BeZero Carbon Sector classification system

What is it?

The BeZero Carbon Sector Classification system is a hierarchical sector classification system for the Voluntary Carbon Market (VCM) comprising three tiers: sector group, sector and sub-sector. VCM projects are classified based on a quantitative and qualitative assessment. Each project is assigned a single classification at the sub-sector level based on the primary activity undertaken by the project. Credit issuance is the primary factor in assessing a project’s major activity. Thematic consistency and market perceptions are also considered for classification purposes.

Background

Across the major global registries issuing carbon credits, there are inconsistencies in the labelling of sectors (also sometimes known as scopes) that projects lie in. These inconsistencies range from the number and names of sectors covered to downstream labelling of projects to their sub-sectors or identification as whether they are removal or reduction credits.

These meta-data labels play a key role in market analytics. BeZero has developed a three tier view to consolidate the makeup of the current market. Our data driven approach appropriately labels projects according to what a majority of their issuance activities contribute to.

In certain instances, various project activities have been condensed to single sub-sectors. For example, the sub-sector ‘Other Transport’ includes projects related to a range of activities including electric vehicles, fleet efficiency, and mass transit. Such examples occur when activity types contribute to a small fraction of the VCM’s overall issuance.

The BeZero Carbon VCM Sector Classification System

This section contains the three tiers of our classification system.

The BeZero sector hierarchy includes a number of distinct groupings not found in other market classification systems to reflect projects with distinctive features such as common ecosystems or technologies. Some notable examples include the following:

- Peatlands is a stand-alone subsector within Soil Carbon and Nature Based Solutions. Typically, many of the large peatlands projects follow REDD+ methodologies and are classified as such by many organisations. However, we believe that the unique ecological characteristics of peatlands - notably large below ground carbon pools - warrant a separate classification.

- The Grasslands sub-sector includes project activities leading to increased carbon stocks in grasslands including both wild and in farmed landscapes. Rotational grazing and other regenerative livestock farming practices are common features particularly for the latter.

- Regenerative Agriculture therefore tends to include arable farming related activities aimed at soil organic carbon (SOC) sequestration. These include reductions in tillage and fertiliser application among other potential activities.

- Blue Carbon is a separate sector reflecting the growing interest in blue carbon as a Nature Based Solution and the emerging pipeline of VCM projects. We have 3 sub-sectors within Blue Carbon, one each for Mangroves, Seagrass & Seaweeds, and Wetland Restoration. Note that Mangroves projects could involve either REDD+ or ARR activities, or both.

- The Tech Solutions sector group is geared to the emerging carbon removal sector linked to new and innovative technologies. These include technologies used purely for carbon removals such as Direct Air Capture, in the Building Materials sector, or downstream in agriculture such as Biochar.

BeZero Sector Classification Definitions

This section contains definitions for each sector group, sector and sub-sector, broken down by sector group.

1. Energy

Projects that generate emission reductions by increasing the efficiency of energy generation systems.

2. Household Devices

Projects that develop and distribute energy efficient technologies which serve to lower the emissions associated with household equipment.

3. Industrial Processes

Processes that lower the emissions associated with large-scale industry.

4. Nature Based Solutions

Projects that protect, restore and manage affected ecosystems.

5. Tech Solutions

Projects that involve implementing processes and technologies to improve carbon capacity and generate environmental benefits.

6. Waste

Projects that reduce emissions associated with the waste sector.

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