance to VCS rules;

Project conformance to the applied methodology, including the procedure for the
demonstration of additionality specified in the methodology; and

Likelihood that methods and procedures set out in the project description will generate
verifiable GHG data and information when implemented.

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VVBs should review the guidance provided in Annex A.2.3.3 of ISO 14064-3 with respect to establishing
validation objectives.
2.1.2

Verification Objectives

Verification is conducted once project implementation has commenced. It is the ex-post assessment of
the monitored GHG data and information. During verification, VVBs must evaluate the monitoring report
and assess the following:

The extent to which methods and procedures, including monitoring procedures, have been
implemented in accordance with the validated project description. This includes ensuring
conformance with the monitoring plan.

The extent to which GHG emission reductions and removals reported in the monitoring report
are materially accurate.

VVBs should review the guidance provided in Annex A.2.3.4 of ISO 14064-3 with respect to establishing
project verification objectives.

2.2

SCOPE AND CRITERIA

Overview
The scope of a validation or verification helps place physical and temporal boundaries on the GHG data
and information that must be assessed. Criteria are the set of requirements against which the project is
evaluated.
Key Elements
In determining the scope of the assessment, VVBs must take into account the physical boundaries, sites
or facilities of the project and the temporal boundaries (ie, the years when GHG emission reductions and
removals are quantified). For validation, the temporal boundaries are determined by VCS project crediting
period requirements set out in the VCS Standard. For verification, the temporal boundaries are
determined by the length of the monitoring period.
The mandatory requirements of the VCS Program and ISO 14064-2 guide the criteria against which the
validation or verification is conducted. The methodology applied to the project also informs the criteria for
validation and verification; therefore, it is essential that VVBs thoroughly understand a methodology prior
to undertaking an assessment. Where projects apply methodologies from other approved GHG program
such as the Clean Development Mechanism (CDM) or Climate Action Reserve (CAR), VVBs should refer
to any guidance provided by such programs with regard to the application of the methodology. Some of
the key validation and verification criteria are discussed further in Section 3.

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VVBs are not expected to document every criterion that will apply to the validation or verification
engagement. Instead, it is sufficient to indicate the relevant documents containing the criteria such as the
VCS Standard, ISO 14064-2 and the applied GHG methodology.

2.3

MATERIALITY

Overview
Materiality, as applied to GHG projects, is the concept that errors, omissions or misrepresentations,
individually or in aggregate, can affect the GHG assertion and therefore affect the decisions of the
intended users. The materiality threshold is non-negotiable between the project proponent and the VVB
and must be informed by the VCS rules on materiality thresholds with respect to project scale.
Key Elements
Materiality has both qualitative and quantitative aspects. When assessing qualitative materiality, VVBs
must determine whether the project conforms to VCS rules and methodology requirements. Certain
qualitative discrepancies such as a discrepancy with respect to ownership or applicability criteria must
always be noted as a material non-conformance. In other cases, qualitative discrepancies will be less
definite and may ultimately manifest themselves as quantitative discrepancies. When considering less
definite qualitative discrepancies, VVBs should use their professional judgment to determine the issues
that immediately need to be identified as material and which require further investigation through
sampling and testing.
When assessing quantitative materiality of data errors, omissions or misrepresentations, VVBs must
assess materiality with respect to the aggregate estimate of GHG emission reductions and removals set
out in the project description or monitoring report. Uncertainties inherent in an approved GHG
methodology are not to be considered.
The materiality threshold varies depending on the amount of the projects GHG emission reductions and
removals, as set out in the VCS Standard. The materiality threshold applies equally to validation and
verification. While all material errors, omissions and misrepresentations must be addressed for a project
to receive a positive validation or verification opinion, if non-material errors are found in the project
documents, VVBs should ensure that such errors are addressed by the project proponent where
practicable.

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EXAMPLE Qualitative Material Discrepancy
Qualitative discrepancies that are material:

An improved forest management (IFM) methodology requires that the evaluation of the baseline
scenarios include, at minimum, historical practice baseline scenarios based on the project
proponents previous and current forest management activities, and common practice baseline
scenarios based on evidence of comparable forest management for similar property types and
situations in the region. While the project description provides a detailed analysis of historical
practices, the VVB finds that the identification of common practice baseline scenarios is based on
national data that does not differentiate between different kinds of forest management scenarios.
The VVB must consider this as a material discrepancy.

A project applies a meter calibration schedule that differs from what is set out in the validated
project description. The VVB must consider this as a material discrepancy.

Qualitative discrepancy that may not be material:

2.4

Gaps in procedures for quality management of data need not be a material discrepancy unless
the VVB determines that such weaknesses in the data management procedures could result in
quantitative discrepancies.

LEVEL OF ASSURANCE

Overview
The VCS Program requires a reasonable level of assurance in validation and verification that GHG
assertions are free of material errors, omissions and misrepresentations. This is non-negotiable between
the project proponent and the VVB.
Key Elements
In a reasonable level of assurance engagement, the VVB must test a sufficient amount of data to ensure
with confidence that no material errors are present. The amount of testing to be conducted is determined
based on the outcome of a risk assessment (see Section 3.3.1.1).

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3 | Project Validation and

Verification Process
VCS Program documents provide detailed rules and requirements that VVBs must refer to when
conducting project validations or verifications. This section provides further guidance on some of the key
areas of validation and verification.

3.1

PRE-VALIDATION ASSESSMENT

VVBs are encouraged to conduct an assessment prior to undertaking project validation to ensure the
project is eligible under the VCS Program. The pre-assessment should, at minimum, focus on the
following:

VVBs must confirm that the validation can be

completed within the relevant validation deadline,
relative to the project start date (ie, the date the
project starts generating emission reductions and
removals). The project start date is fixed and
cannot be adjusted to ensure that validation
deadline is met.

Keep in mind
VVBs conducting a pre-validation
assessment must confirm whether
the project has applied a valid
version of the methodology. VCS,
CDM and CAR methodologies are
updated periodically. In such
cases, projects applying the
previous version of the
methodology must issue a
validation report by the deadline
posted on the methodology page
of the VCS, CDM or CAR website.

VVBs must confirm that the project applies a

methodology eligible under the VCS Program.
Eligible methodologies include VCS
methodologies and methodologies approved
under CDM and CAR. The project must be
validated against a valid version of the applied
methodology. Note the relevant methodology
grace periods on the GHG program website.

In the case of AFOLU projects, VVBs must confirm that the project is in conformance with the
eligibility requirements for AFOLU projects set out in VCS document AFOLU Requirements.
For example, project activities that convert native ecosystems are not eligible under the VCS
Program.

Where the project has registered and issued credits under the CDM, VVBs must check the
issuance date of the validation report used to request CDM registration to determine whether
the project complies with VCS rules on validation deadlines.

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3.2

KEY VALIDATION AND VERIFICATION REQUIREMENTS

VVBs must assess the projects conformance with all VCS Program requirements as well as the
requirements of the applied methodology. This section provides guidance on some of the main
requirements that need to be assessed, highlighting common issues and challenges faced by VVBs.
3.2.1

Right of use

Overview
Under the VCS Program, a project is only eligible where the project proponent can demonstrate right of
use with respect to the GHG emissions reductions and removals generated by the project. Right of use is,
in respect of a GHG emission reduction or removal, the unconditional, undisputed and unencumbered
ability to claim that the relevant project, or jurisdictional program, will or did generate or cause such
reductions or removals (ie, the project proponent has claim to ownership or control of the technologies or
measures that have brought about the reductions or removals).
Key Elements
VVBs are not expected to provide an opinion on the legal ownership of GHG emission reductions and
removals, but VVBs must assess the project proponents right of use with a reasonable level of
assurance. VVBs must assess whether the project proponent can claim right of use based on the
evidence provided by the project proponent. Such evidence may include a contractual right such as legal
title to the plant or equipment that generates GHG emission reductions and removals or a legally binding
agreement such as a long-term lease for the management of lands. VVBs should refer directly to the VCS
Standard for a list of acceptable forms of evidence of right of use.
In assessing right of use, VVBs must keep in mind two conditions. First, a contractual right or agreement
must include right of use with respect to the relevant GHG reductions or removals. Second, the project
proponent must not have been divested of such right of use. Such right of use has to be unconditional,
undisputed and unencumbered, as stated in the definition of right of use.
While the level of due diligence required to evaluate evidence of right of use varies depending on the
project, VVBs must, at minimum, assess whether the project proponent has provided sufficient evidence
to demonstrate the authenticity of the document presented as right of use. VVBs must also assess the
regulatory or jurisdictional framework within which the project is being implemented to determine that
there is no conflict with the project proponents right of use claims at a prima facie level.2 VVBs are

Prima facie implies sufficient evidence to establish a fact or raise a presumption unless disproved or rebutted
and is generally understood to be a flexible evidentiary standard that may at first appear sufficient.

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encouraged to solicit external expertise when evaluating a project in a geographic jurisdiction or sector
where knowledge or expertise is limited.
EXAMPLE Right of use
A company develops a REDD project on forest land owned by the state government. The company
has a long-term lease for the management of the forest and provides the VVB with the lease as
evidence of right of use.
The VVB reviews the jurisdictions regulatory framework and finds that state law recognizes
customary land rights of indigenous peoples and local communities who reside in state-owned
forests. The law transfers rights to the natural resource benefits accruing from the forests to local
residents. The VVB notes that the state law raises a conflict with VCS rules that require right of use to
be unconditional and undisputed, and the VVB requires that the project proponent provide further
evidence to demonstrate that the right of use is undisputed.
In response, the project proponent submits legal documentation that includes a benefits-sharing
agreement established with a community residing in one section of the forest. The documentation has
the approval from the appropriate government authorities and the traditional authority customarily
recognized by the community. However, the project proponent is unable to provide a similar
agreement with a community residing in another section of the forest and therefore redefines the
project area to limit it only to the area where a benefits-sharing agreement has been secured.
The VVB concludes that the legal documentation provides prima facie evidence that the project
proponent has secured the right of use with respect to the project, which now encompasses a small
area.

3.2.2

Methodology Applicability

Overview
All methodologies include specific conditions that a project applying the methodology must meet in order
to be eligible. VVBs must assess whether the project proponent has met these applicability conditions.
Key Elements
Project proponents are expected to detail how their project meets all applicability conditions. VVBs are
required to assess the project against each of these applicability conditions to confirm that methodology
requirements are satisfied. Applicability conditions may include restrictions with respect to the nature of
the technology or measure used in the project, geographic conditions, baseline conditions and eligible
carbon pools. Failure to conform to any applicability conditions must be viewed as a material discrepancy.

