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Ratings Explained

The need for carbon ratings arises from a situation in which projects, developed with the intention of offsetting carbon emissions, face the risk of under-delivering on promised emissions reductions. A project's likelihood of generating carbon offsets is proportional to the value an investor will pay for the credits. Ratings offer an independent opinion on the likelihood of a project's ability to deliver carbon emissions reductions compared to its PDD estimates. A developer's ability to attract investment may increase when its projects are rated, while from an investor point of view, rated projects provide assurances of risk for capital commitments.

Carbon assets not only face the usual array of delivery risks – country-specific, political, financial, performance-linked, force majeure etc. – but are also subject to a high degree of regulatory and monitoring risks. These additional risks associated with the future delivery of contract obligations are dependent on the methodologies used, the status and timing in which the project is completing the applicable framework cycle, and the ability to monitor carbon emissions.

In this environment of uncertainty, the Carbon Rating Agency (CRA) provides quality risk assessments in relation to the performance prospects of projects implemented under the Clean Development Mechanism (CDM), Joint Implementation (JI) or Voluntary Market. Our risk assessments are available for the individual projects at all stages and are also applicable for offset portfolios or other carbon-linked instruments. The CRA bases its risk analysis on a combination of expert evaluation, standardised and transparent risk analysis tools, and input from its independent rating committee, which comprises of experts from both Carbon & Financial Markets.

By delivering quality ratings, CRA brings transparency and transactional efficiency to the market.

Please visit our "Services" page to learn more about our different rating services.