Memorandum submitted by The Climate Group
INTRODUCTION AND
RELEVANCE TO
THE INQUIRY
1. We welcome the Environmental Audit Committee
inquiry into the voluntary offset market and are pleased to provide
a submission.
2. The Climate Group is an independent,
nonprofit organisation dedicated to advancing business and government
leadership on climate change. We are based in the UK, the USA
and Australia and we operate internationally.
3. The Climate Group believes that carbon
offsetting can be a useful way to engage the public in efforts
to combat climate change, increase investments in emissions-reducing
projects and allow experimentation with low carbon technologies.
However, it should be viewed as the third step in a comprehensive
emission reduction strategy that starts with use of cleaner energy
resources and greater efficiency at source. We recognise that,
as legislation to reduce GHG emissions becomes more ambitious
in coverage and depth, offsetting will eventually become mandatory
or redundant.
4. For the past 18 months The Climate Group,
in partnership with the International Emissions Trading Association
and the World Economic Forum GHG Register, has been working with
a range of business, government and non-government organisations
to develop the Voluntary Carbon Standard (VCS). The objective
of the standard is to provide a benchmark for ensuring integrity
and harmonization in the voluntary carbon market, thereby offering
confidence to buyers, sellers and other stakeholders in this growing
market.
5. Version 1 of the VCS was released for
consultation on 28 March 2006 and received written comments from
65 Climate Group and IETA members, partners and external stakeholders.
Consultation meetings have also been held in the UK, Germany,
US and Japan along with a series of teleconferences with interested
stakeholders. A draft Version 2 of the VCS was released on 18
October 2006 and received comment from around 60 stakeholders.
The VCS is currently being finalised by an independent Steering
Committee with launch planned for May.
6. The Climate Group's experience developing
the VCS and advising a number of organisations on the use and
purchase of carbon offsets puts it in a unique position to comment
on the inquiry. We would welcome the opportunity to discuss our
experiences and views in more detail with the Committee.
Question 1: Ought there to be a compulsory UK
or European accreditation scheme for carbon offset projects or
companies? If so, how should this operate?
7. The volume of voluntary offset trades
has expanded significantly in recent times (doubled to ~20 Mt
CO2-e in 2006), and is expected to experience continued growth
(up to ~400 Mt CO2-e in 2010). International standardisation that
guarantees certified offsets are real, additional, permanent and
independently verified is required to increase business and consumer
confidence in the market. This is the aim of the Voluntary Carbon
Standard and we have attached a copy of Version 1 for your consideration.
We believe that if adopted the VCS will ensure that voluntary
carbon offsets are at least as robust as those generated by the
Kyoto Protocol's Clean Development Mechanism. Given the international
nature of VCS we believe that, if widely adopted, it has the potential
to become the basic quality standard for carbon offsets.
8. An independent voluntary standard/accreditation
scheme should be managed in a transparent manner by an independent
organisation responsible for accreditation of verifiers and registries.
This approach has been successful in a number of environmental
areas in which standards and labelling have been used to develop
a credible market. Examples include the development of the WRI/WBCSD
GHG Protocol, the Forest Stewardship Council, Marine Stewardship
Council, the GRI and the Soil Association. In the case of carbon
offsets, we believe that the use of a standard, such as the VCS,
will maintain environmental integrity and enable a wider range
of offsets to be traded and used than if the market were restricted
to Kyoto Protocol carbon units.
Question 2: Should offsetting become mandatory
for some of the more carbon-intensive activities, such as flying?
9. In general, The Climate Group supports
flexible market based measures over direct regulation, although
we recognise that in some cases the latter may be more appropriate.
The recent proposals to include air travel in the EU Emissions
Trading Scheme in 2011 are a good start and we would support inclusion
of all flights originating or arriving in the EU to be included
in the scheme. In parallel, airlines could be required to offer
customers the opportunity to offset flight-related emissions,
perhaps with some commitment to match the offsets purchased. This,
however, should not be seen as a substitute for legislation and
incentives to move the whole of the economy on to a low carbon
basis.
Question 3: Is there enough clarity within the
offset market to allow customers to make informed choices based
upon robust information about different schemes at different prices?
10. The large and growing number of offsets
and carbon neutral initiatives makes it difficult for consumer's
to determine the legitimacy of schemes. Clean Air-Cool Planet's
recent report "A Consumer's Guide to Retail Carbon Offset
Providers"[1]
is a good start, but this needs wider dissemination. Regular published
assessment of the schemes on offer would help the public make
informed choices.