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3.2.1

Baseline Scenario

Overview
The baseline scenario is a hypothetical reference case that most likely represents what would have
occurred in the absence of the GHG project. Given its hypothetical nature, baseline scenarios can carry
significant uncertainty and are a common source of material error.
Key Elements
VVBs must assess whether the baseline scenario selection
procedure complies with the procedure set out in the
methodology. Often the procedures for identifying the baseline
scenario are combined with the procedures for demonstrating
additionality. For example, many CDM methodologies require the
use of the baseline assessment procedures set out in the CDM
methodological tool Combined tool to identify the baseline
scenario and demonstrate additionality.

Keep in mind
VVBs should consider the
following when assessing a
project method for identifying the
baseline scenario:

Have all methodology

requirements been met?

Has a complete set of

baseline alternatives been
identified, within a justified
geographic and temporal
boundary relevant for the
project?

Are all alternative baseline

scenarios functionally
equivalent to the project?
(This may not apply for
AFOLU projects)

Has objective evidence been

provided to support the
barriers assessment? Has
the VVB sampled and tested
this evidence?

Where two or more

alternative baseline scenarios
seem equally likely, has the
conservativeness principle
been applied to select the
scenario that will result in the
fewest GHG emission
reductions and removals?

Methodologies may use one of two approaches in the

procedures for determining the baseline scenario: a project
method or a standardized method.
3.2.1.1

Project Method

A project method is a methodological approach that uses a

project-specific approach for determining the baseline scenario.
Viable alternative baseline scenarios are assessed against one
or more barriers to implementation such as investment,
technological and institutional barriers. The assessment of
baseline scenarios should therefore focus on the identification of
the most plausible baseline scenario (ie, a scenario that faces
the fewest barriers to implementation). For example, in a retrofit
project that involves upgrading equipment, VVBs must consider
whether the continued use of existing equipment would have
been a plausible baseline scenario if the equipment was
reaching the end of its useful life.
3.2.1.2

Standardized Method

A standardized method is a methodological approach that

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standardizes elements of additionality and/or the crediting baseline for a given class of project activity.
Performance methods establish a baseline scenario and baseline emissions that are reflective of all
viable alternative scenarios and emissions for a given class of project activity. Performance benchmark
metrics are based upon baseline emissions, which can serve as the basis for determining additionality as
well as the benchmark for the crediting baseline. For example, a performance method for a cement
methodology could establish a performance benchmark metric expressed in terms of a given level of
GHG emissions generated per tonne of cement or clinker produced (such level would represent the top
performance within the sector).
EXAMPLE Baseline Scenario
A REDD project in Brazil is seeking to avoid planned conversion of forested land to agricultural land.
The project proponent is the owner of the project lands. Prior to project implementation, the project
proponent sold portions of the lands for development into sugar cane plantations.
The applied VCS REDD methodology uses a project method (ie, a project-specific approach) for the
selection of the baseline and prescribes specific procedures that must be undertaken to select the
baseline, beginning with the identification of the agent of planned deforestation.
The specific entity that would undertake future deforestation is unknown, but potential classes of
deforestation agents were considered as required by the methodology. The project proponent
demonstrated that the only deforestation activities undertaken in the project vicinity were agricultural
conversion to sugar cane, citrus or corn plantations. Based on the project proponents history of
selling land to sugar cane plantation owners, this baseline scenario was selected as the most likely.
However, the VVB identified two material discrepancies:

The project proponent did not consider the impact of different (soil) strata within the project
area, as required by the methodology. The VVB determined that soil types differed between
the north and south portions of the project area. Sugar cane suitability may vary by soil type.

The project proponent did not compare the selected baseline scenario against an appropriate
geographic area with similar socio-economic economic and ecological conditions, as set out
in VT0001 (the applied additionality tool). The process did not consider the prevalence of
conversion to each crop type on local lands not formerly owned by the project proponent.

As a result, the project proponent revised the assessment as follows:

The south portion of the project area, where the soil was determined to be too poor to sustain
agriculture, was deemed unlikely to face deforestation and removed from the project area.

A review of recent conversion activities on local areas of similar soil type found an equal
distribution of all crop scenarios. Citrus plantations, (which support high carbon stocks when
compared to sugar cane or corn plantations, were considered the most conservative baseline
scenario for the remainder of the project area.

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Further guidance on how a project method or standardized method is identified and assessed is provided
in Section 5.2.4.
3.2.1.3

AFOLU-Specific Guidelines

Assessing the baseline scenario in an AFOLU project can be particularly challenging due to the variety of
specific requirements within each methodology.
Some questions VVBs should consider when assessing alternative land use scenarios and whether these
scenarios are realistic and credible include:

3.2.2

Do the land use scenarios include the continuation of pre-project land use, the proposed
project activity and an alternative land use within the project boundary?

Do the land use scenarios include the observed land use activities in surrounding
geographical areas with similar socio-economic and ecological conditions?

Do the land use scenarios include activities that occurred within the proposed project activity
boundary in the past 20 years?

Is the identification of a realistic and credible land use scenario based on analysis of land use
records, field surveys and interviews? Project proponents must justify the baseline scenario,
and claims of alternative land uses, by providing sufficient evidence such as reports on
geospatial planning, legal requirements and economic feasibility studies.

Additionality

Overview
Additionality is the concept that credited GHG emission reductions and removals must exceed (ie, be
additional to) what would have been achieved under the business-as-usual scenario, and credited
reductions and removals must be attributable to the intervention of the carbon market.
Specific requirements and criteria for demonstrating additionality are specified in methodologies. VVBs
must assess project additionality against these criteria in full. Methodologies may reference additionality
tools from the VCS or approved GHG programs such as CDM. When a methodology references a tool
such as the CDM Combined tool to identify the baseline scenario and demonstrate additionality, VVBs
need to assess additionality in accordance with the tool. VVBs must take account of relevant guidance
issued in respect of the tool except where such guidance conflicts with VCS rules. For example, when
projects apply the CDM tools for additionality, VVBs must refer to the decisions and guidelines issued by
the CDM Executive Board on assessment of barriers, investment analysis and common practice analysis,

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though they can disregard the CDM requirement for prior consideration of carbon finance (the latter being
addressed by the VCS requirement to have projects validated within fixed times of the project start date).
VVBs should note that VCS requirements on additionality set out in the Methodology Requirements
section of the VCS Standard are high-level requirements not to be used by projects for the demonstration
and assessment of additionality. Rather, the requirements provide the basis for methodologies to develop
fully elaborated procedures for the demonstration and assessment of additionality.

EXAMPLE Additionality
An IFM project undertaken in Rwanda has demonstrated additionality through the use of the VCS
Tool for the Demonstration and Assessment of Additionally in VCS AFOLU Project Activities in
accordance with the methodology. In conducting its assessment, the validation team reviewed the
following:
Step 1: Identification of alternative land use scenarios to the proposed project activity
All identified alternative land use scenarios were deemed credible and legal.
Step 2: Investment analysis
The project proponent elected to use a simple cost analysis. However, the VVB deemed a simple cost
analysis as inappropriate because the project proponent was expecting revenue from ecotourism in
the project areas. The project proponent subsequently performed an investment comparison analysis
using the IRR as a financial indicator. The results of the analysis indicated a five percent IRR for the
project in the absence of carbon finance. Other alternatives suggested IRRs as high as 20 percent.
No sensitivity analysis was conducted, which the VVB noted as a clarification request. The sensitivity
analysis, which was later conducted, found the conclusions to be robust.
Step 4: Common practice analysis
The project proponent indicated that forest lands in Rwanda are typically over-logged, providing
statistics related to the rate of logging as supporting evidence. The VVB indicated that this was
insufficient to demonstrate that the project was not common practice, as it did not address the
prevalence of sustainable forest management initiatives (relative to other alternatives) found across
the country. In response, the project proponent provided statistics regarding the number of
sustainably managed forests in the country. This evidence indicated that only 20 percent of forests
were sustainably managed and that these forests were government owned. No examples of
sustainable forest management on private lands were found by the project proponent. The VVB
agreed that the project activities are not common practice.
The VVB found the project met requirements of Steps 1, 2, and 4 and deemed the project additional.
Key Elements
The VCS Standard identifies two main approaches for demonstrating additionality. Both approaches
require a regulatory surplus analysis step followed by the option of a project-specific approach or one of

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two standardized approaches (ie, a project method, or a performance method or activity method).
3.2.2.1

Regulatory Surplus

To be additional, a project must not be mandated by any law, statute or other regulatory framework or, for
projects in non-Annex I countries, any systematically enforced law, statute or other regulatory framework.
Systematically enforced means that projects required by law may still be eligible if the project proponent
can demonstrate that applicable laws are not enforced and non-compliance is widespread (provided the
methodology does not state otherwise). VCS rules also allow certain laws and regulations to be
disregarded that give comparative advantage to more emission intensive technologies or less emission
intensive technologies. Known as Type E+ and E- policies, these rules ensure carbon finance does not
create perverse incentives that stymie the implementation of local laws and regulations that would seek to
contribute towards climate change mitigation.
3.2.2.2

Project Method

The project method requires that each project individually demonstrate that the project would not have
been feasible in the absence of the intervention of the carbon market.
The project method involves a barriers analysis step and a common practice analysis step. The barrier
analysis and common practice analysis is discussed in greater detail in Section 5.2.4.
Where projects apply an investment analysis as part of the project-based demonstration of additionality,
VVBs should consider the following:

Has an appropriate method for analysis been applied? For example, a wind energy project
will generate revenue beyond the sale of VCUs. The use of a simple cost-benefit analysis is
not likely to be appropriate to the project context. Rather, a more detailed investment analysis
would be required.

Are the applied financial or economic indicators such as internal rate of return (IRR) or net
present value (NPV) suitable for the project type and investment decision, and supported with
objective evidence?

Has uncertainty been adequately addressed in the analysis?

How sensitive is the final result to changes in key assumptions and data?

In assessing the results of a common practice analysis step, VVBs must pay close attention to the
following:

Are the geographic and temporal boundaries appropriate? Various factors may change and
influence alternative choices across geographic areas. The rate that technologies and
practices evolve in the region or sector must also be considered.

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VCS GUIDANCE

Is the justified common practice threshold appropriate? The prevalence of a project depends
on the number of project alternatives, among other factors. The GHG Protocol for Project
Accounting suggests applying a lower common practice threshold where several alternatives
exist.

Does the project activity qualify to be considered as a first-of-its-kind technology? A common

practice analysis may not be required for emerging technologies. However, VVBs must
assess whether the project activity meets the definition of first-of-its-kind. VVBs are
encouraged to refer to CDM guidance to determine if the project activity qualifies as first-ofits-kind.

