| Top Ten Tips for Purchasing Carbon Offsets |
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| James McCallum | |||
| Monday, 30 June 2008 | |||
  Columnist: James McCallumMD of Carbon Ethics  Carbonethics, a company that helps other companies purchase ethical and cost-effective carbon offsets. James McCallum, provides the company’s briefing note outlining the top ten tips for purchasing carbon offsets. 1. Understand What Offsets Are An offset is a carbon dioxide equivalent (CO2e) emissions reduction or removal that is used to counterbalance or compensate for (‘offset’) emissions from other activities. Offsets can be purchased by countries, companies or individuals to meet their own reduction requirements. The key criterion for an offset is that the CO2e reduction or removal that is used as an offset would not have happened anyway i.e. is “additional” to business-as-usual activity, otherwise there will be no net reduction in emissions. In other words, the seller of the offset should be able to prove that the emission reduction would not have occurred if the offsetting payment (in aggregate across the project) had not taken place. This can be done, for example, by showing that the extra revenue made project returns sufficiently attractive or enabled external financing that would not otherwise have been available. 2. Decide How Many Offsets You Need The first step is to calculate your organisation’s carbon footprint. The GHG Protocol, developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), and ISO 14064, developed by the International Standards Organisation provide globally-recognised standards for measuring and reporting the carbon footprint of your organisation. 3. Develop a Tailored Offset Strategy You need a robust strategy for purchasing offsets to meet your target. Here are some questions that you should answer that will help with this process:
4. Decide How You Plan to Buy Offsets You should think about whether you want to choose a preferred provider or buy from the market, whether you want a long-term agreement or to buy year-on-year. You also need to decide who will pay for the offsets (making individual units pay can provide an incentive for reductions at source). 5. Choose the Offset Standard That Best Suits You There are a number of offsetting standards that suit different needs. If you are choosing voluntary offsets, The Climate Group recommends offsets approved under the two main international standards: the Voluntary Carbon Standard (VCS) and the Voluntary Gold Standard. (next month, James will define a list of certified offsets, discuss their effectiveness and provide options available within the voluntary market.) 6. Undertake Due Diligence on Projects Before and after you purchase offsets, complete your own assessment of projects to ensure that they are delivering what they say. NGOs and consultants can help with this. 7. Talk to Different Sellers Offset prices generally increase as you go up the offset supply value chain. Average prices charged by offset retailers are US$8.04/tCO2e compared with $6.03 for brokers, $5.31 for wholesalers and aggregators and $3.88 for project developers. Ask sellers to disclose how much of your money goes directly to the project and how much covers their administrative costs. You may also want to consider directly developing offset projects yourself. While this increases your exposure to project risk, it should also decrease offset costs. 8. Ensure That Offsets Are Retired on a Credible GHG Registry To ensure that offsets are not used more than once you should require that they are retired on a credible GHG registry. There are several registries that currently offer these services and many offset retailers also operate internal registries that are independently audited. 9. Be Transparent About Your Offset Purchases Any offset strategy should be transparent and publicly communicated. Disclose information on your carbon footprint calculations, emissions reduction activities, the type of offset being used, where offsets have been retired and any uncertainties related to these issues. 10. Review Your Approach to Offsetting on a Regular Basis Your organisation’s carbon footprint and approach to carbon management will no doubt change over time. The carbon market is also likely to change over time. With this in mind, ensure your review your approach to carbon offsetting on a regular basis to ensure it is still in line with best practice.
Disclaimer: Harmonious Living is written for and read by a community of individuals with strong and independent opinions. While the publishers of Harmonious Living are dedicated to providing a forum in which views can be openly expressed, those views do not necessarily reflect those of the publishers.
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