Introduction to Offset Standards

There are many offset standards that have been developed in the last few years for the voluntary offset market. (See the Introduction to the Offset Market for more information on the difference between the mandatory and voluntary market.) Standards set criteria by which projects are chosen and evaluated. Such standards may include criteria for: type of project, impact on local communities, additionality and leakage.

Offsets that are produced under a voluntary standard are called Verified Emissions Credits (VERs). Offset that are generated under the Clean Development Mechanism are called Certified Emissions Reductions (CERs). Buyers in the voluntary market can choose to buy CERs or VERs.

Standards alone cannot ensure the quality of a project. It is only through the validation and verification of these standards that projects can reliably be evaluated. Verification consists of the periodic monitoring and review of ongoing projects in addition to an evaluation after the project period has ended. The monitoring ensures that the project is meeting goals and operating properly. For example, if a project involves installing stoves, monitoring allows for assurance that the stoves are working and are being used. Below is a description of the most frequently used standards:

Clean Development Mechanism (CDM)

http://cdm.unfccc.int/

The CDM is part of the United Nations Framework Convention on Climate Change (UNFCCC). As the largest regulatory project-based mechanism, the CDM offers the public or private sector in developed nations the opportunity to purchase carbon credits from offset projects in developing nations. CDM is involved in setting standards and verifying projects. Certified Emissions Reductions (CERs) are verified and certified by authorized third parties (Designated Operational Entities.) CDM standards are stringent and robust yet have high transaction costs so that usually only large projects are registered. CDM requires strict additionality for certification of carbon offset projects. For a more detailed description of the CDM, go here.


Voluntary Standards

Unlike under CDM, there are no unified rules and regulations for the voluntary carbon market. On the positive side, voluntary markets can serve as a testing field for new procedures, methodologies and technologies that may later be included in regulatory schemes. Voluntary markets allow for experimentation and innovation because projects can be implemented with fewer transaction costs than CDM or other compliance market projects. Voluntary markets also serve as
a niche for micro projects that are too small to warrant the administrative burden of CDM or for projects currently not covered under compliance schemes. On the negative side, the lack of quality control has led to the production of some low quality VERs, such as those generated from projects that appear likely to have happened anyway. To address these quality concerns, several voluntary offset standards have been developed. The following are described in more detail on this website:


WBCSD/WRI GHG Protocol for Project Accounting

www.ghgprotocol.org

The WBCSD/WRI GHG Protocol Initiative has developed two separate protocols: the Corporate Accounting and Reporting Standard covers accounting for corporate GHG emission inventories; and the GHG Protocol for Project Accounting (GHG Protocol) is an offset accounting protocol. The latter is a tool for quantifying and reporting GHG emission reductions from GHG mitigation projects and does not focus on verification, enforcement or co-benefits. The GHG Protocol aims to: Provide a credible and transparent approach to quantifying and reporting project-level GHG emission reductions; Enhance the credibility of GHG project accounting through the application of common accounting concepts, procedures and principles; Provide a platform for harmonizing different project-based GHG initiatives and programs.

The protocol was developed by the GHG Protocol Initiative, which was launched in 1998. The initiative was jointly led by the World Business Council for Sustainable Development (WBCSD), a global association of some 200 companies committed to sustainable development, and the World Resources Institute (WRI), an environmental think tank, in partnership with a coalition of businesses, NGOs and governmental and inter-governmental organizations.

For a more detailed description of the GHG Protocol, go here.

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ISO 14064

www.iso.org

ISO 14064 is a policy-neutral, voluntary GHG project accounting standard. It was developed over several years by the International Organization for Standardization (ISO) and launched in the spring of 2006. The standard consists of three parts:

• The first part (14064-1) specifies requirements for designing and developing organization or entity-level GHG inventories.

• The second part (14064-2) details requirements for quantifying, monitoring and reporting emission reductions and removal enhancements from GHG mitigation projects.

• The third part (14064-3) provides requirements and guidance for conducting GHG information validation and verification.