3.2.2.3

Standardized Method

Standardized methods allow for more streamlined assessment of additionality than project-specific
approaches. Standardized methods pre-determine additionality for a given class of project activity.
Qualifying conditions and criteria are set out within the methodology. Rather than each project
undertaking project-specific barriers and common practice assessments, projects are compared against
clearly specified conditions and parameters pre-defined in the methodology. Further guidance on
standardized approaches to additionality is set out in Section 5.2.4.
3.2.3

Ex-ante Quantification of Emission Reductions

Overview
VVBs must include an assessment of whether the GHG emission reductions and removals estimated in
the project description will be achieved by implementing the project activity.
Key Elements
Providing assurance on future projections of GHG emission
reductions and removals is inherently challenging. Various
factors may influence the reductions ultimately achieved. In
the assessment of GHG emission reduction and removal
quantification, VVBs must, at minimum, review the following:

Methodology equations: Where methodologies

provide different options and procedures for
quantifying baseline and project emissions,
VVBs must confirm whether proper justification
has been provided based on the choice of the
baseline scenario, context of the project activity
and other evidence provided. VVBs must also

Keep in Mind
Some projects have inherent
uncertainty that cannot be resolved
prior to project implementation.
Examples include scientific
uncertainty related to the use of
models in the quantification or
uncertainty surrounding weather
patterns in solar and wind projects.
Any such uncertainties must be
transparently identified in the
projects assertion of ex-ante GHG
emission reductions and removals.

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VCS GUIDANCE
confirm whether correct equations have been used, reflecting the relevant methodological
choices.

Data and parameters: Where data and parameters are determined at validation (ie, not
monitored during the project crediting period), VVBs must assess all data sources,
assumptions and calculations to verify that they are correct and applicable to the project.
Where models are used to estimate GHG emission reductions and removals, VVBs must
assess whether the model has been transparently and appropriately parameterized and
calibrated for the project context. For example, where a project applies a model to estimate
changes in soil carbon, and the model requires the use of a project-specific soil carbon decay
rate, the VVB must determine the appropriateness of the data provided and its suitability to
the given agro-ecological zone. In some cases, VVBs may need to review relevant peerreviewed literature to ascertain the validity of the data or parameters provided by the project
proponent.

EXAMPLE Ex-ante quantification of GHG emission reductions

An off-grid, run-of-river hydroelectric project is being developed in Indonesia where the baseline
scenario is the use of diesel generators. The methodology allows for determining the baseline based
on the energy consumption of the technology in use in the absence of the project activity.
Baseline emissions are calculated, as follows:
BECO2,y = EBL,y * EFCO2
Where:
BECO2,y
EBL,y
EFCO2

= Emissions in the baseline in year y; tCO2e

= Annual energy baseline in year y; MWh
= Fuel emission factor; tCO2e/MWh

A default value of 0.8kg CO2e/KWh is used for diesel generation units. The annual energy baseline
consumption is estimated to be 600KWh. In assessing the ex-ante emission reduction estimates, the
VVB focused on the proposed annual energy baseline. Public data indicated that the average
household electricity consumption was 350KWh per year. As a result, the project proponent prepared
and justified a conservatively low forecast of annual energy consumption in the project description.

Uncertainty: VVBs must account for any uncertainty associated with measurement. VVBs
must also consider other sources of uncertainty such as uncertain future project activity or
performance levels. For example, where a project uses a model to estimate forest regrowth,
local climate variability can influence forest regrowth patterns.

Conservativeness: Where VVBs find uncertainty associated with a projects data and
parameters, the conservativeness principle should be applied to adjust estimates of GHG

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emission reductions and removals and, where appropriate, manage the risk of associated
uncertainty.
3.2.4

Leakage

Overview
Many GHG projects, whether related to energy, industrial
processes or AFOLU, have the potential to result in leakage (ie,
the increase of GHG emissions outside the project boundary as
a result of the project). VVBs must include an assessment of
leakage emissions within the same country as the project if
such emissions are measurable. Each methodology sets out
processes to calculate leakage emissions.
Key Elements

Keep in Mind
When a project includes timber
harvesting, as in IFM and some
REDD and ARR projects, market
leakage can be calculated using a
discount factor as set out in the
AFOLU Requirements. When
validating a market leakage
discount factor, VVBs need to be
aware that project proponents are
incentivized to select the lowest
discount factor possible to
maximize net emission reductions
or removals claimed by the project.

Effects from leakage on all carbon sources, sinks and

reservoirs need to be assessed, and significant effects must be
considered when calculating net GHG emission reductions or
removals. Accounting for positive leakage (emission reductions
that occur outside the project area as a beneficial spill-over effect from implementing the project activity)
is not allowed.
EXAMPLE Leakage
A REDD project is developed in Kenya in accordance with a VCS methodology for avoided mosaic
deforestation in dryland forests. The project implements a variety of leakage mitigation activities that
intend to provide economic alternatives to slash-and-burn agricultural practices. The methodology
quantifies activity-shifting leakage using a cumulative model of combined deforestation or degradation
and observations from a leakage area during each monitoring period.
With no historical leakage observations, no data on participation in leakage mitigation activities, and
no certainty as to the extent that leakage mitigation activities will be implemented during the life of the
project, estimating an ex-ante leakage rate is highly uncertain. At validation, the VVB randomly
selected and visited a leakage area used in the model and confirmed that the primary agents of
deforestation had access to the leakage area. In addition, the VVB examined the topographic
characteristics, ownership structure, soil productivity and access points of selected leakage areas and
identified a material discrepancy: five plots in the leakage area did not have landscape configurations
comparable to the project area. The project proponent was required to select different plots.

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VVBs must approach leakage quantification in the same manner as baseline and project quantification,
assessing all data sources, assumptions and calculations to verify accuracy and applicability.
For non-AFOLU projects that reference CDM tools for calculating leakage, such as from fossil fuel
combustion, electricity consumption or transportation, VVBs must ensure that the procedures and criteria
specified in the tools have been applied appropriately.
For AFOLU projects, VVBs must assess if the project has accounted for any leakage considered to be
significant (ie, greater than the de minimis threshold of five percent of total GHG emission reductions and
removals) for three types of leakage: market leakage, activity-shifting leakage and ecological leakage.
Further guidance on the three types of leakage in AFOLU projects is provided in Section 5.2.6.
For REDD and IFM projects, VVBs must carefully examine all assumptions prior to validating the leakage
rate. At each verification event, VVBs must visit leakage mitigation zones (eg, the leakage belt in REDD
projects) and, where applicable, inspect the management plans and/or land-use designations of all lands
owned by the project proponent to ensure affected lands have not materially changed as a result of the
project leakage.
3.2.5

Monitoring Plan

Overview
A monitoring plan includes details about monitoring
parameters, schedules and process. The plan must
describe the entire system employed by a project
proponent for obtaining, recording, compiling and
analyzing GHG data and information, as well as
descriptions of the roles and responsibilities of those
involved. Monitoring plans must be assessed by VVBs to
ensure that the GHG emission reductions and removals
generated by a project will be measurable and verifiable.
Key Elements
VVBs must confirm that a projects monitoring plan
conforms to requirements set out in the applied
methodology. In addition, VVBs must assess the relevant
data quality management procedures for generating
verifiable GHG data and avoiding material errors in
reported GHG emission reductions and removals.

Keep in mind
For AFOLU projects that require
field measurements to monitor
changes in carbon stocks, VVBs
must assess whether the projects
sampling approach is appropriately
documented and in accordance with
the guidelines established by the
methodology. VVBs must consider
whether the monitoring plan includes
target precision levels, sample site
locations, stratification, number of
plots per strata, types of plots used,
frequency of measurement and
appropriate quality control checks
such as a field protocol or standard
operating procedures for data
collection.

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VCS GUIDANCE
VVBs should consider the following:

Data monitoring, calibration or other similar procedures need to be consistently performed,

according to validated methods.

Recognized areas of data uncertainty and risks for material error need to be adequately
managed through data controls and quality assurance checks.

Record-keeping practices need to result in the generation of sufficient levels of documentary

evidence to support assessment against all relevant criteria.

Controls and procedures need to be in place to avoid intentional or unintentional alteration or

destruction of data.

Controls need to be in place to ensure participating staff are sufficiently qualified.

The project proponent needs to demonstrate sufficient management oversight and

accountability for the conduct of monitoring procedures.

Discrepancies between a projects monitoring plan and the monitoring requirements in the applied
methodology must be cited as a material discrepancy.
3.2.6

Methodology deviations

Overview
Methodology requirements may be impracticable in some specific project circumstances. The VCS
Program permits deviations from the applied methodology where they pertain to the criteria and
procedures relating to monitoring and measurement. Deviations relating to any other part of the
methodology are not permitted and require a methodology revision.
Key Elements
The limited scope of permissible methodology deviations implies that VVBs should be cautious when
assessing the validity of proposed deviations. VVBs must ensure that methodology deviations do not
negatively affect the conservativeness of the quantification of GHG emissions reductions or removals,
except where the deviations result in greater accuracy. VVBs must also note that past methodology
deviations are not precedent setting (ie, approval of a particular deviation does not grant approval of the
similar deviations in the future).
In most cases, VVBs should be able to recognize whether a methodology deviation relates only to the
procedures relating to monitoring and measurement. However, given the interconnected nature of many
methodologies, VVBs should be aware that such deviations may have implications on other provisions of

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the methodology (eg, equations for quantification) and must assess this possibility when evaluating a
proposed deviation.
EXAMPLE Methodology deviation
A methodology requires the use of a default factor to calculate project emissions and no options are
provided for developing an alternative factor. At validation, the project proponent proposes the use of
an alternative, peer-reviewed, region-specific factor as a methodology deviation. The project
proponent also proposes a new quantification approach that alters the equation for calculating
baseline emissions. The VVB rejects the proposed deviation to the quantification approach, citing the
fact that the proposed deviation is not specific to the procedures relating to monitoring and
measurement. However, given that the default factor is a parameter available at validation, the VVB
determines that the proposed deviation is allowed. The VVB finds that while use of a regional default
factor may result in less conservative quantification of GHG emission reductions or removals, it
increases accuracy.
The same methodology requires the use of particular measurement equipment to monitor methane
emissions in the project scenario. At validation, the project proponent proposes an alternative model
of monitoring equipment due to the particular model specified in the methodology no longer being sold
in the market. The project proponent demonstrates that the alternative monitoring equipment does not
negatively impact the conservativeness of the quantification of GHG emission reductions or removals.
The project proponent documents the use of a regional default factor and more modern measurement
equipment in the project description as methodology deviations. The VVB also documents in the
validation report that the deviations are appropriately described and justified, and that the project
remains in compliance with VCS rules. The VVB issues a positive validation. At the subsequent
verification, the VVB will take note of the methodology deviations when reporting on the
implementation of the project activity.

3.2.7

Project Description Deviations

Overview
Projects may be implemented differently from the validated project description, or the project may change
over time. Further, project proponents may want to switch to use the latest version of a methodology or a
different methodology altogether, recognizing the development and evolution of methodologies. In such
cases, the VCS Program allows project description deviations at the time of verification.

