Designing A Winning Carbon Offset Program

By nature, all quality construction projects are an investment. We want to see our vision come to fruition and we want value for our investment.  Achieving permanent, long-term emissions reduction targets are no different. The most progressive and comprehensive carbon offset projects require a level of financial commitment that should be matched by professional stewards who will help you reach your goals whilst also providing social, environmental and clean technology benefits to host communities.

But how can you be sure that each project you’re funding actually delivers the promised carbon savings and other benefits? The effectiveness of the project itself is important – the amount of CO2 absorbed or future emissions avoided, for example – but that’s not the whole story. Carbon offset programs must be carefully designed to ensure the savings are genuine, quantifiable, permanent and additional.

Finding a carbon offset program that ticks all the boxes for your organization is not straightforward. Amongst a forest of Kyoto offset mechanisms, mandatory cap-and-trade systems, voluntary standards and other programs, certifications and protocols, how can you identify a program that fits your needs?

Protocols, programs, registries and standards

The terminology around offsets can be confusing, but it’s important to understand the differences between the key components and the role each of them plays in the design of a winning carbon offset program.

An offset protocol (or methodology) covers the rules that determine the eligibility, additionality, baseline and emissions for each type of project. This typically includes the accounting rules and the monitoring, reporting, verification and certification rules. Internationally recognized protocols form the basis of a successful offset program.

To help clients achieve their sustainability goals, a well-designed offset program applies the rules set out in the protocol to ensure offsets are genuine, additional and permanent and to make sure that projects perform as expected to deliver actual carbon savings. The program must also include registration and enforcement systems using a registry to record the ownership and retirement of offsets. This guarantees that each offset is unique and is only sold once, thus avoiding any issues with ‘double counting’ or other false reporting.

In the voluntary carbon market there are many offset standards, which set criteria for the selection and evaluation of projects. By themselves, standards do not guarantee the quality of a project; proper validation and verification are also needed.

Managing the risks of offset programs

Before investing in offsets, there are four significant areas of risk to be aware of: a good offset program will be robustly designed to address and minimize each of these risks.

  1. Additionality – In theory, the test of whether a project is ‘additional’ is quite simple: “Holding all else constant, would the activity have occurred, if it were not implemented as an offset project?” However, answering this question presents a real challenge to the offset program designer, since it relies on calculating a hypothetical baseline scenario against which to compare the projected carbon savings. (For a successful example of this, we worked with Ben & Jerry to design a carbon offset project–Green Dream Methane Reduction Project–to help small farms in Vermont treat their manure to improve on-farm sustainability. Without this alliance, those individual farms would not have been able to afford the technology.)
  2. Permanence – Offset projects are designed to operate for a minimum number of years to guarantee future carbon savings over a fixed period. Some types of projects risk being cut short: Technology may break down or be switched off, removed or vandalized; tree plantations may be destroyed by fire, disease, catastrophic weather events or logging.
  3. Leakage – Investing in certain types of offset projects can lead to an organization, knowingly or inadvertently, increasing its emissions elsewhere and/or at a later date.
  4. Quantification and verification errors – Offset savings may be miscalculated due to incorrect assumptions, inaccurate baselines or simple mistakes.

Another – often overlooked – area of risk is that the use of offsets can delay investment in cleaner technology and ‘lock in’ polluting processes and infrastructure for the longer term. An expert offset provider can work with a client organization to design a transitional program that achieves emissions reductions at home whilst supporting global low-carbon development.

What does a great carbon offset program look like?

Progressive carbon offset providers design programs that maximize the benefits of offsetting whilst minimizing the risks. Although the technical complexities are considerable, experienced offset providers can offer reassurance through their rigorous processes and certification. NativeEnergy’s Help Build™ Carbon Project Certification, for example, employs a number of steps – screening, third-party validation and verification – as well independent registry listing and validation against international standards.

What will projects like Green Dream Farm Methane Reduction look like in ten years…or more? Leading offset program providers are flexible and innovative to respond to changes in GHG legislation, mandatory compliance requirements and clients’ needs. As the offset market continues to grow and change, well designed offset programs offering socially progressive offsets – such as Help Build™ carbon offsets – represent best practice, enabling pioneer organizations to support the transition to a low-carbon world.