Carbon offset evaluation criteria

It is important that carbon offset projects are tested against standards for assurance that they are funding a reduction of greenhouse gas from the atmosphere that would not have otherwise occurred. Any carbon offset used by an organisation to meet emission reduction requirements under the NoCO2 certification program must:

1. Be financially additional
For a carbon offset to be financially additional, the money from the offsets must have been required to make the project happen beyond ‘business as usual’. Projects often fail this test where they are cheaper than their more polluting equivalent, or their energy savings pay back in time frames that make it a ‘business as usual’ proposition.

2. Be environmentally additional
The project must be additional to the existing environment; that is, carbon offsets cannot be claimed on situations that would have occurred anyway. A good example is the natural growth of a forest or the implementation of an activity that would have occurred through legislation or a shift in market demand. Furthermore, carbon savings from a carbon offset must be additional to a country’s mandatory Kyoto target. For countries/states with a binding target, such as Australia, NZ and the EU, (from 2008-2012), this can be achieved through the Joint Implementation mechanism, or through sourcing carbon offsets that pre-date the Kyoto commitment period. More information about Kyoto is provided later in this document.

3. Be permanent
Permanence is a very important requirement for a carbon offset. Carbon savings that have been forward claimed or carbon emissions that have been stored can present a liability risk for any party using them to make a claim. If the emissions fail to happen, or are released into the atmosphere, and the project proponent does not make good on this reduction, then the liability may fall back on the purchaser who made a claim, to rectify the issue.

4. Not create leakage
Leakage is where a project results in an increase of emissions elsewhere. This is a major risk in avoided deforestation projects where the removal of one section of forest product from the market encourages the destruction of forest in another due to inelastic demand.

Continue to next page...