“Carbon, the currency of a new world order” (Paul Kelly, The Australian, 21 March 2007)

Public awareness of the threat of climate change has risen sharply in the last couple of years and an increasing number of businesses, organizations and individuals are looking to minimize their impact on the climate.

To effectively address the threat of climate change, we need comprehensive and stringent policies to reduce greenhouse gas (GHG) emissions at national and international levels. At the same time, voluntary individual and corporate climate action can be essential for creating the public awareness and constituency needed for policy change.

Individuals and organizations can most effectively lower their own carbon footprints by improving energy efficiency (e.g. in their homes, offices, or factories), relying on lower-emission products (e.g. buying locally grown food), and changing consumption patterns (e.g. home size, travel choices). Beyond this, carbon offsets are gaining prominence as a tool to compensate for emissions. By paying someone else to absorb or avoid the release of a tonne of CO2 elsewhere, the purchaser of a carbon offset can aim to compensate for or, in principle, “offset” their own emissions. This is possible because climate change is a non-localized problem; greenhouse gases spread evenly throughout the atmosphere, so reducing them anywhere contributes to overall climate protection.

Yet carbon offsetting is not without its critics. A recent flurry of media reports has criticized the poor quality of carbon offsets projects in both the compliance and the voluntary market (e.g. Financial Times, 2007). Recent research reports have pointed out that a significant number of offsest come from projects that would have been implemented anyway (i. e. are non-additional, see chapter 5.1) (Schneider, 2007; Haya 2007) Many have also raised issues of equality and fairness based on the argument that carbon offsetting enables developed nations to perpetuate unsustainable lifestyles by funding carbon projects in developing countries. Some critics have pointed out that these offset projects rarely lead to benefits for the host community and have gone as far as calling the offset market as a form of carbon colonialism (Eraker, 2000.) Others assert that accounting methods for the offsets are too inaccurate to justify claims of real emission reductions or to support the achievement of ‘carbon neutrality.’

Despite these critiques, the carbon markets are growing rapidly. With more than € 20 billion traded in 2006 (Capoor & Ambrosi, 2007), carbon markets are already a substantial economic force and will likely grow considerably over the coming years. It is therefore important to focus the discussion on how to use these markets most effectively to:

• Contribute to climate protection through real and additional, permanent, and verifiable greenhouse gas (GHG) reductions, while limiting unintended negative consequences.
•  Reduce GHG emissions in an economically efficient way.
• Enhance the social and environmental benefits to project hosts.
• Stimulate social and technological innovation and participation by new actors sectors and groups.
• Create and build constituencies for more effective and comprehensive national and international solutions.
• Avoid perverse incentives that could stymie broader climate protection actions and policies.
• Synergistically work with other climate protection measures.

The voluntary offset industry has recognized the need for quality assurance in order to restore the credibility of the offset market. Over a dozen voluntary offset standards have been developed in the last few years. Yet no single standard has so far managed to establish itself as the industry standard. Each standard has a slightly different focus.

Some closely mirror compliance market standards, while others take a more lenient approach in order to lessen the administrative burden and enable as many credits as possible to enter the market. Certain standards are limited to particular project types (e.g. forestry), while others exclude some project types in order to focus on the social benefits of carbon projects. It is important to note that the vast majority of voluntary offsets are currently not certified by a third-party standard. This is likely to change over the coming years.The next chapters provide an overview of the carbon markets in general and the compliance and voluntary offset markets.

Download Making Sense of the Voluntary Carbon Market: A Comparison of Carbon Offset Standards

PDF format, 3.2MB, 119Pages.

Anja Kollmuss (SEI-US), Helge Zink (Tricorona), Clifford Polycarp (SEI-US)

Published by: WWF Germany
Title: Making Sense of the Voluntary Carbon Market: A Comparison of Carbon Offset Standards
Authors: Anja Kollmuss (SEI-US), Helge Zink (Tricorona), Clifford Polycarp (SEI-US)
Graphic Design: Tyler Kemp-Benedict
Date: March 2008

About This Report:

This report discusses the role of the voluntary carbon market and provides an overview of the most important currently available carbon offset standards. It compares the following standards side-by-side, outlining the most pertinent aspects of each:

• Clean Development Mechanism (CDM)
• Gold Standard (GS)
• Voluntary Carbon Standard (VCS)
• VER+
• The Voluntary Offset Standard (VOS)
• Chicago Climate Exchange (CCX)
• The Climate, Community & Biodiversity Standards (CCBS)
• Plan Vivo System
• ISO 14064-2
• WRI/WBCSD GHG Protocol for Project Accounting

The report is meant to be a comprehensive reference. To maximize the readability and transparency of the report, we distinguish between the following types of information:

• Background information describes principles and mechanisms of the offset market in general. This report uses the CDM as the baseline standard against which all the other standards are compared. It also includes an explanation of the CDM project cycle and the main actors involved in CDM offset projects. The information in these sections is presented as objectively as possible and with minimal editorializing. The appendices include further background information. Background information appears in black.

• Standard Comparisons and Summaries include specific information about each standard as well as comparison tables. The information in these sections is presented as objectively as possible and with minimal editorializing. Standard comparisons and descriptions are titled in blue or on a blue background.

• Authors’ Comments are sections where the authors express their opinions and value judgments. Editorial comments and opinions about each standard can be found at the end of the standard description. In their brief comments, the authors focus on what they consider the main strengths and weaknesses of each standard. Editorial comments are indicated by a vertical bar on the left.

Many of the standards we have reviewed are young and have few implemented projects. Our assessment relies on comparing the requirements of each standard and does not include project comparisons. Judging the standards based on their performance in the real world will be impossible until at least a few projects have been implemented under each of them.

We hope that the layout and structure of this paper will allow a diverse audience of consumers, offset professionals and project developers to find the information they are looking for.

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