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VCS GUIDANCE
Key Elements
Where a project description deviation is proposed, VVBs must first ascertain whether the deviation
impacts the applicability of the methodology, additionality or the appropriateness of the baseline scenario.
Guidance on these three types of impacts is set out in the CDM Guidelines on assessment of different
types of changes from the project activity as described in the registered PDD. Determination of whether
the deviation impacts any of these three elements must be consistent with the CDM guidance and apply
the following conditions:

Where the deviation impacts applicability of the methodology, additionality or appropriateness

of the baseline scenario, the project proponent must describe and justify the deviation in a
revised version of the project description. The requirement for a revised project description is
in recognition of the deviation being a substantial change to the project.

Where the deviation does not impact the applicability of the methodology, additionality or the
appropriateness of the baseline scenario, and the project remains in compliance with the
applied methodology, the project proponent must describe and justify the deviation in the
monitoring report. The deviation is documented in the monitoring report in recognition of the
deviation being a more limited change to the project.

VVBs are required to assess whether the deviation is appropriately described and justified. VVBs are
further required to determine whether the project remains in compliance with VCS rules. The findings and
conclusions must be reported in the verification report and the deviation must also be reported on in all
subsequent verification reports. Where the assessment results in a negative conclusion, the verification
report, and either the monitoring report or revised project description, must be provided to the VCSA, as
set out in the VCS Standard.
VVBs must have experience of project validation, recognizing that assessment of project description
deviations is a validation activity. If the VVB is not accredited or approved for validation for the applicable
sectoral scope, it may still proceed if the following conditions are met:

It holds accreditation for validation in at least one (other) sectoral scope.

It has completed validation of at least five projects under the VCS Program or an approved
GHG program, and such projects have been registered under the relevant program.

The project description deviation does not impact the applicability of the methodology,
additionality or the appropriateness of the baseline scenario (see the VCS Standard for
further information on such deviations).

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VCS GUIDANCE
Note also that past project description deviations are not precedent setting (ie, each deviation must be
assessed upon its merits and approval of similar deviations does not provide a sufficient basis for
approval).
EXAMPLE Project description deviation
A registered REDD project is undergoing inventory field work in preparation for the initial verification.
While processing the inventory data, the project proponent realizes their GIS technician committed a
processing error that resulted in incorrect mapping of the project area, leading to an omission of five
percent of the project area. At verification, the project proponent proposes, through a project description
deviation, expanding the project area to include the forests mistakenly excluded from the project area.
The project proponent documents that the expansion would not have an impact on the applicability of
the methodology, appropriateness of the baseline scenario nor additionality of the project. The VVB,
determines that, consistent with the CDM Guidelines on assessment of different types of changes from
the project activity as described in the registered PDD, the addition of project activity sites may impact
the validity of the investment analysis or barrier analysis as validated in the project description. The
VVB requests that the project proponent describe and justify the deviation in a revised version of the
project description.
A registered ARR project undergoes a change in management that results in modifications to various
silviculture techniques. The project proponent now conducts re-planting, fertilization and other
management approaches in a manner unlike how it was reported in the project description. The project
proponent describes the new techniques in the monitoring report and justifies that the deviation does
not have an impact on the applicability of the methodology, additionality or the appropriateness of the
baseline scenario.
When assessing these deviations, the VVBs conclude in each verification report that the deviations are
appropriately described and justified, and that the projects remain in compliance with VCS rules. At the
subsequent verification, the VVBs will take note of the deviation when reporting on the implementation
of the project activity.

3.2.8

Projects with Multiple Project Activities or Multiple Project Activity Instances

Overview
Under the VCS rules, project proponents can combine multiple project activities or multiple project activity
instances within one project. Project activity refers to the set of technologies or measures that generate
GHG emission reductions and removals set out in a given methodology. Project activity instance refers to
an individual unit of a project activity. For example, if the project activity is the implementation of efficient

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cookstoves, each individual cookstove represents a project activity instance. Diagram 1 below provides a
schematic overview of the five project configurations that are allowable under the VCS Program.
Diagram 1: Project Configurations Allowable Under VCS Rules

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Key Elements
Projects with multiple instances of project activities or
multiple project activities need only one project
description and a single validation is undertaken.
For projects with multiple instances, the demonstration
and assessment of baseline and additionality is
combined, because multiple project activity instances are
undertaken as part of the same investment decision.

Keep in Mind
VVBs should consider whether
multiple project activity instances are
simply separate projects.
For example, where instances are
geographically distant, baseline and
additionality characteristics for these
instances may be quite different,
given that common practice, local
laws and other characteristics may
vary. VVBs should assess whether
aggregated baseline and
additionality assessments would
yield the same outcome as an
individual assessment of each
instance.

A project with multiple project activities refers to the

implementation of different types of project activities and
can entail the application of a combination of
methodologies. VVBs must perform the assessment of
baseline and additionality separately for each project
activity, except where these can be integrated by using
the same tool and/or procedures for each activity (eg,
generation of electricity from methane captured in an
anaerobic digester). In addition, VVBs must consider
whether the project proponent has provided sufficient evidence to establish the impracticality of a
separate demonstration of additionality. For example, multiple additionality assessments are unnecessary
where a project proponent implements different project activities at a single facility such as the installation
of an anaerobic manure digester and electricity generation system on a farm. However, where a project
EXAMPLE Projects with multiple instances of project activities
Deciding whether baseline identification and additionality demonstration can be performed jointly or
separately depends on the circumstances of the project activity instances. The following two
examples require different approaches:
1. A wind energy project with total capacity of 12.5 MW comprises ten wind turbine generators
of varying capacities. All the wind turbines are located in the state of Karnataka, India and
were commissioned between 2010 and 2012. The electricity generated is sold to the state
electricity supply company on the basis of power purchase agreements. Based on the
baseline scenario and additionality assessment, the VVB concludes that the project activity
conforms to the VCS definition of a project with multiple instances. The baseline identification
and additionality demonstration for the ten wind turbines can be performed jointly.
2. A landfill gas project captures methane for electricity production at three different landfill
sites, located in the states of Colorado, Virginia and Texas in the United States. Different
local regulations apply at each site, and waste management practices also differ. The VVB
concludes that the identification of the baseline and demonstration of additionality cannot be
done jointly for the three landfills, and each site would need to be considered as a separate
project.

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includes implementation of energy efficiency retrofits on one site and implementation of fuel switch on
another site, the VVB should assess whether both project activities emanate from a single investment
decision.
3.2.9

Grouped Projects

Overview
VCS rules for grouped projects allow for the expansion of project activities over time and over a
geographically dispersed area. New project activity instances can be added to the project over time (ie,
following initial project validation) within predefined geographic areas, provided they meet the set of
eligibility criteria set out in the project description. The new instances are validated at the time of
verification.
In keeping with the intent of the CDM rules on Program of Activities (PoA), the VCS rules on grouped
projects are intended for programmatic initiatives that are typically managed by a central coordinating
entity. The rules are designed to facilitate the scaling up of project activities where the GHG emission
reductions generated by each project activity instance are small. Examples of activities well suited to the
grouped project approach include solar home systems, installation of efficient lighting and installation of
clean cookstoves.
Key Elements
VVBs should focus on the following key elements when validating grouped projects:

Geographic areas: VVBs must ensure that the project description clearly identifies the
geographic areas within which new instances may be added. Geographic areas must be
defined using geodetic polygons and provided in a KML file. Such geographic areas need not
be contiguous and may be large or small, noting the grouped project requirements for
additionality and baseline assessments of the geographic area.

Identification of baseline scenario and demonstration of additionality: The assessment of

baseline scenario and additionality is based upon the initial instances included within each
geographic area. VVBs must ensure that, for each project activity, a single baseline scenario
exists for each geographic area. VVBs must also ensure for each project activity that
additionality is demonstrated across the entirety of each geographic area. Failing this, VVBs
must require that the geographic areas are redefined such that the requirements are met. As
with projects with multiple instances, project activity instances within a grouped project should
be part of the same investment decision if they are to be included in a single project.

Eligibility criteria: VVBs must ensure that an appropriate set of eligibility criteria are
established for each combination of project activity and geographic area. The criteria are
used to validate new project activity instances, essentially serving as a checklist to determine

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whether the instances share the same attributes as the initial set of validated project activities
instances. For example, eligibility criteria for grouped projects implementing CFLs may state
that new instances must be installed in grid-connected households and the CFLs must be at
least 30 percent more expensive compared to conventional incandescent bulbs. In general,
VVBs must ensure that the eligibility criteria are developed sufficiently that such
determinations could be made when validating new instances. Eligibility criteria must also
conform to any restrictions set out in the methodologies applied.

Monitoring and GHG information system: VVBs must ensure that the project has an
appropriate monitoring plan that includes a sampling plan to collect data from all project
activity instances and information systems, allowing for centralized data collection. VVBs
must ensure the sampling plan is able to generate statistically significant results.

Methodology: Grouped projects can apply methodologies other than those designed
specifically for grouped projects. When reviewing the methodology and the projects
application of it, VVBs must be mindful of any capacity limits applicable to the methodology.
VVBs need only ensure that project activity instances and clusters adhere to such capacity
limits; the grouped project as a whole may exceed the capacity limit.

3.2.10 Assessing Non-Permanence Risk

Overview
AFOLU project proponents must complete a self-assessment of the potential transient and permanent
losses to their projects carbon stocks over a 100-year period. The VCS AFOLU Non-Permanence Risk
Tool generates risk ratings that are applied to the net change in the projects carbon stocks, thereby
determining the number of credits that the project proponent deposits into the reserve of non-tradable
credits, the AFOLU pooled buffer account. At verification, VVBs must assess the projects nonpermanence risk based upon the projects Non-Permanence Risk Report.
Key Elements
The non-permanence risk rating only needs to be assessed for projects with GHG emission sources or
sinks that can be reversed. GHG project activities are not subject to buffer withholding if they do not store
carbon in biomass or carbon pools, such as projects that reduce N2O, CH4 or fossil-derived CO2.
Risk factors are classified into three categories: internal risks, external risks and natural risks. The risk
tool assesses internal risk further by evaluating sub-categories: project management, financial viability,
community engagement and project longevity.

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When assessing the non-permanence risk report for AFOLU projects, VVBs must refer to the most recent
version of the risk tool and assess whether the project meets the risk threshold identified for each risk
category and the project as a whole.
In assessing risk factors, VVBs should pay particular attention to
the following:

Keep in Mind
If a project proponent is
aware that part of the project
area has comparatively
greater risks, the project area
can be stratified for the
purpose of the risk analysis.
The VVB would assess the
non-permanence risk for
each stratified project area.
The risk rating would then
apply to the net change in the
projects carbon stocks of the
respective stratified area.

When assessing internal risk, VVBs must evaluate

the risk that project activities will not be continued in
the future. VVBs should note that the project
proponent does not have to provide evidence of right
of use for the entire project longevity. Rather, the
project proponent must demonstrate they can obtain
and maintain right of use for the entire project
crediting period. For example, evidence of right of
use for a 10-year period is acceptable if the right of
use is renewable at the end of 10 years.

