This scheme for voluntary carbon offsets misses the mark

The UK government’s Department of Energy and Climate Change (DECC) Quality Assurance Scheme for Carbon Offsetting (the DECC scheme) was launched several weeks ago, without much fanfare. This government initiative aims to provide reassurance, to individuals and organisations choosing to compensate or ‘offset’ their unavoidable greenhouse gas emissions, that their efforts to do so will make a real difference. While a welcome stimulus to the emerging ‘voluntary carbon market’ to get its house in order, there are flaws in the DECC scheme which could be counter-productive.

Initially, the DECC scheme recognises only those offsets approved under formal UN standards, such as Certified Emission Reductions (CERs). The DECC scheme does not recognise Verified Emissions Reductions (VERs), at least not yet. VER projects are developed according to rigorous voluntary certification standards which ensure the highest-quality emissions reductions. Like CERs, VERs are verifiable, additional and permanent. Because the DECC scheme does not recognise VERs yet, this government programme could set back the expansion of the voluntary market for carbon reductions, the exact opposite of what its policy should be.

ICROA is the leading membership organisation for carbon reduction and offset providers in the voluntary carbon market. Our members have developed an industry-leading code of best practice, which requires members to use only the highest standards and certifications for their carbon foot printing, greenhouse-gas reduction advice and offset products. ICROA members are highly respected carbon reduction and offset providers, and member companies are based in the USA, Europe and Australia.

The DECC scheme has been in development for several years, during which the market for VERs has changed dramatically. Between 2006 and 2007 the voluntary carbon market tripled and the Voluntary Carbon Standard, which is emerging as one of the leading voluntary certification programmes, was launched. The second stage of the DECC scheme would allow for voluntary offset standards to be reviewed for inclusion in a subsequent version of the DECC Scheme — but why wait? This delay is unnecessary and ill-advised. ICROA members are concerned that the UK government’s failure to recognise high-quality VERs today could damage the voluntary carbon market.

The benefits of the voluntary carbon market

The voluntary carbon market allows consumers and businesses, which are not covered by UN reduction targets, to take significant action to reduce their greenhouse gas emissions. Their purchases result in carbon reductions above and beyond those required by treaty and law. ICROA members sell VERs and CERS to their customers, but the majority of offset credits sold by our members are VERs.

Projects that generate VERs typically produce a number of ‘co-benefits’ which are vital. Co-benefits include the promotion of local sustainable development, the alleviation of poverty, and in some cases, the restoration of critical ecosystems and habitat. The voluntary carbon market has been acknowledged as ‘the markets most likely to reach poorer and smaller communities in developing countries.’ CDM projects are often much larger scale and some have been criticised for not fulfilling the sustainable development criteria enshrined in the Kyoto Protocol. Project developers like David Mukisa of Ugastove in Kampala, Uganda, take advantage of the small scale community focus of the voluntary carbon market. He comments, ‘Projects like ours [efficient home cooking stoves] that start small cannot easily get funding from the compliance market’.

Each Ugastove reduces more than a tonne of CO2 emissions per year and also largely eliminates unhealthy kitchen smoke. Communities in the least developed countries are already being affected by climate change, but the overwhelming majority of current CDM project transactions, 73 per cent, take place in China. Only 5 per cent are in African countries. The voluntary carbon market and the innovation it drives can help redress this imbalance.

Self-regulation in the Voluntary Carbon Market

One of ICROA’s primary concerns is that the DECC scheme has been designed for the voluntary carbon market of two years ago and doesn’t acknowledge the significant advances that have taken place in the meantime. The myth that the voluntary carbon market is an unregulated ‘free for all’ has been dispelled with the launch, first, of the Gold Standard which is ‘an NGO-backed tool that generates premium carbon credits and promotes sustainable development’ and then of the Voluntary Carbon Standard, which provides ‘quality assurance for the world’s carbon market’ . These certification protocols have been developed openly in collaboration between environmental NGOs, climate policy experts, and industry participants. They have been rapidly embraced by the market. ICROA members are currently only permitted to use offsets sourced using the Gold Standard and the Voluntary Carbon Standard, as well as UN-approved credits. The DECC scheme should reflect the quality assurance measures that have been implemented by market participants.

Stage 2 of the DECC scheme

ICROA believes that self-regulation of the voluntary carbon market, using recognised premium-quality offset standards and a behavioural code of best practice, provides substantial assurances for customers. The programme that the UK government recently launched could undermine the voluntary carbon market. That possibility just makes no policy sense and is not acceptable. ICROA wants to bring its experience and expertise to the table immediately, to help the UK government revise the DECC scheme, so that it recognises the premium voluntary offset standards and other industry-driven quality-assurance practices that are guiding the voluntary market today.