Ozone-depleting substances (ODSs) are greenhouse gases (GHGs) that harm the ozone layer and have an outsize impact on our climate. Companies have historically used ODS gases in refrigeration and other industrial and commercial applications, but the international community is phasing out the production of new ODS gases. Existing ODS gases are still a threat, as they escape into the atmosphere during storage, use, or equipment servicing. ODS destruction projects reduce ODS emissions by collecting these gases before they reach the atmosphere, then destroying them permanently.

This credit type is highly additional and impactful, incentivizing the permanent disposal of potent GHGs that current regulations fail to address. The market’s reaction to ODS credits reflects their value: multiple ODS methodologies have received Core Carbon Principles (CCP) approval from the Integrity Council for the Voluntary Carbon Market (ICVCM), and ODS credits have one of the strongest retirement rates of all credit types.

Still, ODS projects come with risks — particularly in monitoring, reporting, and verification (MRV) and assumptions to set the baseline scenario — that developers can mitigate:

• Tracking ODSs and maintaining their legal documentation is challenging. If a project doesn’t get it right, it may fall out of compliance with the standard’s requirements or struggle to verify the destruction of ODSs. Projects can mitigate this risk by working closely with the host country to track ODSs and ensure compliance, and by using digital MRV and data-security measures to more efficiently and transparently prove the chain of custody of ODS gases.
• Baseline assumptions about ODS leakage rates involve uncertainty, and improper baseline assumptions could lead to over- or undercrediting. These risks are well-mitigated by the conservative accounting measures in the active methodologies, but further research into how often technicians vent ODSs and how quickly they leak from storage containers and appliances can improve the accuracy of current baseline assumptions.

Overall, ODS collection and destruction projects face three challenges to reaching scale: limited availability of destruction facilities in developing countries, high recovery costs for ODSs in hard-to-reach sources, and import and export barriers for transporting ODS gases. Carbon finance can help to overcome these hurdles by supporting the development of additional destruction facilities, driving research into new technology for recovering or destroying ODSs, supporting solutions to logistical challenges, and building local capacity to manage ODS gases.

Ozone-depleting substances (ODSs) are powerful superpollutants that were once widely used in refrigeration, air conditioning, fire suppression systems, and insulation foam. These substances — which include chemicals like chlorofluorocarbons (CFCs), hydrochlorofluorocarbons (HCFCs), and halons — earned their name because they destroy the ozone layer that protects life on Earth from harmful radiation. ODSs are also potent greenhouse gases, with global warming potentials hundreds to thousands of times that of carbon dioxide.

This double-edged threat to the climate and the ozone layer led the international community to heavily restrict the production and trade of new ODSs under the Montreal Protocol (see box below). These restrictions, however, haven’t stopped emissions: ODS gases already in circulation continue to leak out of equipment, storage containers, and discarded appliances. Even where it is illegal to release ODSs, companies and individuals often vent these substances at the end of their useful life, especially where disposal infrastructure is lacking and law enforcement is weak.

This is where ODS destruction projects come in. These projects provide credits for safely collecting and destroying both virgin and used ODS gases, providing a crucial financial incentive for activities that current policy frameworks do not support. By doing so, these projects offer a highly additional and impactful climate benefit. But despite their high integrity, ODS projects face hurdles to scale due to the logistical and legal challenges of ODS recovery and transport. The VCM has the potential to help ODS crediting projects overcome these hurdles, unlocking a pathway to eliminating some of the world’s most dangerous atmospheric pollutants.

ODS destruction projects permanently eliminate ODS gases that would otherwise leak into the atmosphere. Project developers first collect the gases from existing cylinders, stockpiles, or equipment, then transport them to a certified destruction facility. Generally, these destruction facilities meet strict performance standards set by the Montreal Protocol’s Technology and Economic Assessment Panel (TEAP), ensuring the near-complete breakdown of ODS gases into inert compounds. Once destroyed, these gases are gone for good and can no longer contribute to ozone depletion or climate change.