For all AFOLU project types, the entire project

longevity must be covered by management and
financial plans that demonstrate the intention to continue the management practices. The
project longevity risk rating is determined by whether the project proponent has a legal
agreement or requirement to continue the management practice. A legal agreement or
requirement must be in place to continue the management practice. A legal agreement to
protect land, such as national designation as a protected area, is insufficient to demonstrate

EXAMPLE Assessing Non-Permanence Risk

A wetlands rewetting and conservation (WRC) project in Malaysia began implementing activities to
conserve an undrained peatland in 2005. The project was verified in 2011. In preparing a nonpermanence risk assessment, the project proponent evaluated the projects financial viability and
opportunity cost based on, among various factors, previously secured funding and alternative land
uses developed prior to the project start date.
However, a major donor discontinued funding for the project in 2010. Meanwhile, growing oil palm
demand led to a significant increase in the land value of the projects surrounding areas, compared to
the 2005 land value. The projects opportunity cost increased with respect to its main alternative land
use, which the project proponent identified as draining peatland for oil palm production.
Upon verifying the non-permanence risk assessment, the VVB noted a non-conformance that the
project proponent did not correctly apply the risk tool. The project proponent improperly estimated the
cumulative cash flow breakeven point and the net present value (NPV) based on data and information
from the project start date and not information from the date of the current assessment.
The project proponent revised the risk assessment for both financial viability and opportunity cost and
estimated risk based on the most recent data available from the date of the assessment.

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that a management practice will continue for the length of the project.

3.3

Projects with longevities of less than 30 years are not permitted under the VCS, and VVBs in
such cases must fail the risk assessment.

While risk is assessed over a 100-year period from the start of the current monitoring period,
the analysis should be based on data and assumptions that accurately reflect current
conditions, not past or future circumstances, when determining all risks, including the
opportunity costs and financial viability.

When assessing the cumulative cash flow breakeven point, VVBs must evaluate whether
recurring capital expenditures have been accounted for in the breakeven analysis.

KEY ELEMENTS OF THE VALIDATION AND VERIFICATION PROCESS

3.3.1

Sampling, Validation and Verification Plans

Overview
Sampling plans and associated validation or verification plans
describe the planned validation or verification activities and
schedules. These plans also address what data and information
will be sampled and how it will be tested. A robust sampling
plan is critical in ensuring the robustness of the validation or
verification.

Keep in Mind
Sampling applies to both
quantitative and qualitative data
and information. Qualitative
information (eg, procedures or
applicability) is particularly relevant
for validation. Quantitative data
(eg, monitored results) is a
principal focus at verification.

Key Elements
In developing sampling, plans, VVBs must consider the objectives, scope, criteria, materiality and level of
assurance for the proposed validation or verification assessment.
3.3.1.1

Sampling Plans

A sampling plan should describe: risks of material error, types of data and information to be assessed,
methods to be used to assess the data and information, and the amount of each type of data or
information to be assessed.
To determine each of these, a VVB must first conduct a risk assessment to identify areas that may
potentially result in material discrepancy.
Risk assessments must follow the guidelines set out in Annex A.2.4.6 of ISO 14064-3 and include, at
minimum, reviews of the following:

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3.3.1.2

Background information: Contextual information is

provided to help readers understand the nature,
scale and complexity of the project.
Potential sources of material error: Potential
sources of material error will differ for validation and
verification, reflecting the different objectives as set
out in Section 2.1.
GHG information system controls: Controls are
needed to avoid or correct errors (ie, control risk)
for each source of potential material error.
Consideration should be given to the full data chain
of custody for all relevant data types, considering
potential risks of error at each step in the chain.
Residual risks: Any areas of risk not adequately
addressed by the control systems should be
identified for inclusion in the sampling plan. ISO
14064-3 identifies a range of testing methods that
can be employed alone or in combination to assess
a particular residual risk.

Keep in Mind
Data and information vary in
reliability. ISO 14064-3 delineates
three general types of evidence in
order of decreasing reliability:

Physical: directly observable

such as witnessing a meter
calibration.

Documentary: written or
electronic records, logs, data or
procedures.

Testimonial: verbal information

gathered through interviews.

For less reliable sources of evidence,

cross-checking should be used.
Given that physically observed data is
considered most reliable, and that
VVBs are required to provide a
reasonable level of assurance, site
visits must be included in validation
and verification plans.

Data Testing Methods and Determining Representative Samples

VVBs may employ several testing methods, including, inter alia: simple random sampling, stratified
random sampling, systematic sampling, cluster sampling and multi-stage sampling.
Choice of testing method (or combination of methods) will depend on the data in question and the nature
and extent of risks identified. VVBs should apply their professional judgment in determining the most
appropriate method. VVBs are encouraged to use the following resources as guidance:

Standard for Sampling and Surveys for CDM Project Activities and Programme of Activities
(PoAs);

IPCC 2006 Guidelines for National Greenhouse Gas Inventories;

IPCC 2003 Good Practice Guidelines for Land Use, Land-Use Change and Forestry.

Multiple cross-checking methods are advisable where data is less reliable. VVBs must also determine the
amount of data required for the assessment (eg, how many data points or records) by selected methods.
Data samples must be representative of the whole data set and reflect the risk assessment.

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3.3.1.3

Validation and Verification Plans

VVBs must prepare validation and verification plans that describe the schedule of validation or verification
activities, documents to be reviewed, locations to be visited, validation or verification team duties, and
associated logistical details and arrangements.
Design of the validation or verification plan must be informed by the sampling plan.

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EXAMPLE Sampling and Verification Plan
A gas-to-biomass fuel switching project using a methodology for fuel switch from fossil fuels to
biomass residues for thermal power is undergoing its first verification. During the risk assessment
portion of sampling plan development, the VVB identified baseline emissions from fossil fuel
combustion for heat generation (BEHG,y) as a key emission source with potential for material error.
The equation used to calculate BEHG,y is as follows:

Where:
=

Baseline emissions from fossil fuel combustion for heat generation in the heat
generation equipment (tCO2e/yr)

Heat generated with incremental biomass residues used as a result of the

project activity during the year y (GH/yr)

CO2 emission factor of the fossil fuel type displaced by biomass residues
(tCO2e/GJ)

Average net efficiency of the heat generation equipment if fired with fossil
fuels in the baseline (ratio)

Below is a simplified summary of related details on the sampling plan. In developing the verification
plan, the VVB ensured that the site visit was scheduled to correspond with a scheduled calibration
event, sufficient time was allocated to perform the planned data sampling and testing, and appropriate
verification team members were assigned to specific tasks.
Potential
Discrepancy

Reporting Risk

Meter
Calibration

heat,FF

BEHG,y

Medium (use of nonaccredited firm)

Planned Sampling and Testing

Physically observe calibration firm
conducting calibration
Review all calibration logs
Interview calibration technicians

HGPJ,biomass,y

EFFF,CO2,y

Control Risk

Trace back limited sample data to raw

data

Data entry and

storage in
spreadsheet

Very low (automated

data acquisition and
uploading; validated
previously)

Data entry and

storage in
spreadsheet

Medium (manual
entry to
spreadsheet)

Review spreadsheet to confirm that

validated values are used

Spreadsheet
used for
calculations

Low-Medium (good
access controls,
validated previously)

Recalculate a limited sample of daily

results

High level review of dataset to ensure

continuity of data over reporting period

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VCS GUIDANCE
3.3.1.4

Updating Sampling, Validation and Verification Plans

As data are sampled and tested, VVBs will likely need to change the initial risk assessments. VVBs must
update sampling, validation and verification plans in an iterative manner according to increases or
decreases in the perceived level of risk. Some situations may necessitate extending the validation or
verification schedule or number of sites visited. Adjustments, while potentially inconvenient and involving
some cost, are necessary to ensure that a reasonable level of assurance can be provided.
3.3.2

Resolution of Material Discrepancies and Clarification Requests

Overview
Resolution of identified actual or potential material discrepancies is an important part of finalizing a
validation or a verification. All identified discrepancies and areas for clarification must be clearly
communicated to the project proponent, addressed and transparently documented.
Key Elements
Validation and verification almost always result in the identification of areas requiring further clarification
and discrepancies that must be addressed. VVBs must clearly document the following:

Clarification requests (CLs): Project reporting lacks transparency and further information is
needed to determine if a material discrepancy is present.

Corrective action requests (CARs): The VVB has identified a material discrepancy or nonconformance that the project proponent must address.

When issuing CLs and CARs to project proponents, the following guidelines apply:

VVBs must be careful not to offer consulting advice when issuing CARs such as how to
address noted deficiencies. Otherwise, the independence of the VVB is called into question.

The VCS validation and verification reporting templates require that VVBs document the
process used to resolve material discrepancies (not just the discrepancies themselves).

VVBs must document all identified CLs and CARs and summarize the CLs and CARs in the
validation or verification report.

All CLs and CARs need to be fully resolved prior to issuance of a positive validation or
verification statement. In the case of validation, it is unacceptable for VVBs to leave material
discrepancies unresolved (eg, deficiencies in a projects data management system), which a
verifier may need to ensure is addressed at a later date.

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3.4

COMMON TECHNICALLY CHALLENGING AREAS

During validation and verification, common areas of technical challenge arise across a wide variety of
projects and methodologies. This section identifies some common issues and provides related guidance.
3.3.3

Complete Identification of GHG Sources, Sinks and Reservoirs

Overview
A key component of assessing project and baseline emissions is the complete identification of relevant
GHG sources, sinks and reservoirs. While the methodology identifies the relevant types of GHG sources,
sinks and reservoirs, the project proponent must determine the specific sources, sinks and reservoirs
present and ultimately quantified for a given project.
Key Elements
Identification of a complete set of relevant GHG sources, sinks and reservoirs can be challenging,
especially for large or complex project sites, or where the project involves multiple sites. For many
projects, this can be a potential source of material error.
During validation, VVBs must first assess the project proponents process for identifying relevant emission
sources (eg, how systematic was the process and who was involved in carrying it out?) to identify the
associated control risk. The sampling plan could then be developed accordingly. In addition to review of
engineering drawings and interviews with key staff, careful attention during site tours (if the facility has
already been constructed) can be effective in confirming identified GHG sources, sinks and reservoirs.
During verification, the verification team must not only visit all relevant sites but also sample an adequate
number of sites based on a risk assessment.
In both validation and verification, the assessment team will need sufficient technical experience related
to the methodology and project technology. Deficiencies in this area have in the past led VVBs to
overlook material discrepancies.
3.3.4

Calibration

Overview
Calibration of monitoring equipment is critical in ensuring accurate reporting of results. This is a common
problem area for projects. Calibration is frequently conducted incorrectly or at inappropriate times. The
result is often a material impact on the reported emission quantifications.

