In the shadow of the Kyoto Protocol, a voluntary carbon market is rapidly emerging to allow businesses, organisations, and individuals to offset their greenhouse gas emissions. Through the investment in projects that either save or sequester greenhouse gases, climate conscious consumers are able to purchase credits that ‘offset’ or ‘neutralise’ their contribution to global warming. This controversial practice has evolved into a multimillion-dollar industry that links an appetite for carbon neutrality with countless engineering ‘offset’ projects around the globe.
But what exactly is being offset? Are the offset projects producing reliable carbon reductions? How do these projects affect the local communities that host them? Where can one locate offset project information? How are credits verified and registered?
The voluntary market for carbon offsets is currently unable to answer these questions consistently. Unlike the Kyoto Protocol, which uniformly regulates project-based offset transactions, the voluntary market contains a number of different standards, protocols, and verification tools that contribute to a fragmented and muddled marketplace.
This research project therefore seeks to understand the extent to which the variety of emerging standards adequately meets the needs of the growing voluntary market for carbon offsets. The standards chosen for critique include:
• ISO 14064
• The CDM Standard
• The Voluntary Carbon Standard (draft version)
• The Voluntary Gold Standard
• The Climate, Community, and Biodiversity Standard
• Plan Vivo
• The Carbon Neutral Protocol
• Defra’s Voluntary Code (draft version)
To critique these standards, a review of current literature and stakeholder opinion identified a number of market needs that fit into the following seven assessment categories:
1. Wider Climate Change Efforts
2. Flexibility and Use
4. Credible Emissions Accounting
5. Responsible Development
6. Quality and Use of Offset Credits
Each standard was scored through a set of weighted criteria designed to critique the effectiveness of the standards in meeting the critical issues of the seven assessment categories above.
The assessment revealed that no single standard adequately meets all the needs of the voluntary market for carbon offsets. Collaboratively, however, pieces of each standard provide a credible structure for the comprehensive needs of the young voluntary market. Most standards evaluated in this report performed poorly in the Wider Climate Change Efforts category, revealing a bias toward offset projects and a general neglect for encouraging emission reductions, offset process governance, and wider climate change participation.
Baseline standards designed through international collaboration, such as the CDM or Voluntary Carbon standards, ensure robust emissions accounting and define a consistent credit and registration process, but fail to adequately address wider climate change efforts or sufficient sustainability criteria for the offset project host community. Alternatively, standards developed through NGOs, such as the Voluntary Gold or Climate, Community, and Biodiversity standards, excel at ensuring community benefit, but lack universal applicability by exclusively covering particular offset project types in specific locations.
The results of this study therefore suggest two key recommendations for the voluntary market. The first is to consolidate competing standards into one baseline standard, thereby establishing a consistent framework for voluntary carbon transactions. Given its performance in this assessment, the Voluntary Carbon Standard serves as an adequate starting point for this baseline. To compensate for weakness in promoting sustainable development, the VCS baseline should incorporate criteria from NGO standards to ensure environmental, social, and economic benefit for offset project host communities.
Secondly, this report recommends the development of a certification scheme for entities selling offset credits to encourage wider climate change participation and guarantee the credibility of information being relayed to the consumer. By following the ISO organisational certification model and using criteria from ISO 14064, the Carbon Neutral Protocol and Defra’s Voluntary Code, a successful certification scheme will increase trust and quality within the voluntary market.
Standards play an essential role in any activity by providing a structure and level playing field to allow the activity to continue successfully. In the context of voluntary offsetting, providing this structure is essential to achieving the scale necessary to put a dent in our climate crisis.