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Finding your way through the fog of offset standards

CCX, CDM, VCS, VOS, VER+, DECC Quality Assurance Scheme...digesting the list of carbon offset standards is like feasting on a bowl of alphabet soup. The sheer volume of standards adds to the confusion and creates the need for a measurement process for the standards themselves. Convergence is happening, slowly, but the market is still very fragmented, making it hard for companies to determine which to go for.

The purpose of all but one of these offsetting standards is to regulate the production of offset credits from projects, often, but not always, in developing countries. Each standard has a set of criteria that a project must adhere to. 

The main point of differentiation is the type of project a standard will admit. Most standards allow for energy efficiency projects, for example the large-scale deployment of energy-saving light bulbs; renewable energy projects, such as wind turbines, hydroelectric dams, solar panels and biofuel generation; and methane capture projects, which capture the methane emitted by landfill sites or agriculture and burn it, turning it into carbon dioxide which has a much lower global warming potential.

More divisive is the inclusion of REDD (Reduced Emissions from Degradation and Deforestation): projects that protect areas of forest from being chopped down. The idea, whilst uncontroversial in itself, has been the subject of challenging international negotiations. It is notoriously hard to calculate the emissions reduction from such projects, as it involves complex assumptions far into the future. In preventing deforestation of a specific area it is also hard to know whether the logging has moved elsewhere, and hence whether emissions have in fact been reduced. In addition, the carbon reductions take a long time to materialise (over the lifetime of the tree), whereas what is usually being offset is emissions that have already happened. Finally, concerns are held over the lack of permanence of the reduction - the tree will eventually decompose/be burned and release the carbon emissions back into the atmosphere.

Projects that most standards won’t touch with a bargepole include nuclear power and destruction of HFCs (gases with a high global warming potential that are produced by industrial processes). HFC projects are contentious because they effectively reward companies for the destruction of gases that many believe should not have been produced in the first place  Such projects are permitted by only three standards: the Voluntary Carbon Standard (VCS ), the Chicago Climate Exchange (CCX) and VER+.  Nuclear projects are only permitted by CCX and VER+.

The second area of differentiation concerns ‘co-benefits’, the measurement of benefits that are additional to the reduction in carbon dioxide. The most stringent in this area is the WWF’s Gold Standard, which aims to ensure that offset projects also 'do no harm' and contribute to sustainable development. The Ecologica Institute’s SocialCarbon standard also focuses on the co-benefits of projects and is now being combined with other standards such as the VCS to improve projects' social and environmental credibility.

The final area of differentiation is with regards to the methodology used to calculate the emissions reductions arising from the project. The vast majority of standards assure that the emissions reductions are verified by an independent third party, are additional to reductions which would have occurred anyway and are reported into a registry to ensure transparency and the avoidance of double counting. The CDM and Gold Standard go further and separate out the verification and approval process. This goes some way to avoiding conflicts of interest, for example where bodies that approve projects are paid by the project developers.

The Department of Energy and Climate Change (DECC) Quality Assurance Scheme is a slightly different type of standard to the others. Rather than providing a set of criteria for assessing the robustness of project offsets, instead it recommends two types of credit, CDM credits and EU Allowances, the latter of which is not based on projects at all. EU Allowances are industrial ‘pollution permits’, and using them for carbon offsetting involves permanently removing them from the EU Emissions Trading Scheme so they cannot be used by the industrial companies that need them. This means the companies need to reduce their emissions instead of buying permits and continuing to pollute.

The Quality Assurance Scheme also ensures that the methodology used to calculate carbon footprints meets the Government’s specifications.

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