Barriers to ODS Destruction

While the science behind ODS destruction is proven, creating a viable project requires time, technical expertise, and intentional design. Several barriers make scaling these projects difficult:

1. There are a limited number of destruction facilities. Most TEAP-approved ODS destruction facilities are in developed countries (i.e., non–Article 5 countries). Building new destruction facilities in Article 5 countries is expensive and technically demanding, forcing many project developers to transport ODSs abroad — which is expensive, time-intensive, and heavily restricted.
2. The Basel Convention restricts ODS transportation. This treaty regulates the cross-border movement of hazardous waste, including ODS gases, meaning project developers must navigate complex paperwork and acquire consent from both the exporting and importing governments. In rare cases, it can become legally impossible to move ODS gases across borders.
3. There are gaps in technical capacity for recovery. Safe ODS handling requires skilled technicians, specialized equipment, and robust infrastructure. In many Article 5 countries, these resources are scarce, and without them it’s impossible to collect gases at the volume and purity required for carbon crediting to be economically viable.
4. Some forms of ODSs are not economically feasible to collect or destroy. As compared with refrigerant gases, ODSs in foams are far more challenging and expensive to extract. It’s hard to quantify how much ODS may be in a piece of foam without extracting it, making it nearly impossible for a project developer to assess whether it is worth destroying foam for crediting. Foam itself also presents a logistical challenge: moving around potentially massive quantities of foam is cumbersome and rarely economical.

Due to these barriers, virtually all ODS projects today collect and destroy CFC gases used in cooling systems because they are easier to access, especially in developed countries with robust refrigerant management infrastructure. However, this leaves a massive untapped source: appliance and insulation foams, which still hold at least half of all remaining ODS gases. In addition, few projects both source and destroy ODSs in Article 5 countries due to the lack of available destruction facilities. Most projects opt to move ODSs to developed countries for destruction.

While these challenges are significant, project developers can overcome them with the support of carbon finance, especially when credit purchasers invest in long-term, forward offtake agreements and are willing to pay a higher price per credit. With this financial support, project developers can navigate regulatory barriers and work closely with national and regional authorities to plan ODS recovery and transport. Pre-credit funding can also catalyze technician training, expand ODS destruction infrastructure, support research into managing and extracting ODSs in foam, and potentially unlock new technologies — such as mobile ODS destruction — especially in Article 5 countries where governments lack the capacity to manage ODS banks.

The market for ODS recovery and destruction credits is well-developed, with ample room for further growth in developing countries.

The Climate Action Reserve (CAR), the American Carbon Registry (ACR), and the Verified Carbon Standard (VCS) offer six methodologies for ODS destruction on the VCM (see Exhibit 1). Each methodology defines the eligible ODS types (for example, CFC refrigerants), source geography, and destruction geography. Aside from these distinctions, the methodologies take very similar approaches to GHG accounting. Collectively, these standards have issued nearly 7 million credits, of which 5.1 million have been retired. The retirement rate of 73.5% is the highest of all project types with more than 1 million credits, indicating sustained demand for these credits.

Exhibit 1. Methodologies for ODS Recovery and Destruction

Standard	Methodology & Date of Last Update	ICVCM Core Carbon Principles (CCP) Status	Credits Generated as of 2025	Registered Projects	Projects Generating Credits	ODSs Eligible for Destruction	ODS Source Geography	ODS Destruction Geography
American Carbon Registry	ACR Destruction of Ozone Depleting Substances and High-GWP Foam, v2.0 (2023)	Under assessment	937,659	16	16	CFCs, HCFCs, or halons from refrigerants, solvents, fire suppression, medical aerosols, or foam-blowing agents	US or Canada	Global
American Carbon Registry	ACR Destruction of Ozone Depleting Substances from International Sources, v1.0 (2021)	CCP approved	1,694,871	20	14	CFC refrigerants	Outside US	Global
Climate Action Reserve	CAR Article 5 Ozone Depleting Substances Protocol, v2.0 (2012)	CCP approved	4,009,926	5	5	CFC refrigerants	Article 5 country	US
Climate Action Reserve	CAR U.S. Ozone Depleting Substances Protocol, v2.0 (2012)	CCP approved	65,808	3	2	CFC refrigerants and CFC or HCFC foam-blowing agents	US	US
Verified Carbon Standard	VM0016: Recovery and Destruction of Ozone-Depleting Substances (ODS) from Products, v1.1 (2017)	Did not apply for assessment	179,088	4	2	CFC or HCFC refrigerants or blowing agents from refrigerator insulation foam	Global	Global