ISO 14064-2 provides general guidance and does not prescribe specific requirements. For example, it suggests that additionality be taken into account but does not require a specific tool or additionality test to be used. These requirements are left to be defined by the GHG program or regulation that uses ISO 14064-2. Similarly, it does not focus on secondary benefits.

ISO’s national members pay subscriptions to cover the operational cost of ISO’s Central Secretariat. The subscription paid by each member is in proportion to the country’s Gross National Income and trade figures. Another source of revenue is the sale of standards. The cost for ISO 14064 is around USD 134 (EUR 85) for each of the three standards.

For a more detailed description of the ISO 14064, go here.

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Gold Standard

www.cdmgoldstandard.org

The Gold Standard (GS) is a voluntary carbon offset standard for renewable energy and energy efficiency projects. The GS can be applied to voluntary offset projects and to Clean Development Mechanism (CDM) projects. It was developed under the leadership of the World Wildlife Fund (WWF), with a focus on offset projects that provide lasting social, economic and environmental benefits.

The GS CDM was launched in 2003 after a two-year period of consultation with stakeholders, governments, non-governmental organizations (NGOs) and private sector specialists from over 40 countries. The GS Verified Emission Reduction (VER) standard was launched in 2006. The GS is presently endorsed by over 60 environmental and development NGOs. It is financed by donors and by income from issuance fees and franchising fees.

For a more detailed description of the Gold Standard, go here.

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Voluntary Carbon Standard 2007

www.v-c-s.org

The Verified Carbon Standard (VCS 2007) is a full-fledged carbon offset standard. It focuses on GHG reduction attributes only and does not require projects to have additional environmental or social benefits. The VCS 2007 is broadly supported by the carbon offset industry (project developers, large offset buyers, verifiers and projects consultants).

The VCS version 1 was published jointly in March 2006 by The Climate Group (TCG), the International Emissions Trading Association (IETA) and the World Economic Forum (WEF) Global Greenhouse Register. The VCS 2007 was launched in November 2007 following a 19-member Steering Committee review of comments received on earlier draft versions. The Steering Committee was made up of members from NGOs, DOEs, industry associations, project developers and large offset buyers. The World Business Council for Sustainable Development (WBCSD) joined in 2007 as a founding partner of VCS 2007. The VCS will be updated yearly for the first two years and every two years after that.

For a more detailed description of the VCS, go here.

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VER+ (VERplus)

www.tuev-sued.de/climatechange
www.netinform.de

The VER+ is a full-fledged carbon offset standard and closely follows the Kyoto Protocol’s project-based mechanisms (CDM and JI). The VER+ standard was developed by TÜV SÜD, an auditor (Designated Operational Entity - DOE) for the validation and verification of CDM projects. It was designed for project developers who have projects that cannot be implemented under CDM yet who want to use very similar procedures as the CDM. The VER+ was launched in mid 2007.

For a more detailed description of the VER+, go here.

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Chicago Climate Exchange (CCX)

www.chicagoclimatex.com/

The Chicago Climate Exchange was launched in 2002 as a voluntary greenhouse gas (GHG) emission cap and trade scheme located in North America. This page gives a short overview of the CCX cap and trade program but primarily focuses on its offset program.

Participation in the CCX cap and trade scheme is voluntary, but once entities elect to participate and commit to emission reduction targets, compliance is legally binding. Members can comply by either cutting their emissions internally, trading emission allowances with other CCX members, or purchasing offsets generated under the CCX offset program. There are no limits on the use of offsets for compliance with the emission reduction targets.

In the first phase of the scheme, from 2003 to 2006, CCX members agreed to cut their emissions by 1% each year below their annual average emissions for the period 1998 to 2001, thereby by achieving a reduction of 4% by the end of the fourth year. For the second phase from 2007 to 2010, the original members agreed to cut their emissions by an additional 0.5 % each year to achieve an overall target of 6% below 1998–2001 levels by 2010. New members participating in the second phase must achieve a similar overall reduction target by 2010 by reducing their emissions by 1.5% each year.

