02.How carbon standards work
There are different quality offsets around and... the buyer has to beware. It's a matter of making sure the offsets you're buying are certified.
Alan Pears, VCMA Board member
The question that begs to be asked is can consumers trust that offsets validated under the two main standards – VCS or GS – are genuine, or is it still the Wild West out there?
CHOICE spoke with several industry experts who told us that, while offsetting has a sketchy past, the majority of providers in Australia now are legitimate as a result of stringent standards.
Alan Pears is an adjunct professor at RMIT University and a member of the Board of Voluntary Carbon Markets Association (VCMA) and the Advisory Board of the Climate Alliance. He believes standards set in Australia and internationally are providing more certainty in the market. “It is certainly improving,” he says.
“There are different quality offsets around and, at the moment, the buyer has to beware. It’s a matter of making sure the offsets you’re buying are certified.”
Martijn Wilder, head of Baker & McKenzie’s global environmental markets practice and professor of Climate Change Law at the Australian National University, agrees. “There used to be more rogue traders, but there are very few these days as the market is much more regulated and buyers are more educated. There are formal approval bodies and formal registry systems, there is greater government regulation and the ACCC has been active in enforcement.”
Freddy Sharpe, CEO of offset provider Climate Friendly, says the process for having projects verified under the standards is rigorous. “You need to submit a plan for approval, it must be constructed and then verified [to ensure] it works, then later audited to make sure it’s been operating as planned. All those reports by auditors are available [online] on public registries. They’re verified by internationally approved auditors – the same ones who validate Kyoto projects.”
While some projects verified by reputable standards are riskier than others, the riskier the project the more of a buffer zone that is built into it. For example, Wilder says that for forestry projects that traditionally involve planting trees, there is a risk that trees may be destroyed before the project reaches maturity. For this reason, project operators must plant more trees than necessary to generate their carbon units, and must provide alternative credits to consumers in case of project failure.
There is heated debate surrounding whether Australians ought to buy carbon offsets locally or if they are better off buying internationally as a result of our Kyoto obligation to cut emissions.
Many believe that carbon offsetting projects in Australia reduce the amount by which the big polluters need to cut their emissions in order to achieve the Kyoto targets.
This may have been true when Kyoto was first signed but that’s no longer the case, says Peter Shuey, chair of the Technical Sub-Committee of the VCMA and executive director of ACXargyle, the operator of Australian CO2 Exchange.
Wilder says that the government is not counting an individual’s reduction in emissions or carbon offsets as part of its compliance with Kyoto. He adds that individuals can feel confident that offsetting their own emissions won’t impact on the compliance targets of governments and large companies.
Gourmet or basic?
In Australia, where there is no mandatory requirement for individuals to reduce emissions, offsets can be bought voluntarily. Consumers can either buy directly through specialised carbon offset retailers, or choose to offset certain activities, including air travel, through third parties such as airline companies.
There are several types of offsets available to minimise your carbon footprint. Whether you choose to tick a box at the time of purchasing a ticket for air travel or offset your carbon on your own, if the offsets are certified by the VCS or GS, they’re likely to be legitimate.
Depending on the type of project, offsetting a tonne of carbon can cost less than $10, while other projects can cost more than $50.
Types of projects include methane removal, renewable energy, energy efficiency, industrial gas, forestry, and co-beneficial projects which go beyond just greenhouse gas reduction.
Sharpe says, “Congee carbon is cheap, gourmet carbon is expensive. Some projects have a very charismatic story, but they’re the most expensive. For example, in Kenya, they’re distributing Life Straws, where you pour water in one end, it comes out the other end, and the filter in the middle traps the bad stuff. You’re saving the fuel used to boil the water to clean it, but [the projects are] very expensive, so it has to cost more per tonne than for a relatively low-cost wind farm”.
Does it add up?
There are several factors to take into consideration when selecting carbon offsets. The Environment Protection Authority (EPA) says that consumers need to consider “additionality”, permanence, and monitoring and verification. These factors are accounted for under recognised standards, such as the VCS and GS.
“Additionality is a key concept in evaluating whether or not an offset project leads to real and measurable greenhouse gas reductions. To be regarded as a valid offset, a project must be proven to be ‘additional’ to what would have occurred anyway,” according to the EPA.
“Some emission reductions may not be secure or may involve a range of risk. Offset providers should offer some form of guarantee that purchased credits will be maintained, or customers will be compensated if the project doesn’t deliver the expected emissions reductions.”