To date, nearly three-quarters of all credits have originated from projects destroying ODS gases in the United States, where access to reclamation technology, technicians, and certified destruction facilities is well-established (see Exhibit 2). Thailand has also generated a notable number of credits, mainly due to a public–private partnership between the Thai Government and the project developer Tradewater to destroy ODS stockpiles collected by Thai Customs. Most ODS credits are on the CAR (58.5%) and ACR (39.0%) registries, with a smaller share on the VCS registry (2.5%).

Exhibit 2. Proportion of VCM ODS Destruction Credits by Country

Country	Share of Credits Issued as of 2025
United States	74.6%
Thailand	16%
France	4.8%
Ghana	2.2%
Canada	2%
Dominican Republic	0.3%

CAR led the early development of ODS destruction methodologies, with many of the CAR issuances beginning in 2009 and peaking in 2010, just after CAR released its first protocols (see Exhibit 3). CAR credit issuance has since declined due to two factors. First, the two US CAR protocols only allow developers to destroy CFC refrigerants, the supply of which is declining globally and is nearly depleted in the United States due to the Montreal Protocol. Second, ODS destruction is one of a handful of carbon project types accepted by the California and Washington compliance markets. The two states’ compliance markets offer a higher average price per credit than the voluntary market, attracting participation from many US-based project developers.

The California and Washington markets have generated over 27 million ODS credits since 2008 — nearly four times as many as the VCM (see Exhibit 3). Between 2012 and 2020, 20 million credits went live on the California compliance market, cutting into the US-based voluntary credit supply that otherwise may have gone to CAR. (The ACR methodologies arose after the CAR methodologies and expanded on both the geographies and ODS types permitted under the CAR methodologies.)

Exhibit 3. Issuance of ODS Destruction Credits

ODS destruction is a highly additional project type and has significant environmental and social co-benefits compared with other industrial credit types. The key risks relate to the MRV of the chain of custody for ODS gases and, to a lesser extent, baseline assumptions about ODS leakage rates (see Exhibit 4). (For more on how we evaluate risk severity and prevalence, see Appendix II.) These risks are well-mitigated by the active methodologies, but developers that implement digital MRV and work closely with their host country to ensure secure tracking of ODSs can further reduce these risks.

Exhibit 4: Carbon Credit Risk Matrix for ODS Recovery and Destruction

Quality Criteria	Risk Severity	Prevalence
Additionality/Baselines	Low Concern	Common
Leakage	Low Concern	Uncommon
Permanence/Durability	Negligible Concern	Rare
GHG Accounting	Low Concern	Uncommon
Monitoring, Reporting, and Verification	Low Concern	Very Common
Socio-Environmental Safeguards	Low Concern	Uncommon

Additionality/Baselines: Low Concern, Common Prevalence

Users often vent ODS gases illegally at end-of-life or simply allow them to leak over time from equipment or storage. Even under best practices, all ODS gases will inevitably end up in the atmosphere without intervention, underscoring the high additionality of these projects. Due to uncertainty in ODS leakage rates, some risk lingers in how projects set their baselines, but the active methodologies mitigate this risk well.

Baseline rates of ODS leakage are not perfect but are well-managed by methodologies. To determine how many credits their project can earn, developers must estimate how much of the ODS would have leaked without their intervention. This leakage rate varies depending on whether the gas is stored, in use, or likely to be vented, but the data to support these distinctions is limited. Venting is illegal and underreported, so it isn't always clear how often venting occurs. Similarly, scientists don't always have accurate ODS leakage rates from appliances or storage containers, because such leakage is understudied.

To manage this uncertainty, active methodologies use conservative assumptions. For example, they often assume gradual ODS leakage in developed countries, even where venting is common; this approach likely underestimates avoided emissions and thus limits the credits a project can earn. Methodologies also require project developers to align their baseline assumptions to their country's context and use location-specific data where available, further reducing the risk of overcrediting.