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VCS GUIDANCE
Key Elements
Calibration problems can often be traced to poor calibration procedures, including communication of
calibration schedules and associated record keeping. Problems are also common when unqualified or inexperienced technicians are employed.
Calibration is an issue for both validation and verification. During validation, VVBs must focus on ensuring
that calibration plans meet the requirements specified in the applied methodology and/or by the
equipment manufacturer. Calibration schedules need to be clearly presented and communicated to
relevant staff. It should also be clear how verifiable records of calibration will be generated.
During verification, attention must be placed on reviewing objective evidence, demonstrating that
calibration was performed according to plan. Depending on assessed risk and project type, the use of
cross-referenced data and information is recommended. Best practice examples include timing a site visit
to align with a calibration event, reviewing calibration logs and/or interviewing the individual(s) conducting
the calibration (which often involves outside service providers).
Determining minimum required experience or qualifications for a calibration technician or organization can
be challenging. Ideally, the project uses calibration organizations accredited to relevant standards. Other
non-accredited organizations may also perform calibrations if permitted by an equipment manufacturers
specifications and the relevant methodology. Ultimately, VVBs must assess whether calibration practices
follow current good practice as required by Clause 5.10 of ISO 14064-2 and meet any requirements

EXAMPLE Calibration
A landfill gas destruction project in the United States has developed a VCS project using a
consolidated methodology for landfill gas project activities. In order to minimize the risk of calibration
drift in gas flow meters, the project proponent established a quarterly field check schedule.
During verification, the VVB discovered that planned quarterly checks were missed, and only single
checks at the beginning and end of the annual reporting period were conducted. The final check
showed that the calibration had drifted significantly, over-reporting gas flows by 10 percent. The
monitoring report was based on unadjusted meter readings.
The VVB cited two material discrepancies:
1. Material error of up to 10%: To resolve this issue, the project proponent conservatively assumed
that the meter over-reported flows by 10% for the entire monitoring period.
As a result, the proponent discounted measured flows (and thus reductions) for the entire year by
9.1 percent [10 (100 + 10)].
2. Non-conformance with the validated monitoring plan: To resolve this issue, the project proponent
submitted a project description deviation applicable to the reporting period, justifying the
conservativeness of the alternative approach. The project proponent also identified why the
scheduled checks were missed and enhanced associated monitoring and quality assurance
procedures accordingly.

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VCS GUIDANCE
specified in the methodology. To avoid significant challenges during verification, it is important that these
procedures are carefully scrutinized during validation.
3.3.5

Emission Factors, Measurement Abbreviations and Conversion Factors

Overview
Emission factors, conversion factors and measurement abbreviations, while often taken for granted, are
all common areas where material errors may be introduced into the quantification of GHG reductions and
removals.
Key Elements
Accuracy is contingent on proper use of the factors and assumptions embedded in GHG calculations.
Accuracy likewise relies on proper understanding of any abbreviations or industry-specific language. The
following are examples of factors and abbreviations:

Emission factors (eg, tCO2e per MWh electricity, tonne CO2e per m3 natural gas);

Conversion factors (eg, BTU/m3, g/L, kg/tonne, GWPs);

Measurement abbreviations (eg, MMBTU, SCF, kt, Nm3).

VVBs must ensure that factors and abbreviations are appropriate and meet the requirements of the
applied methodology. VVBs must ensure the sampling and testing are appropriate for the assessed risk.
Spreadsheets can pose significant risks, especially where associated data quality controls are minimal.
Experience from a range of GHG programs indicates that VVBs tend to devote insufficient time to
sampling and testing emission factors, conversion factors and measurement abbreviations. Errors often
emerge when spot checks are conducted by program administrators.
3.3.6

Models

Overview
Models are powerful tools used to provide GHG data where direct monitoring or simple estimation is not
possible or practical. Models can, however, be complex. Results are sensitive to various inputs and key
assumptions, making them a common source of material error.
Key Elements
Models can range from simple (eg, expressed as a single equation) to complex (eg, comprised of many
equations incorporated into modeling software). Models can estimate emissions directly (eg, a landfill gas
generation model) or indirectly (eg, a forest growth and yield model that estimates changes in amount of

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VCS GUIDANCE
woody biomass). There are two broad uses for models:

Estimating ex-ante GHG data in a project description (eg, use of the CDM Tool to determine
methane emissions avoided from disposal of waste at a solid waste disposal site to estimate
ex-ante baseline emissions for a landfill gas project).

Estimating ex-post GHG data in a monitoring report (eg, use of a forestry model that meets
the requirements of VCS methodology VM0003: Methodology for Improved Forest
Management through Extension of Rotation Age to estimate ex-post carbon stock changes in
the baseline).

Given that models are often complex and have inherent uncertainty, VVBs must ensure that applied
models apply conservative factors to discount for model uncertainty and use conservative assumptions
and parameters that are likely to underestimate, rather than overestimate, the GHG emission reductions
or removals. VVBs must also ensure that sufficient empirical testing has been conducted to calibrate the
model accurately for the project. For example, where a forest growth and yield model is used to estimate
change in carbon stocks, the model may need to be calibrated and/or validated through field
measurements and compared against inventory data to ensure the appropriateness of the model for the
project. Model results should be subjected to sensitivity analysis, taking into account variation in input
parameters. It is also important that the validation or verification team include an expert experienced in
the application of the particular model to ensure its correct use.
Keep in Mind
Key questions to consider when reviewing factors and abbreviations include:

Is the factor appropriate for the project or baseline technology, fuel type, geographic location
and time period?

Are the correct units being used?

Has there been confusion between CO2 and CO2e?

Has there been confusion between GHGs such as CO2 and CH4?

Have the VVB and project proponent clearly understood the abbreviations?

Have the abbreviations been used correctly in the calculations?

Have metric and imperial units been confused?

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VCS GUIDANCE

4 | Project Validation and

Verification Reporting
Project validation and verification reporting is central to the transparency of validation and verification
processes. Reporting provides a means for VCSA and other stakeholders to better understand VVB
findings and supporting rationale. This ultimately increases market confidence in the VCS Program and
its projects and VCUs. Reports are also an important tool during subsequent verifications, as they can
provide useful inputs to a VVBs risk assessment.

4.1

REPORT TEMPLATES

Overview
The VCS Program ensures consistent VVB reporting by requiring the use of validation and verification
report templates. Guidance is contained within each template to assist VVBs in properly documenting
processes, findings and conclusions.
Key Elements
When preparing a validation or verification report, VVBs must address, at minimum, the specific items
detailed within the VCS templates (VCS Validation Report Template and VCS Verification Report
Template, respectively) and adhere to the structure of the template. However, VVBs can provide
additional information. VVBs are encouraged to include additional documentation as annexes to the
reports where needed.
The report templates have been developed to ensure both a minimum level of transparency in reporting
and consistency in work undertaken by different VVBs. Both templates are structured in a similar manner
covering the following key areas:

Introduction: Covers objectives, scope, criteria, level of assurance and project description.

Process: Addresses methods, objectives and criteria, including the sampling plan used to
undertake the validation or verification.

Findings: Identifies, discusses and justifies findings in specific areas identified in the
templates.

Conclusions: Provides a clear statement of conclusions, addressing specific items identified

in the templates.

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VCS GUIDANCE
The verification template also includes a section for reporting on the validation process, findings and
conclusions, which VVBs need to complete where a methodology deviation or project description
deviation is applied to the project or where new project activity instances are added to a grouped project.
In some cases, verification may also include gap validation of a project that is registered sequentially
under the VCS and another approved GHG program.

4.2

REPORTING LEVEL OF DETAIL

Overview
A sufficient level of information and detail must be provided in validation and verification reports to allow
readers to understand the validation or verification process and draw informed conclusions about the
project.
Key Elements
Understanding the appropriate level of detail for reporting is a common challenge for VVBs. Reporting is
simplified through various report templates where VVBs are instructed whether to provide more
descriptions or more detailed discussion and justification.
All sections of the templates, other than validation or verification findings, require only a description. VVBs
must indicate the activities conducted, methods used, criteria applied and other information as
appropriate. Descriptions should be succinct, while providing enough detail for the reader to understand
what approaches were taken. VVBs are not required to include details on why they pursued a chosen
course of action.
In contrast, the validation and verification findings sections of the templates require the identification,
discussion and justification of all conclusions. VVBs must not only indicate findings but must also provide
details on the following:

Project proponent assertions;

Types and amounts of evidence sampled and tested;

Material and non-material discrepancies identified and how they were addressed; and

Results of data testing that support the validation or verification conclusions.

VVBs must also ensure that reports contain an itemized breakdown of GHG emission reductions and
removals where appropriate. For example, where the net emission reductions and removals is the sum of
emission reductions and removals from changes in soil carbon, changes in both belowground biomass
and aboveground biomass, as well as emission reductions and removals from each of the carbon pools
must be stated and verified separately.

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VCS GUIDANCE
Where the monitoring report includes vintage breakdowns, the verification report must verify the emission
reduction and removal volume for each vintage period specifying the exact start dates and end dates of
the vintage period. This is required if VCUs are to be issued according to any vintage period breakdown
in the monitoring report.
It is not necessary to provide detailed information such as the results of individual recalculations, notes
from interviews and meetings, or detailed observations from site visits. This detailed information should
still be retained outside of the validation or verification report in the form of validation and verification
records. Such records assist VVBs in demonstrating conformance to ISO 14064-3 and ISO 14065 (eg, as
part of accreditation assessment and surveillance). VCSA may also request such records as part of
program oversight.

5 | Methodology Assessment
The VCS Program provides a unique, bottom-up approach to methodology development that incentivizes
project proponents or other market participants to create new methodological approaches for accounting
for GHG emissions reductions or removals in eligible sectoral scopes. Ensuring that VCS methodologies
are robust is integral to quality assurance of the VCS Program. This section sets out guidance that VVBs
are expected to follow when conducting methodology assessments.

5.1

GUIDANCE ON KEY ELEMENTS OF METHODOLOGY APPROVAL PROCESS

Assessment of new methodologies, methodology revisions, modules and tools are guided by the
requirements and procedures set out in VCS document Methodology Approval Process. Methodologies
submitted to VCS undergo a 30-day public consultation period followed by two independent assessments
by qualified VVBs. Where both VVBs approve a methodology, VCSA conducts a final review prior to
approving the methodology. Diagram 2 shows the main stages in the methodology approval process.
Diagram 2: Main Stages in the Methodology Approval Process

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VCS GUIDANCE
5.1.1

Key Elements of the Process

The methodology approval process is designed in stages that are sequential. VVBs conducting
methodology assessments should bear in mind the following:

Initial VCSA review: VCSA undertakes a review of all methodology elements submitted under
the methodology approval process. The purpose of the initial methodology review is to
ensure that the methodology documentation has been completed in accordance with VCS
rules and is of a sufficient quality to enable its assessment under the VCS methodology
approval process. The methodology developer may need to revise the methodology as a
result of the preliminary VCSA review. VCSA may not accept methodologies into the process
where they are not of the requisite standard or not in compliance with VCS rules. VCSA may
also not accept methodologies that sanction politically or ethically contentious project
activities or otherwise undermine the integrity of the VCS Program or broader carbon market.
VVBs who are contacted to begin first assessment should therefore confirm whether VCSA
has already accepted the methodology into the approval process and completed its
preliminary review.