For a more detailed description of the CCX, go here.

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The Climate, Community & Biodiversity Standards

www.climate-standards.org

The Climate, Community & Biodiversity Standards (CCB Standards) is a project design standard that offers rules and guidance for project design and development. It is intended to be applied early on during a project’s design phase to ensure robust project design and local community and biodiversity benefits. It does not verify quantified carbon offsets nor does it provide a registry. The CCB Standards focuses exclusively on land-based bio-sequestration and mitigation projects and requires social and environmental benefits from such projects.

The CCB Standards was developed by the Climate, Community and Biodiversity Alliance (CCBA) with feedback and suggestions from independent experts. CCBA is a partnership of non-governmental organizations, corporations and research institutes such as Conservation International, The Nature Conservancy, CARE, Sustainable Forestry Management, BP and CATIE. The first edition was released in May 2005.

For a more detailed description of the CCB Standards, go here.

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Plan Vivo System

www.planvivo.org

Plan Vivo is an Offset Project Method for small scale LULUCF projects with a focus on promoting sustainable development and improving rural livelihoods and ecosystems. Plan Vivo works very closely with rural communities and emphasizes participatory design, ongoing stakeholder consultation, and the use of native species. The Plan Vivo Foundation certifies and issues only ex ante credits, called Plan Vivo Certificates, and therefore does not verify ex-post offsets.

The Plan Vivo System was initiated in 1994 for a research project in southern Mexico. The system was developed by the Edinburgh Centre for Carbon Management (ECCM), a consulting company that focuses on climate change mitigation strategies and policies, in partnership with El Colegio de la Frontera Sur (ECOSUR), the University of Edinburgh and other local organizations with funding from the UK Department for International Development (DFID).

For a more detailed description of the Plan Vivo, go here.

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Green-e Climate Program

www.green-e.org/getcert_ghg.shtml

Green-e Climate is a certification program launched in 2008 for carbon offsets sold to consumers in the voluntary offset market. Green-e Climate was developed and is administered by the Center for Resource Solutions (CRS), a non-profit organization based in California. CRS was founded in 1997 to identify, promote and implement sustainable development solutions. In addition to Green-e Climate, CRS manages two other certification programs:

Green-e Energy is the leading US independent certification and verification program for RECs. This Green-e program is not discussed further in this report .

Green-e Marketplace is a program that allows companies to display its logo when they have purchased a qualifying amount of renewable energy and passed verification standards. This program is not discussed further in this report.

In addition, as part of the Green-e Climate program CRS developed the:

Green-e Protocol for Renewable Energy, a part of the Green-e Climate Program, which determines the eligibility of renewable facilities in the United States to sell GHG offsets through Green-e Climate (for details, see below).

Green-e Climate has a slightly different focus and is complementary to all the other voluntary GHG offset standards described in this report. Green-e Climate is a certification and verification standard for retailers’ offset products. It ensures that retailers have actually purchased and retired the types of offsets that they have sold, that there is full disclosure of project information and that no false or misleading claims are made to customers. Green-e Climate endorses other existing GHG offset standards (see Recognition of Other Standards below). Sellers who seek Green-e Climate certification for their sales of offsets must source from projects that are certified by one of the endorsed Programs. Generally, retailers mix together offsets that originate from a variety of projects to create an end product that is sold to consumers.

For a more detailed description of the Green-e Climate, go here.

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Green-e Climate Protocol for Renewable Energy

www.green-e.org/getcert_ghg_re_protocol.shtml

The Green-e Climate Protocol for Renewable Energy (Green-e CPRE) is part of Green-e Climate (see below) a certification program for carbon offsets sold to consumers in the voluntary offset market. All Green-e programs are administered by the Center for Resource Solutions (CRS), a non-profit organization based in California (see below). The Green-e Climate Protocol for Renewable Energy (Green-e CPRE) is a voluntary GHG offset protocol that certifies eligible renewable facilities in the US to sell GHG offsets.

For a more detailed description of the Green-e CPRE, go here.

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