A philosophical debate on the ODS crediting approach is ongoing. Some scientists argue that ODS destruction projects should receive credits gradually over time, mirroring how ODS leakage emissions would have occurred in the absence of a carbon project. This "gradual" crediting model resembles the approach that forest carbon projects use, where standards issue credits annually as the avoided emissions are realized. However, all current methodologies use a "bulk" crediting approach where project developers receive all credits once they have verified ODS destruction. Proponents of the bulk approach argue it reflects the permanent and immediate climate benefit of removing ODS gases from circulation, and that it avoids unnecessary, artificial delays in crediting for ODS project developers who already must contend with high up-front project costs.

This debate does not ultimately undermine the integrity of ODS recovery and destruction projects, where the key quality indicator is whether the developer correctly estimates the total volume of verified emissions reductions. Buyers may encounter this distinction while comparing credits from other methodology versions, but by our analysis, it is more a matter of accounting philosophy than a substantive indicator of quality.

Leakage: Low Concern, Uncommon Prevalence

The "leakage" risk of carbon projects refers to the possibility of triggering GHG releases outside the scope of the project — that is, when an action to reduce emissions from one sector or geography causes increased emissions somewhere else. The leakage risk for ODS destruction is minimal, since most recovered gases have no realistic path back to market. Active methodologies mitigate leakage by requiring project developers to account for potential emissions increases when technicians substitute another chemical for the destroyed ODS.

Leakage can occur if a project destroys an ODS that technicians need to service existing equipment. Some companies and government agencies still use ODS gases to service old equipment. Whether a technician would reuse an ODS depends on the purity of the ODS, whether shipment and reuse are technically and economically feasible, and whether the technician can feasibly replace the ODS-charged system with one that doesn't use ODS gases at all. If an ODS project destroys a gas that a technician needs, then the technician will either purchase more of that gas from dwindling stockpiles or replace the ODS with a substitute system or different gas that creates a new source of emissions.

Most recovered ODS gases are not pure enough for reuse, or can't be legally resold, so they wouldn't realistically be recycled anyway: 90% of refrigerants in end-of-life equipment are vented in the United States, and this number is closer to 100% in the developing world. Globally, companies are also phasing out legacy equipment, replacing them with advanced alternatives. So, while leakage from substitute gas emissions is possible, it is rare in practice.

To reduce the risk of leakage, methodologies limit the types of ODS gases that project developers can credit. For example, the methodologies may not allow developers to destroy ODS gases that are still in production, or that technicians need for military, aviation, and other critical uses. Methodologies also require projects to account for substitute chemical emissions when relevant. Some buyers and developers may go a step further by assessing their local ODS demand and chemical substitute markets before moving forward with a destruction project.

Permanence: Negligible Concern, Rare Prevalence

This credit type generates emissions reductions by destroying ODS gases that would otherwise leak into the atmosphere. The ODS destruction process is not reversible, so the climate benefits of these projects are permanent.

GHG Accounting: Low Concern, Uncommon Prevalence

The GHG accounting for ODS destruction is relatively simple, which helps reduce the risk of incorrect emissions estimates. The biggest risk stems from minor leaks or overestimation of the ODS volume a project destroys, but methodology requirements largely mitigate this risk.

Project developers must manage ODS gases seeping from their containers and ensure they only receive credit for the exact volume of ODSs they destroy. Projects can inadvertently cause ODS gas emissions when extracting the gases or transferring them from one container to another — typically 1%–3% of ODS gases leak during transfer to storage. If the gases sit in storage for extended periods before destruction, ODS leaks can also occur through slow seepage. To minimize this accounting risk, active methodologies require projects to abide by the best management practices established by the International Organization for Standardization (ISO), US Environmental Protection Agency (EPA), and industry norms. When technicians use these best practices, emissions are usually negligible. Methodologies also require project developers to use ISO-certified containers that are less leak-prone and to destroy ODSs in a timely manner.

