What Are Voluntary Carbon Offset Projects and How to Assess Their Reliability?
Carbon offset schemes are designed for people who want to reduce their carbon footprint indirectly. Customers, usually motivated by the will to offset individual high-carbon activities such as flights, pay carbon offset companies for schemes that cut down on carbon dioxide emissions elsewhere. Prices of the service vary widely, depending mostly on the type of projects the company offers and the amount of carbon dioxide a customer wants to offset.
Advantages and Disadvantages of Carbon Offset Projects
Critics of carbon offset projects point out that those who reduce their carbon footprint to appease their guilty conscience don’t take any direct steps to combat climate change. Another argument is that offset companies could potentially hinder wider regulations targeting climate change that could cripple the offset companies’ ability to sell their service cheaply. As the offset market is relatively young, there is much room for irregularities; it is difficult for the customer to verify if the offset company delivers on its promises.
For proponents of the project, carbon offset projects are the only way to make up for some unavoidable carbon dioxide emissions, such as business travels. Climate change isn’t a localized problem, so offsetting carbon elsewhere is a viable option for combating climate change. A report from Britain's National Consumer Council and Sustainable Development Commission determines that carbon offset schemes raise awareness about the problem and can be an incentive to develop more sustainable habits. Apart from that, carbon offset schemes spurs many social projects in developing countries.
A few test have been developed to assess additionality:
- Legal and regulatory additionality test
The project cannot be implemented within official policies, regulations, or industry standards to be considered additional.
- Financial test
The revenue from the project should be sufficient to justify it from an economic point of view.
- Barriers test
If the project involves overcoming some barriers that would prevent the implementing of a similar projects by the local community (for instance lack of resources), the project may be considered additional.
- Common practice test
If the project uses technologies that are already in wide use in the region, it cannot be considered additional.
Although the above tests cannot guarantee that carbon offset projects are additional, they offer the customer some guide in assessing various carbon offset companies.
Assessing the Quality of Carbon Offset Schemes
Carbon offset companies vary widely in their practices, so it’s important for the customer to choose wisely. Unfortunately, companies may be tempted to cheat to make easy profit. The good news is that there are criteria for evaluating the trustworthiness of carbon offset companies, such as:
- Avoidance of double counting
- Realistic cost calculations
The criterion of additionality says that carbon offset schemes have to provide reductions of carbon dioxide emissions independently of any cuts that could happen of their own accord. For instance, if a company decides to install energy-efficient light bulb, and a few months later the government passes the law to refund the installation of energy-efficient light bulbs in every household, the project can’t be considered additional. The problem with this criterion is that it’s impossible to predict the future with certainty. Some companies offer to invest your money in another scheme should the first one fail to meet the criterion of additionality.
To assess the viability of a carbon offset project, it is necessary to check if the company engages in deceitful activities such as double counting. Double counting refers to a practice whereby companies sell offsets that have already been included as emission savings elsewhere (for instance selling the same carbon credits to two different customers or that are part of local or national targets to reduce carbon dioxide emissions).
Carbon offset companies should provide a carbon calculator on their website, so that customers can calculate their carbon footprint. Companies should have a clear methodology for calculating the operating costs and carbon dioxide emissions.
In addition, a carbon offset company should have a sustainable financial policy that will guarantee that the company will stick around long enough to implement its projects.
Monitoring carbon offset companies is of incredible importance, as it allows to discover any potential irregularities. The carbon offset market has developed two basic standards for measuring the quality of the companies: Voluntary Gold Standard (VGS) and Voluntary Carbon Standard (VCS). Companies of the first type are audited according to the Kyoto protocol and must bring some social benefits to the local community. The second type is equally rigorous, but less expensive and bureaucratic. Carbon offset companies frequently employ third-party institutions to monitor and evaluate their projects and in order to prove that they meet internationally recognized standards.
The Three Basic Carbon Offset Project Types
- Renewable energy
- Energy efficiency
Offset Project Types
Projects of the first type develop and implement renewable energy technologies, focusing in particular on biomass, wind, and solar energy. The benefits of such schemes are long lasting, as the renewable energy solutions they deploy have the potential to produce clean energy for many years to come.
Projects that focus on energy efficiency normally involve supplanting inefficient appliances in developing countries. Such projects usually have the additional social benefit of helping families save money.
Sequestrating carbon dioxide by planting plants is the most controversial of the three types. Carbon dioxide absorption depends on many variables, so it is impossible to make reliable calculations. In addition, the plants used in this long-term project could be chopped off or destroyed by natural disasters at some point in the future.
The carbon offset market is still young and spark off many controversies. Opponents say that it may be seen as a way to appease a guilty conscience and avoid taking more direct action. Proponents argue that carbon offsetting is a way to initiate a wider climate action. When assessing a carbon offset company’s reliability, it is necessary to take the following into account: additionality, avoidance of double counting, realistic cost calculations, and stability. Monitoring is indispensable to prevent any irregularities. The three basic project types include: renewable energy, energy efficiency, and sequestration, the last one being the most controversial.