Evaluating Credits

If these criteria are met, there is a good chance that the offset is of high quality and will result in real reductions in greenhouse gases. It is important we as a team understand this criteria in order to ensure we advocate for this quality within our customer experience.

Additionality

Project must not have happened “business as usual”.

Additionality is one of the most important things to look for when assessing carbon offsets. To be additional, an offset project must not have happened without the incentives arising from the offset market. It is essential that the reductions aren’t simply reductions that would have happened in the “business as usual” scenario – otherwise, the offset has no net climate benefit.

Most widely recognized and strictest series of tests for additionality is the Kyoto Protocol’s Clean Development Mechanism (CDM) known as the CDM additionality tool. Also used for the Gold Standard for Global Goals. The UN applies the screen and a third party audits it.

Accurate quantification

For a carbon offset to be real, it is essential that the emission reductions it represents be quantified accurately.

For instance, if a wind farm is built, before it can sell offsets it is necessary to calculate how many tonnes of CO2e the project is responsible for avoiding. In order to use a baseline scenario they must employ a very technical process requiring specialized expertise and meticulous accounting, monitoring and reporting.

Once the baseline has been determined, project developers must use recognized quantification methodologies (which are specific to each offset project type) to estimate the emission reductions that result from the offset project. The entire process of quantifying greenhouse gas reductions should be guided by generally accepted accounting principles.

Auditing

Validation

Takes place before the project activity is underway, and is an independent assessment of the project design. Its purpose is to review the baseline and all calculations for accuracy, and to confirm that the emission reductions will be additional and achievable.

Verification

Occurs after the project has been implemented and has generated reductions, and provides independent confirmation that those reductions actually took place or if they are more or less than originally anticipated. These should be performed by 3rd parties and ideally it will be 2 difference businesses that complete these steps.  Auditing in the form of validation and verification provides assurance that statements made about an offset project’s emission reductions are true and correct.

Unique ownership

Clear ownerships must be established for the greenhouse gas reductions that the credit represents.

More than one individual or organization might claim the benefit from the reduction, a problem known as “double counting”. To avoid this problem, offsets should be backed by legal instruments that clearly demonstrate exclusive, enforceable ownership rights of the reductions.

Permanence

This is the durability of the climate benefit from an offset project, and varies depending on the offset project type.

For example, in the case of offset projects from renewable energy, energy efficiency, or methane destruction, there is no risk of reversal and permanence is not an issue. For instance, even if a wind turbine were damaged and could create no further reductions, the reductions that it had already achieved by replacing fossil fuel-burning energy sources would not be affected. By contrast, offset projects that rely on storing carbon, like tree planting or agricultural sequestration, can release some or all of their stored carbon back into the atmosphere at any time if the trees are killed by fire, disease, or logging, or if the agricultural soil is disturbed—thereby cancelling the climate benefit associated with the offset and rendering it worthless.

Attempts to address permanence for projects that rely on stored carbon need to ensure long-term monitoring, and have a mechanism to replace any unintentional releases of stored carbon.

Leakage

A situation where a greenhouse gas reduction in one region causes an increase in emissions somewhere else.

This is a particular concern for projects that involve protecting forests. For example, protecting a forest in one location could simply shift logging to another forested area in a new location. Energy efficiency projects might also lead to leakage; for example, the money saved through reduced energy consumption might be used to pay for something else that will have corresponding greenhouse gas emissions.

Sustainability

At a minimum, carbon offset projects should comply with all relevant social and environmental regulations.

Better yet, offset projects should be designed so that they do not have negative environmental or social impacts (for example, impacts on wildlife or on indigenous peoples), whether they are covered by regulations or not.

At the other end of the spectrum, it’s also possible to develop carbon offset projects that create broader sustainability benefits. These could include, for example, job creation and the alleviation of poverty, enhancement of biodiversity, reduction of air pollution, and other benefits. However, it must be noted that these broader sustainability benefits should be above and beyond the reductions in greenhouse gas emissions achieved by the project.

Stakeholder Consultation

Evidence of stakeholder consultation – locally and with offset project experts from around the world – can provide greater assurance that the project does not have adverse social, environmental, or economic impacts, particularly on the community where it is developed.

Obtaining stakeholder buy-in can help to ensure that any issues that may arise are addressed before the project begins. Stakeholder consultation can take the form of a public forum, or even a simple questionnaire for stakeholders to complete.

Timing

Vendors sometimes sell offsets that haven’t been achieved yet, known as “forward crediting”.

The buyer will purchase these offsets and receive credits upfront, despite the fact that this is planned for the future.

This presents two problems:

1. The project fails prematurely (e.g a wind farm might not be able to obtain financing to be built, or trees planted might die before growing to maturity and storing the carbon that has already been sold (and used) as offsets.)
2. The offsets may be out of synch, time-wise, with the emissions they are supposed to offset. While a delay of a year or two is probably not significant, the purpose of carbon offsets is to counterbalance the effect of greenhouse gases that are currently being emitted somewhere else.