Most importantly, project developers must cross-check their gas volumes: while technicians may measure ODS volumes at the point of collection, standards only issue credits for the volume that is independently measured and confirmed by the destruction facility. Developers must ensure their destruction facility complies with TEAP facility requirements and must deduct credits for any ODS that the destruction facility fails to fully destroy (usually well below 1% of the ODS volume).

Monitoring, Reporting, and Verification: Low Concern, Very Common Prevalence

Monitoring, reporting, and verifying (MRV) ODS destruction projects can be complex, especially when project developers aggregate ODS gases from multiple sources or from overseas. The key MRV risk is that projects fail to properly track and document ODSs, but available methodologies set high standards for how developers mitigate this risk.

Verifying the ODS chain of custody is complex. ODS gases vary widely in their legality and trackability. Some project developers work with a government to destroy their country's stockpile, so they have ample access to records that detail the gases' origin, use, and composition. Other project developers source ODS gases from many different discarded appliances across a vast region or acquire privately held ODS banks of questionable origin. To ensure the integrity of an ODS destruction credit, the project developer must be able to show their standard that the ODS comes from an eligible source (see Exhibit 1). The developer must also closely track the transportation of that ODS to its destruction facility. This requires navigating lengthy and complex legal processes and ensuring the gases are securely exchanged from one party to another.

Ensuring a secure chain of custody is one of the key challenges to implementing an ODS project, and methodologies impose strict requirements on project developers in this regard. When executed according to methodology rules, chain-of-custody requirements prevent fraud and ease the burden on third-party verifiers. The strongest projects further mitigate the risk of losing track of ODSs by working closely with importing and exporting governments, managing documentation electronically, thoroughly vetting their ODS suppliers, and using robust data security practices to reduce errors and prevent data manipulation.

Socio-Environmental Safeguards: Low Concern, Uncommon Prevalence

ODS projects provide major social and environmental benefits by preventing ozone layer depletion and abating some of the most nefarious climate pollutants in existence, ultimately delivering benefits far beyond their project boundaries. However, equity concerns have emerged around how and where financial benefits are realized.

ODS destruction should build local capacity where possible and should not exacerbate existing inequities. Most projects source ODS stockpiles from Article 5 countries and transport them to developed countries for destruction. In these cases, the existing methodologies do not require the project developer to compensate the country of origin, nor to invest in building local ODS management capacity. This can exacerbate the already severe climate and financing inequities, where developing countries are locked out of credit revenue due to limited infrastructure or regulatory hurdles.

To avoid this harm, both buyers and standards should prioritize implementing clear cooperation and benefit-sharing agreements with ODS source countries and aim to destroy ODSs in their country of origin when possible. Projects that go above and beyond will invest in training, infrastructure, and recovery systems when working in Article 5 countries. When project developers integrate equity and capacity-building into their project design, ODS destruction can deliver significant climate mitigation benefits and enhance climate justice efforts.

ODS recovery and destruction projects offer some of the highest-impact climate credits in the VCM and deliver outsize social and environmental benefits compared with other industrial credit types. The ICVCM approval of multiple ODS methodologies underscores this credit type’s credibility, and the growing global demand to reduce cooling emissions will ensure these projects have a place in the VCM for years.

Still, scaling ODS destruction remains a challenge. Most TEAP-approved facilities are in developed countries, while many of the highest-risk ODS stockpiles remain in Article 5 countries. Transboundary regulations such as the Basel Convention, limited local infrastructure, and the need for careful chain-of-custody management all constrain expansion. More research into how to quantify and manage ODS gases in hard-to-access supplies, including insulation foams, is also urgently needed.

Carbon finance can play a catalytic role in closing the remaining gaps, and buyers, developers, and standards can all help accelerate progress. Buyers can prioritize long-term forward offtake agreements that empower developers to tackle high up-front costs and logistical and technical challenges. Developers can further build infrastructure and capacity in underserved geographies, ensuring Article 5 countries can rise to the challenge of managing remaining ODS stockpiles. Standard-setters and researchers can investigate and approve new quantification and technological approaches to ODS management, allowing this credit type to expand its breadth of ODS emissions mitigation. With these steps, ODS recovery and destruction can become a cornerstone of the high-integrity VCM.