Public consultation: Methodologies that have completed the initial VCSA review are posted
for a 30-day public comment period. The VCSA will also host a webinar on the methodology
during the public comment period.

First assessment: The first assessment report cannot be issued before the public comment
period concludes. This allows the methodology developer to take into account any public
comments. It also allows the VVB to undertake an assessment of, and to document, how
such comments were taken into account.

VCSA review: VCSA reviews the methodology and the associated assessment report once
the first assessment has been completed. VCSA may hire external experts as part of this
review. Any CLs and CARs emerging from this review will need to be addressed by the
developer during second assessment. VCSA may also issue CLs and CARs that the VVB
would need to address if the review indicates that the methodology has not been assessed in
accordance with VCS rules. If CLs and CARs issued by VCSA are not satisfactorily
addressed by the VVB, VCSA reserves the right to not accept the assessment report.

Second assessment: The second assessment needs to include a review of the first
assessment report and the most recent version of the methodology element. The second
assessment report cannot be issued until the first assessment report has been issued. The
second assessment must also take account of the findings from VCSA review. Where CARs
issued by the first assessor cannot be resolved in a reasonable time frame, second
assessment may begin once the draft first assessment report has been issued. The first and
second assessors can simultaneously review unresolved CARs. All such CARs must be
closed out before the respective VVB can issue the final first and second assessment reports.

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5.1.2

VCSA review: The VCSA review at this stage entails a thorough review of the methodology
document and the second assessment report. Any CLs and CARs resulting from the VCSA
review need to be addressed in the methodology and the second assessment may also need
to be updated as necessary. VCSA may also issue CLs and CARs that the VVB would need
to address if the review indicates that the methodology has not been assessed in accordance
with VCS rules. If CLs and CARs issued by VCSA are not satisfactorily addressed by the
VVB, VCSA reserves the right to not accept the assessment report.

Reconciliation: Once the second assessment is completed, both VVBs need to approve the
same final version of the methodology. The VVB who performed first assessment needs to
update the first assessment report statement to take account of changes made to the
methodology during second assessment. VVBs conducting a first assessment should
therefore consider the time and costs of reviewing the methodology following second
assessment.

Final VCSA review and approval: VCSA undertakes a final review of the methodology when
the developer submits the final version of the methodology document along with the final
versions of the two assessment reports and a signed methodology approval request form.
VCSA may make minor edits and clarifications in the methodology as part of the final review
and approval process to ensure that methodologies approved under the VCS are written
clearly and apply consistent terminology and formatting.

Role of the VVB

Under the methodology approval process, two VVBs are required to independently assess the
methodology. The methodology assessment process is a desk review process that involves a thorough
review of all the elements of a methodology as set out under the Methodology Approval Process.
Methodology assessments typically entail an iterative review where the VVB issues CLs and CARs that
must be addressed by the developer until the issues are resolved satisfactorily.
Methodology assessments require background research, document reviews, and interviews with experts
and key stakeholders to determine whether criteria and procedures described in the methodology
conform with the requirements and principles set out in the VCS Standard as well with scientific best
practice. VVBs must also carefully evaluate the underlying assumptions and conceptual approaches that
are used in methodology and explain whether and how the methodology takes into account relevant
scientific and sector specific considerations.
VVBs conducting methodology assessments need to meet the eligibility criteria set out in the
Methodology Approval Process. VVBs are responsible for assembling competent and qualified teams to
undertake methodology assessments. VVBs must consider sector-specific competencies and capabilities
of personnel when building assessment teams. VVBs must also ensure teams include an appropriately
qualified, independent technical reviewer.

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Some VVBs contract external experts as consultants where a methodology requires detailed technical or
scientific expertise in a sector for which it does not have in-house expertise. For non-ARR AFOLU
methodologies and methodologies that use a standardized methods, at least one of the VVBs must
include in its assessment team a VCS-approved expert for the given project type. In many project types,
the science or technology within a sector is continually evolving and experts play a key role in ensuring
that a methodology reflects scientific best practice.
5.1.3

Role of VCSA

VCSA is responsible for managing the methodology approval process and for providing support and
oversight to ensure that approved methodologies are consistent with VCS rules.
Each methodology submitted to the methodology approval process is assigned a program officer who is
responsible for facilitating communications across the relevant stakeholders and for conducting a review
of the methodology at various stages of the process. VCSA reviews methodologies upon initial
submission of the methodology (before the methodology is posted for public consultation), after first
assessment and after second assessment.
VCSA is also responsible for overseeing the second assessment. VVBs conducting second assessment
sign a contract directly with VCSA (rather than the methodology developer). This agreement clarifies that
the VVBs client is VCSA and ensures VCSA has the ability to oversee second assessment even while
the methodology developer is responsible for financing the assessment. During second assessment, it is
important that VVBs inform VCSA of progress related to all relevant milestones. Where milestones are not
met in a timely manner, VCSA reserves the right to terminate the agreement and contract an alternative
VVB following consultation with the methodology developer.
5.1.4

Effective Communications

Close communications between the methodology developer, the VVBs and VCSA is critical in ensuring
that the methodology assessment is completed in a timely, efficient and robust manner. The VCSA
program officer managing the methodology can help facilitate communication where appropriate. The
program officer can also provide clarifications on VCS procedures and requirements as needed.
5.1.5

Seeking Clarifications from VCSA

If there is a lack of consensus on the methodology element between the methodology developer and
VVBs, or between VVBs, either party may request that VCSA provide clarification or facilitate additional
discussions between all parties to resolve the issue. While the VVBs are ultimately responsible for
assessing the methodology element, the clarifications provided by VCSA may, in certain cases, take
precedence over assessment findings of the VVBs.

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5.2

KEY ASSESSMENT CRITERIA

Methodologies set out the detailed criteria and procedures that project activities must follow. Detailed
requirements for methodologies are set out in the VCS Standard and other accompanying program
documents such as the AFOLU Requirements and ODS Requirements.
When conducting a methodology assessment, VVBs need to assess whether the methodology conforms
to VCS rules and whether the methodology has appropriate criteria and procedures to ensure
conservativeness and scientific integrity.
VVBs must also ensure that methodologies are written in a manner that provides a prescriptive set of
criteria and procedures that projects can apply and VVBs can audit against, thereby minimizing the scope
for subjective interpretation, or gaming, by project proponents and VVBs using the methodology. This
includes the use of precise language and the avoidance of vague terminology. For example, VVBs must
ensure the proper use of key words must, should and may. Consistent with best practice, must is to be
used to indicate a firm requirement, should is to be used to indicate a (non-mandatory) recommendation
and may is to be used to indicate a permissible or allowable option. The term shall is reserved for VCS
program documents and is generally not appropriate for methodologies.
Methodology assessments must focus on whether and how the methodology addresses the components
set out in the sections below.
Keep in mind
Methodologies must not restate VCS requirements. For example, VCS requirements on project
crediting period should not be included in the methodology. Where necessary, methodologies may
make reference to the VCS rules directly to prevent methodologies from becoming outdated, should
it be necessary to update a specific VCS requirement. References to specific tools or VCS Program
documents must not state specific versions but rather refer to the most recent version of the tool or
document.
Where methodologies include definitions, VVBs must ensure that the definitions are consistent with
VCS definitions. If methodologies contain definitions not included in the Program Definitions, or the
methodology contains more narrowly defined terms than in the Program Definitions, such
methodology definitions need to be noted within the methodology element. In addition, VVBs must
ensure that terms are used consistently across the methodology.

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5.2.1

Applicability

Overview
The applicability conditions set out the criteria for determining which projects are eligible under the
methodology. These may include conditions with respect to GHG reduction technologies and measures,
or geographic areas under which a methodology is applicable.
Key Elements
VVBs must assess whether the methodology provides a clear and defined specification and/or list of
project activities eligible under the methodology. This means that applicability conditions cannot be open
ended. For example, a methodology cannot state that a methodology can be applied to a range of
energy efficiency measures but instead needs to specify the energy efficiency activities or measures that
are applicable, such as replacement of incandescent light bulbs with CFLs and LEDs. Modules and tools
also need to set clear conditions and parameters under which the module or tool is applicable.
VVBs must bear in mind that applicability conditions must not include criteria and procedures that are
addressed in other sections of the methodology. For example, the applicability conditions section cannot
state that the project will have no leakage, but the methodology must instead provide a procedure for
determining leakage within the leakage section. In addition, conditions specified in tools or modules used
by the methodology must not contradict any conditions specified in the applicability conditions section.
VVBs must also bear in mind that a methodology should not create limiting conditions that restrict its use
to a single project or proprietary technology or approach.
5.2.2

Project Boundary

Overview
The project boundary in a methodology sets out criteria and procedures for identifying and describing the
GHG sources, sinks and reservoirs relevant to the project and baseline scenarios.
Key Elements
VVBs must assess whether the methodology has provided adequate justification for the included and
excluded GHG sources, sinks and reservoirs. AFOLU methodologies must adhere to the requirements on
relevant carbon pools set out in the AFOLU Requirements. VVBs must also assess whether the GHG
sources, sinks and reservoirs identified for the project and those identified in the baseline scenario are
equivalent and consistent. VVBs must assess whether the project boundary includes, at minimum, all
GHG sources, sinks and reservoirs controlled by the project proponent and related to the project.

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5.2.3

Baseline scenario

Overview
All methodologies need to establish criteria and procedures for identifying alternative baseline scenarios
and determining the most plausible scenario.
Key Elements
The baseline scenario is a reference case for the project activity. VVBs must consider whether the
procedures for determining the baseline scenario take into account existing and alternative project types,
activities and technologies that provide the same type of quality and quantity of product or service as the
project activity. Note that functional equivalence between the baseline scenario and the project scenario
may not apply or be appropriate for certain AFOLU project types.
VVBs must assess whether the procedure for identifying the baseline scenario allows for identifying the
most plausible baseline scenario and determine whether the procedure takes into account relevant
information concerning present or future conditions such as political, technical, economic and sociocultural conditions. For methodologies that use a performance method to establish the crediting baseline,
VVBs must assess whether the proposed baseline scenario, or aggregate baseline scenario, would be
credible for the whole class of project activity.
The procedure for the identification of baseline scenario may be combined with the procedure for
demonstrating additionality where appropriate.
5.2.4

Additionality

Overview
The procedures for demonstrating additionality provide a step-wise approach to demonstrate whether a
project activity would have occurred in the absence of the intervention of the carbon market.
Key Elements
VVBs must assess whether the procedure set out in the methodology complies the VCS rules on project
methods and standardized methods (ie, performance or activity methods) for additionality.
Note that referencing or restating VCS rules is not sufficient. Rather, methodologies need to apply an
appropriate additionality tool that is approved under the VCS or an approved GHG program, or
methodologies can develop new, detailed procedures for demonstrating additionality within the
methodology or as a separate tool. However, methodologies may reference VCS requirements on
regulatory surplus without providing further procedures.

