Why We Need a Performance Benchmark Standard for Offsets

Why We Need a Performance Benchmark Standard for Offsets

One of the major issues facing delegates working on a new international climate change treaty at COP15 is how we can improve carbon offset trading programs, both in reference to the current Clean Development Mechanism (CDM) protocols and proposed protocols such as those for Reducing Emissions from Deforestation and Degradation (REDD).

When properly implemented, compliance-grade carbon offset programs can lower overall climate change mitigation costs, while also supporting the development of clean energy and carbon sequestration technologies and projects. However, to date many carbon offset programs have been plagued by inefficiencies.

In addition, there has been controversy over whether many of these programs' projects are truly additional -- in other words, would they have occurred under a "business-as-usual" scenario? These problems are of particular importance as we attempt to move from the current CDM system -- which has only produced 300 million tons of certified GHG reductions since its inception -- to new international and domestic systems that call for the delivery of billions of tons of offsets per year.

In short, we need to increase not just the quality but also the supply of compliance-grade offsets if we want carbon offset programs to make a real difference in mitigating climate change.

Fortunately, there are alternatives to the current project-by-project CDM-style approach to offset approval and additionality testing. One alternative is the performance benchmark approach. This approach provides an objective means of assessing whether a carbon offset project reduces emissions beyond business-as-usual practices without sacrificing quality. In addition, this approach's higher levels of efficiency will help us address the carbon offset supply shortage in a manner that truly lowers the cost of climate change mitigation.

In a performance benchmark process a benchmark is established for the performance of carbon offset projects that reduce emissions beyond a business-as-usual baseline. This benchmark is typically set for one sector at a time (e.g. livestock facilities) and for individual project types of similar size and geographic location (e.g. methane capture and combustion systems).

Any future project that meets or exceeds the performance benchmark is considered additional and beyond what would be expected under a business-as-usual scenario. The approval process for this approach is more predictable and objective than a project-by-project approach, which can easily introduce subjective analysis and bureaucratic obstacles that delay system investment, development and implementation.

The performance benchmark approach is not a complete solution to the problem of additionality. In particular, for newer and more complex types of carbon offset projects the lack of meticulous project assessment can be a drawback, since the "benchmark" for the sector is still evolving.

However, with proven carbon offset projects in established sectors, such as methane capture at livestock facilities, a performance benchmark approach can greatly lower the costs of certification, while still ensuring environmental integrity.

With both international and U.S. climate change polices calling for the generation of billions of tons of carbon offsets over the next decade, the need to improve our current carbon offset certification process is urgent. Use of a performance benchmark approach to additionality is one way that that the world can affordably meet this demand for carbon offsets, without sacrificing environmental integrity.

Dan Kalafatas is President of 3Degrees.

Photo CC-licensed by Flickr user Tambako the Jaguar.