Why We Need Self-Regulation to Make Offsets Truly Green

Why We Need Self-Regulation to Make Offsets Truly Green

Offsetting greenhouse gas (GHG) emissions is like public education: Everyone is an expert on it, and opinions are posted all over the Internet like celebrity photos.

In GHG compliance markets, governed by treaty and law, strict criteria are put in place to define what types of offset projects are acceptable and what conditions -- real, permanent, additional, etc. -- they must meet.

Not everyone agrees with the rules. Discussions of additionality are tortuous. There are inevitable reports of imperfections in projects resulting from the protocols that are now in place. Nonetheless, projects designed to create offsets for compliance face rigorous scrutiny, and one can reasonably expect that improvements will be made in the rules governing them, as happens following the introduction of any new complex system.

The voluntary market for offsets, however, lacks the same governmental oversight, a situation that poses some challenges, but simultaneously creates opportunities. In the absence of formal supervision, the question for any offset buyer entering the voluntary market is, "How do I know I'm supporting a valuable project and not being taken advantage of?"

Fortunately a solid foundation of self-regulation and expectations has been laid, so buyers can now have sturdy confidence in these unregulated voluntary markets.

The Mission of Self-Regulation

In the early years of the voluntary market, the lack of consistency led to charges that offset providers were "carbon cowboys." It was obvious that those who resorted to this cliché had never actually labored as a cowboy. The work is plain hard, the hours are long, and the pay is poor. Perhaps it was the reputed independence of cowboys that troubled commentators on the voluntary market.

Despite the deadness of the metaphor, the criticism about untoward independence of the voluntary market led to a strong and useful response in the establishment of the International Carbon Reduction and Offset Alliance (ICROA) in 2008 to provide self-regulation for the voluntary carbon offset market.

The Code of Conduct

ICROA was established by leading offset providers and has established several distinctive requirements of membership, notably a Code of Best Practice that establishes "rules of the road" for member companies. ICROA has set the standard by which every firm that sells offsets may be assessed.

The basics of the ICROA Code are:

-- Members must sell only those offsets validated according to one of the leading offset certification standards. Today ICROA recognizes the following: Clean Development Mechanism/Joint Implementation, Gold Standard and the Voluntary Carbon Standard. The recent emergence of several strong certification standards for voluntary offsets has been a major advance.

Questions about the quality and reliability of voluntary offsets can now effectively be resolved by reference to the leading voluntary standards. There appears to be convergence around the key standards that ICROA recognizes, and this broad agreement will bring greater clarity and credibility to the voluntary offset market.

The voluntary standards mentioned above have been developed with guidance from a range of capable and expert stakeholders, and they all take pains to establish criteria that address the attributes essential to a credible offset: real, permanent, verifiable, unique, and additional.

Furthermore, many offset projects for the voluntary market deliver important co-benefits -- for example, the alleviation of poverty and support for local economic development or the preservation of important habitat. The projects are innovative and the development of carbon credits brings investment to communities and emitting activities that otherwise would be ignored.

-- Members must do more than maximize their offset sales. The Code says that ICROA members will assess and implement both internal and external emissions-reduction opportunities, the "reduce-and-offset" approach. The Code explicitly recognizes that offsetting alone is not a sound approach to carbon management, but rather that offsets complement reductions in carbon emissions that a company's achieves. ICROA places responsibility on its members to support these essential reductions at the source.

-- Companies must measure the carbon footprints of their clients according to accepted international standards and set their emissions reduction targets based on scientific assessments. These requirements seem obvious, perhaps, but they will eliminate the all-too-casual carbon calculations that once prevailed and, alas, still can easily be found. And to have agreement about the basic requirements of carbon assessments lays an essential foundation for sound action by purchasers in the voluntary market.

-- Finally, each ICROA member will submit an annual report demonstrating compliance with the Code. The organization is also developing guidelines for the auditing of company reports, to ensure that the self-reporting is complete and accurate. This requirement for the preparation of a publicly available, annual report puts teeth into the Code and provides unprecedented transparency. Reporting guarantees that customers can know the essential facts about their offset suppliers and the offsets they are buying from them.

Everyone in the carbon offset business has, at heart, a simple goal: To ensure the responsible reduction in GHG emissions. By standing behind a robust Code, which supports the carefully crafted certification standards that now exist for the voluntary offset market and promotes sound carbon management and reduction strategies, ICROA is setting the standard for self-regulation in voluntary markets.

Tom Stoddard is Co-Chair of the International Carbon Reduction and Offset Alliance (ICROA). This article originally appeared at Ecosystem Marketplace.