We are grateful to the Ripple Impact Fund, an advised fund of the Silicon Valley Communication Foundation, and the Cisco Foundation for their generous financial support for this project.

We are also grateful to Anastasia O’Rourke (Carbon Containment Lab), Gabrielle Dreyfus (Institute for Governance and Sustainable Development), and Gabe Plotkin (Tradewater) for sharing their time and expertise to inform this explainer.

Acronym List

ACR – American Carbon Registry
CAR – Climate Action Registry
CCP – Core Carbon Principles
CO₂ – Carbon dioxide
CFC – Chlorofluorocarbon
EPA – Environmental Protection Agency
GHG – Greenhouse gas
HCFC – Hydrochlorofluorocarbon
HFC – Hydrofluorocarbon
ICVCM – Integrity Council for the Voluntary Carbon Market
MRV – Monitoring, reporting, and verification
ODS – Ozone-depleting substance
TEAP – Technology and Economic Assessment Panel
VCM – Voluntary carbon market
VCS – Verified Carbon Standard

Risk Assessment

CMI reviewed resources from across the VCM and each credit type's sector to develop neutral, succinct risk profiles. We focused on the most crucial risks to quality, their drivers, how standards require projects to mitigate these risks, and how projects could mitigate these risks beyond the standard requirements. We mapped these factors to help stakeholders understand how to think about risk management within a particular credit type.

We looked at both risk severity and prevalence, giving an average score for each based on all identified risks and their mitigation measures.

We define risk severity as the extent to which the identified risks threaten the integrity of the credit type. We reduce risk severity to match the effectiveness and feasibility of the current available and required mitigation measures in the literature. Our risk severity scoring options are as follows:

1. High concern means the identified risks seriously impact project credibility. These risks either lack mitigation measures, or the available mitigation measures are ineffective, or the mitigation measures are difficult for the project developer to access or apply.
2. Medium concern means the risks significantly impact project credibility, and mitigating the risks requires effort — above and beyond basic methodology or standard requirements — on the part of the project developer.
3. Low concern means that the projects have some risk, but these risks are easily mitigated by the project, generally through methodology or standard requirements.
4. Negligible concern means there is little or no risk to a given criterion, and mitigation is not necessary.
5. Not enough information means there is no credible analysis or opinion in the literature on the relevant risks and mitigation measures that would enable an informed decision.

We define risk prevalence as the likelihood that projects within the credit type encounter the risks we identified. To evaluate prevalence, we assessed the frequency with which credits would encounter each risk, regardless of whether the risk was mitigated. While the mitigation measures are incorporated into the severity score, mitigation feasibility and efficacy are not incorporated into the prevalence score. Our risk prevalence scoring options are as follows:

1. Very common means all or most credits in this type will encounter the risks identified (approximately 75% or more of credits in the type).
2. Common means many credits (approximately 30%–75% of credits in the type) will encounter the risks identified.
3. Uncommon means fewer than half of all credits under the credit type will encounter the risks identified (approximately 10%–30% of credits in the type).
4. Rare means none or almost none of the projects/credits in the credit type will encounter the risks identified (approximately 10% or less of credits in the type).
5. Not enough information means there is no credible analysis or opinion in the literature on how often projects encounter these risks that would enable us to make an informed decision.

Within each credit type, there may be multiple methodologies and activity types. We've generated risk profiles that provide the average risk severity and prevalence for the credit type broadly.

Example of Risk Scoring

Let's put this into perspective with an example: many nature-based credit types, like reforestation or grassland management credits, face challenges with nonpermanence, because it is hard to guarantee that carbon will remain stored in trees or soil over time. Factors like wildfires, extreme weather, and pests are often outside a project developer's control, and because these risks are inherent to nature-based projects, a typical assessment might flag permanence as "High Concern" and "Very Common."

Our analysis goes a level deeper, looking at how active methodologies and project developers work to address risks — for example, through buffer pool contributions required by registries, or through additional tools like credit insurance and community-centered project design. If these mitigation measures are strong and widely adopted, we might downgrade risk severity to "Medium Concern," meaning the risk is still serious, but there are effective ways to manage it.