11. The development of objective independent
standards like the VCS and the implicit registries and transparency
requirements will also provide some consistency to the market
and help build confidence. The Climate Group has also recently
begun a process to develop an international carbon neutrality
standard and accreditation body—under the working title
Carbon Stewardship Council.
Question 4: Many offset projects involve afforestation
or reforestation. Is the science sufficiently coherent in this
area accurately to assess overall long-term carbon (or other GHG)
gains and losses from such projects?
12. The science surrounding measurement
of carbon in afforestation/reforestation projects is fairly reliable
when conservative estimates of carbon uptake and storage are used.
Policy issues such as permanence, leakage and eligible project
types are equally important and more topical than measurement
techniques and require greater scrutiny. Also significant is the
extent to which it is acceptable to use credits from future forest
growth to offset current emissions. Generally the Climate Group
would recommend the use of offsets from clean energy products
rather than those involving forestry.
Question 5: Is there sufficient data available
to guarantee accurate amounts of carbon or other GHG mitigation
in the sorts of schemes which offset projects finance?
13. Data monitoring and measurement techniques
have improved rapidly over the last few years due to:
(a) requirement for both Annex I and Non-Annex
I countries to report national communications;
(b) requirements for Annex1 countries to
report annual national greenhouse gas accounts;
(c) the growth in the CDM market;
(d) a number of efforts requiring and/or
encouraging carbon disclosure by companies; and
(e) a growing in understanding of the need
to measure emissions if we are to be able to reduce them effectively.
At the project level too, experience with the
Kyoto Protocol's Clean Development Mechanism, Joint Implementation
and other schemes means that we can now assess and measure the
emission reductions achieved with acceptable degrees of accuracy.
The use of an independent standard—again such as the VCS—specifying
how such reductions should be measured, reported and monitored
in the voluntary carbon market will enable users to be sure that
the offsets they acquire have bean measured accurately.
At the macro level, the lack of common standards
and registries mean that is currently difficult to assess the
aggregate emissions reductions that are being achieved by different
schemes. Again, the adoption of an international standard for
the offset market, with a registry attached to it, will mean that
these aggregate figures will become more transparent and reliable.
Question 6: What impact will the voluntary carbon
offset market have on the compliance market if the former continues
to grow as steadily as it has done over the last few years?
13. The Climate Group believes that the
voluntary carbon market complements the compliance market by providing
an additional way for organisations and individuals not yet covered
by regulation to reduce their net greenhouse gas emissions. Voluntary
markets have little or no impact on supply and demand in compliance
systems, because of the relatively small size of the voluntary
market, the higher $/tCO2-e return in compliance systems and the
use of projects that may be developed exclusively to generate
voluntary offsets. They play a useful role in trialling new methodologies
and approval processes, which can then be incorporated in compliance
markets, and in demonstrating the range of emissions reduction
options that are available. As stated earlier, progressively more
ambitious legislation covering a wider range of emitters should
reduce the scope of the voluntary market.
Question 7: What evidence is there to show that
offsetting helps to change the carbon behaviour of the customer?
14. There is a lack of quantitative data
comparing the carbon intensity of companies and individuals that
offset versus those that do not. However, from an analytical perspective,
offsetting requires users to measure and manage their emissions
profile and thereby gain a greater understanding of the magnitude
of their carbon impact and the opportunities for emissions reduction
at source. Results from emissions reporting programmes (Climate
Leaders (US), Greenhouse Challenge Plus (Australia)) are that
the process of measuring emissions leads to identification and
uptake of emissions reduction opportunities. We could expect companies
that offset to demonstrate better carbon behaviour than those
that do not and individuals to become more engaged with wider
efforts to combat climate change.
Question 8: To what extent are the schemes and
projects funded by offset companies more broadly sustainable,
in an environmental, social or economic sense?
15. Most offset schemes include some non-greenhouse
gas indicators, though a lack to date of widely accepted standards
means that these are not always applied or adhered to. As a minimum,
projects generally have to demonstrate that they have achieved
all relevant environmental approvals. More recent standards are
requiring that project implementation has no negative impact on
sustainable development. However, the extent to which this is
assessed varies and more work is required in this area. The Gold
Standard—which explicitly includes a sustainable development
screen based on local stakeholder participation—provides
a good model for stimulation of multiple benefit projects.
January 2007
1 http://www.cleanair-coolplanet.org/ConsumersGuidetoCarbonOffsets.pdf Back
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