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Methodologies can apply one of two approaches for the demonstration and assessment of additionality:
the project method or the standardized method. Both methods begin with the regulatory surplus analysis
step.
5.2.4.1

Project method

As set out in Section 3.2.2, the project method involves a barriers analysis step and a common practice
analysis step.
For the barriers analysis, the types of barriers that may be assessed for a VCS project are:

Investment Barriers: The investment barriers analysis step involves determining if the
proposed project activity would have been economically feasible or economically the most
attractive option in the absence of revenues from sale of VCUs.

Technological Barriers: Technological barriers of various kinds may be present for a project,
including a lack of key elements necessary to move the project forward (eg, supporting
infrastructure, material inputs or skilled labor) and/or project aspects that increase the risk of
technology failure (eg, risk inherent in the complex or unproven nature of a technology).

Institutional Barriers: Institutional barriers include other barriers not reflected above such as
organizational, cultural, social or educational barriers.

The final additionality step is the common practice analysis. The project method requires a demonstration
and assessment of whether the project activity is common practice in an appropriately-defined sector or
region when compared against project alternatives that do not receive carbon finance. The common
practice analysis step may also be required where methodologies apply standardized methods.
The criteria and procedures established for demonstrating common practice must be based on guidance
provided in the GHG Protocol for Project Accounting, Chapter 7 (WRI-WBCSD). The GHG Protocol
requires that market penetration of a project technology or practice will be assessed by collecting data on
all alternative baseline scenarios within a relevant geographic area and calculating a relative market
share for each different technology or practice.
5.2.4.2

Standardized Method

The VCS Program allows two types of standardized methods:

Performance Methods: A methodology that uses a performance method establishes a

performance benchmark for determining additionality and/or the crediting baseline. Projects
that meet or exceed a pre-determined level of the metric may be deemed as additional and a
pre-determined level of the metric may serve as the crediting baseline.

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Activity Methods: A methodology that applies an activity method establishes the bounds of
the project activity that is deemed to be additional. These methods pre-determine
additionality for given technologies and measures within given contexts of application using a
positive list. Projects that implement activities on the positive list are automatically deemed as
additional and do not otherwise need to demonstrate additionality. One of three options
(activity penetration, financial viability or revenue streams) is used to qualify the project
activity for the positive list.

The assessment of standardized methods requires a very careful review given that standardized methods
entail the determination of additionality and/or the crediting baseline for whole classes of project activities.
When assessing standardized methods, VVBs should refer to the VCS requirements, described in the
VCS Standard, as well as the guidance provided in the Guidance for Standardized Methods. The
guidance document provides information to help with the background and interpretation of standardized
methods.
5.2.5

Procedure for Quantification of Net GHG Emission Reductions and Removals

Overview
Methodologies need to establish procedures for quantifying GHG emissions and reductions and
removals. As set out in the VCS Standard, the procedure must determine baseline emissions, project
emissions and emissions associated with leakage.
Key Elements
When assessing quantification procedures, VVBs must determine whether appropriate formulae and
calculation methods have been used. The methods must provide a logical and consistent approach to
determine the net GHG emission reductions and removals. The assessment must also focus on whether
appropriate parameters have been applied in the calculation methods or formulae.
Quantification procedures are subject to uncertainty. VVBs must assess whether the methodology relies
on assumptions, parameters and/or procedures with significant uncertainty and whether the methodology
has appropriate procedures to address such uncertainty. The VCS Standard sets out required confidence
intervals and, where the uncertainty exceeds the permitted thresholds, methodologies are required to
apply a conservative deduction to address the uncertainty. VVBs are encouraged to review the most
recent version of the IPCC report Good Practice Guidance and Uncertainty Management in National
Greenhouse Gas Inventories when reviewing the uncertainty associated with methodologies.
VVBs must pay particular attention to uncertainty where indirect methods such as models, default factors
and proxies are used to estimate GHG emissions reductions and removals, and where direct
measurements are not be feasible either due to the nature of the project activity or due to the complexity

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and cost involved in field-based measurements. While methodologies may pursue a model-based
approach to estimate GHG emission reductions and removals, VVBs must assess whether the model is
based on publicly available, reputable and recognized sources. Further requirements for the use of
models, as well as the use of default factors, standards, and proxies, are provided in the VCS Standard.
VVBs may also be required to determine whether a model has been calibrated for use in a given
ecological zone. For example, a methodology for reduced deforestation in a semi-arid zone should not
use a model that is derived from data from a moist tropical climatic zone. VVBs must assess whether the
methodologies that use models include basic requirements for model selection, parameterization,
calibration and validation to the local project area. VVBs must also assess whether methodologies include
a pathway for calibrating, or refining, the model uncertainty through the use of available data and/or
measurements.
5.2.6

Leakage

Overview
Methodologies must specify procedures for estimating leakage in project activities. Specific leakage
requirements for various AFOLU project categories are detailed in the AFOLU Requirements.
Key Elements
Assessing leakage can be challenging. Complex inter-linkages typically exist between a project activity
and the activities outside the project boundary. VVBs must consider whether changes in GHG emissions
outside the project boundary are directly attributable to the project.
Where a project results in a change in GHG emissions outside the project boundary, those emissions are
considered as leakage. A key question VVBs must consider when assessing leakage is whether the
methodology has accounted for potential upstream and downstream emission sources associated with
the project activity. For example, in a project activity that uses biomass to generate electricity and the
project boundary only includes emission sources within the generation site, upstream emissions that
result from the production of biomass should be evaluated. Given that a project activity can have multiple
upstream and downstream effects, VVBs should consider the significance of the effect and the extent to
which the effects are directly attributable to the project activity. The principle of relevance should be
applied in determining what constitutes leakage.
In some methodologies it may be necessary to evaluate and account for lifecycle emissions. Lifecycle
emissions are emissions associated with the product life from cradle-to-grave (ie, from raw material
extraction through materials processing, manufacture, distribution, use, repair and maintenance, including
disposal or recycling). For example, in fuel switch projects where conventional fossil fuels are replaced

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with biofuels, the seed to tailpipe emissions associate with biofuels, depending on how the biofuel is
produced, can be very significant.
In AFOLU methodologies, VVBs must ensure that the methodology has appropriate criteria and
procedures for addressing the following types of leakage, as applicable:

Market leakage: Projects may significantly reduce the production of a commodity, causing a
change in the supply and demand equilibrium, resulting in a shift of production elsewhere.

Activity-shifting leakage: The agent of deforestation and/or degradation may move to an area
outside the project boundary and continues activities elsewhere.

Ecological leakage: Wetlands restoration and conservation (WRC) projects may cause
changes in GHG emissions or fluxes of GHG emissions from ecosystems hydrologically
connected to the project area.

Criteria and procedures for determining leakage may either be within the methodology or a separate tool.
Where appropriate, the methodology may also reference approved tools for the estimation of leakage.
5.2.7

Monitoring
Keep in Mind

Overview
The methodology must provide the data and parameters to be
reported, including sources of data and units of measurement.
Key Elements
In assessing monitoring data and parameters, VVBs must
assess whether the default factors and standards used are from
a publicly available, reputable and recognized source (eg, IPCC
or published government data), peer reviewed, and appropriate
for the given source, sink or reservoir. The standards and
factors must also reflect current data.
Where methodologies do not provide data values, VVBs must
assess whether the methodology establishes appropriate
procedures for the project proponent to determine data values.

VVBs must assess the

appropriateness of monitoring and
quality assurance procedures set
out in the methodology. For
example, in an IFM project, a VVB
may need to assess whether
sufficient clarity on sampling
design is provided (ie, plot
location, sampling intensity and
stratification). In certain
methodologies, the procedures
may need to provide prescriptive
guidance with regard to
measurement procedures as well
(eg, the minimum diameter at
breast height (DBH) of trees to be
measured or minimum depth for
soil sampling).

VVBs must also consider whether the measurement methods

prescribed by the methodology are appropriate. For instance, in
some case direct measurements of GHG emissions may be feasible (eg, measuring the methane
captured in landfills through flow meters); in other cases, indirect measurements of GHG emissions

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combined with calculations may be more appropriate (eg, calculating carbon stock changes from models).
These choices may involve trade-offs between accuracy and uncertainty. If a methodology uses a less
accurate method for monitoring a particular GHG source or sink, the VVB must assess whether
appropriate procedures are in place to ensure that the estimates are conservative. As set out in the IPCC
Good Practice Guidance and Uncertainty Management, higher tier methods that involve direct
measurement result in more reliable estimates with reduced uncertainty. This implies that methodologies
that rely on low-tier approaches, such as the Tier One method of using default emission factors, must
ensure that the default factors are conservative to account for uncertainty.
Where methodologies require the use of remotely sensed data, VVBs must, at minimum, require that
internationally-recognized published guidelines are followed for evaluating remotely-sensed data.
Guidelines for estimating carbon stock based on forest inventories and remotely sensed data are found in
the IPCC Good Practice Guidelines for LULUCF and the Global Observation of Forest and Land Cover
Dynamics (GOFC-GOLD).

5.3

REPORTING REQUIREMENTS

Methodology assessment reports must clearly describe the process of the assessment as well as the
findings from the assessment.
VCSA provides a template for methodology assessments. The template requires that VVBs provide a
description of the assessment, the method and criteria used, and any findings of uncertainties related to
the methodology element. For each aspect of the methodology element, VVBs must assess whether and
how the criteria and procedures are appropriate, adequate and in compliance with VCS rules. All CLs and
CARs as well as the methodology developers responses need to be documented.
VVBs must ensure that the methodology assessment reports provide a sufficient level of detail to allow
VCSA and other intended readers to understand how the methodology conforms to VCS rules and
scientific best practice. For example, where a VVB relies on published peer reviewed studies to evaluate
the credibility of a procedure used in a methodology, the methodology assessment report should provide
references to the studies.

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APPENDIX 1: DOCUMENT HISTORY
Version

Date

Comment

v3.0

4 Oct 2012

Initial version released under VCS Version 3

v3.1

8 Oct 2013

Main updates:
1) Updated the methodology deviation and project description deviation examples
(Sections 3.2.6, and 3.2.7).
2) Clarified the use of the terms must, should and may in methodologies (Section
5.2).

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