Carbon offsets 101
For many organisations carbon offsets can be a useful part of an overall Greenhouse Gas (GHG) reduction strategy when used in conjunction with genuine emission reductions. In essence an offset is purchased to counterbalance or compensate for emissions generate by an organisation. One carbon offset cancels out 1 tonne of carbon dioxide equivalent (CO2e) emissions.
Whilst the potential benefits of carbon offsets have received a huge amount of press recently, not all of the coverage has been favourable and it can be confusing for organisations trying to figure out just where offsetting fits into their carbon emissions management strategy.
Offsets are sometimes seen as a easy “get out” for organisations not willing or able to make tougher internal decisions associated with emission reductions. Furthermore, there is still a good deal of uncertainty and misinformation around exactly which type of carbon offsets should be purchased and the relative pros and cons of the different offset options on the market.
An important decision to make for an organisation looking to acquire offsets is whether to purchase them from the regulated Kyoto-compliant market, delivered under the Clean Development Mechanism (CDM), or from the unregulated voluntary market. Certified offsets bought and sold through the CDM are known as CERs or Certified Emission Reductions. Offsets bought and sold through the voluntary market are know as VERs or Voluntary Emission Reductions.
CERs
Under the Kyoto protocol, developed countries can choose to invest in GHG emission reduction schemes in developing countries, the idea being that the overall global cost of reduction is lower. Key to this approach, and indeed to all offset schemes, is the concept of additionality i.e. that the GHG emission reductions would not have occurred without the additional incentive provided by the offset payment.
CERs have become the official international currency for trading emissions reductions and around two billion CERs are expected to be generated by the end of the first phase of Kyoto in 2012. CERs provide arguably the highest quality carbon offset.
VERs
The alternative to CERs is to purchase VER offsets. Whilst a VER credit will, in theory, provide the same offset as a CER credit, VERs are not currently regulated in the same way and will not necessarily have gone through the same rigorous certification process as CERs. VERs can vary significantly in their quality depending on the supplier and you should perform your own due diligence prior to making a purchasing decision.
Although the VER market might look a little too unregulated for some organisations’ liking, there are a number of global and national standards you should look out for when purchasing this type of offset.
Globally, The Gold Standard and Voluntary Carbon Standard provide the highest level of VER accreditation. If you’re looking for qualify VERs, or your organisation is global and wants offsets that can be used internationally, then these two standards are the ones to look out for.
In addition to these two global standards, in Australia you can also purchase offsets accredited under the Greenhouse Friendly scheme and NSW Greenhouse Gas Abatement Scheme (GGAS)
Who to buy your offsets from
When it comes to deciding who to purchase your offsets from there are three choices, a retailer, a broker or a wholesaler, and as you’d expect prices generally increase as you go up the offset supply value chain. Ask sellers to disclose how much of the company’s money goes directly to the project and how much covers their administrative costs.
For a list of offset providers in Australia, together with the standards under which each provider is accredited, take a look at the Carbon Offset Guide website.
Keep reviewing your offsetting approach
An organisation’s carbon emissions footprint and approach to emissions management and reduction will no doubt change over time. The carbon market is also likely to change in the coming months and years. This is particularly true in Australia with the introduction of the Carbon Pollution Reduction Scheme. With this in mind, organisations should ensure their approach to carbon offsetting is reviewed on a regular basis to ensure it is still in line with strategic goals and best practice.
Tags: additionality, carbon offsets, cdm, cers, the gold standard, vers, voluntary carbon standard
