Carbon is the most abundant substance in the world. In the recent years, we could have seen a similar abundance of corporate pledges of becoming carbon neutral or even climate positive by 2030–2040–2050, frequently with the help of voluntary Carbon Offsets, also referred to as Carbon Credits. Although Europe has been so far going in the direction of the mandatory Emission Trading Scheme (EU-ETS) the interest in voluntary offsetting of one’s emisions has been steadily rising within the past few years.
This rise in popularity of Carbon Credits poses 2 challenges:
- proper understanding of Carbon Offsets through Carbon Credits
- risks associated with Carbon Credits’ quality and data reliability
Let’s start with the first challenge. The term Carbon Offset, also referred to as Carbon Credit refers to Green House Gas (GHG) emission reductions or removals that compensate for CO2 emissions. The idea is that by investing into such a Carbon Credit, the subject that has invested “Offsets” its CO2 emissions. The projects however must comply with strict principles, recently defined by ICAO’s CORSIA as:
- Are additional.
- Are based on a realistic and credible baseline.
- Are quantified, monitored, reported, and verified.
- Have a clear and transparent chain of custody.
- Represent permanent emissions reductions.
- Assess and mitigate against potential increase in emissions elsewhere.
- Are only counted once towards a mitigation obligation.
- Do no net harm.
Investing into Carbon Credits however is insufficient. Each subject truly aiming to reduce its impact on the environment should however not only redeem itself with Carbon Credits but should also reduce its overall emissions as per GHG scope 1,2,3.
Now that we have understood what Carbon Credit is, we can see the complexity behind emitting one. But what can an entity do to be sure that the Carbon Credit being purchased adheres to the specific criteria and is not a fake?
For this, there exist certification bodies handling the certification procedure of Carbon Credits, thus ensuring the piece of mind for buyers of such credits. There are several institutions nowadays, some of them are included below:
- American Carbon Registry
- Climate Action Reserve
- Verified Carbon Standard
- Gold Standard
- Plan Vivo System
In order to ensure the certification reliability, the certification process is rigorous, costly (approx. 5000 USD) and carried out on an ongoing basis by 4 key stakeholders: the project developer, impacted stakeholders, Validation and Verification Body and the certification authority. The below process describes such an approach applied by the Gold Standard certification authority.
- Project planning and stakeholder consultation: Confirming the basic project design, preparing Key Project Information note and holding a Stakeholder Consultation Meeting
- Preliminary review by the certification authority: Submitting completed Stakeholder Review notes, submitting Project Draft Design Document including Safeguarding Principles, Estimation of Climate and SDG impacts, Monitoring plan, Cover Letter, signed Terms and Conditions
- Preliminary design approval: Ensures project listing and assures progress in the certification process
- Third party validation: Validation and Verification Body carries out validation of the fully completed Project Design Document and all relevant supporting materials
- Project Design review by the certification authority: Review of the validaion of the Validation and Verification Body, review of the final Project Design Document and other relevant supporting materials with a special focus on: Project Safeguards, Stakeholder inclusive design, Robust Monitoring Plan, Estimated Climate and Sustainable Development Impacts
- Project Monitoring: Regular monitoring, discussion with stakeholders, Annual Report preparation, Annual reports submissions in years when verification is not conducted, Monitoring Report preparation and submission for verification at least every 2 years
- Third party monitoring validation: Validation and Verification Body validates the ongoing project impact based on Annual reports and Monitoring Reports
- Performance review by the certification authority: Review of the approval from the Validation and Verification Body, review of the Monitoring Reports
- Performance certification: Approval of the current monitoring cycle by the certification authority
The fight against Green Washing will be a lengthy one, but with the use of data and proper understanding of the basic concepts of carbon sequestration we will be able to succeed. For starters, we should avoid offsets that have not been certified by an established program.