Voluntary Offset

Voluntary carbon offsetting is a new business sector that is attracting increasing public interest. Emissions trading and other climate policy instruments cover only a portion of carbon emissions. They do not cover or do not adequately cover sources such as households, most small and medium-sized enterprises, transport (especially air transport) and large events. Also, it is not usually possible to reduce one’s own emissions to zero. Voluntary carbon offset is an attempt to apply the emissions trading principle to these smaller-scale sources.

Offsetting means either avoiding a specific quantity of a given source’s emissions at another location or using sinks to capture the respective quantity of carbon from the atmosphere. A number of professional providers of offset activities have emerged on the market. They offer clients a service by:

• Calculating the quantity of carbon to be offset.

• Conducting an offset project which results in reducing emissions in the respective amount or capturing the same amount of carbon from the atmosphere.

• Documenting the offset by issuing a certificate or other form of proof.

Businesses, organisations and governments are starting to use the scheme to an increasing extent in order to demonstrate their commitment to the climate change cause. For example, the entire carbon emissions resulting from the Renewables Conference in Bonn in 2004 were offset. The German Environment Ministry (BMU) and the German Ministry for Economic Cooperation and Development (BMZ) will purchase the respective amount of emission reduction certificates and then set them aside. The certificates stem from a small-scale CDM project in India which involves equipping large kitchens with solar-thermal power. Great Britain is currently setting up a fund to offset the emissions generated by the air miles travelled by government officials and also the emissions which occurred in conjunction with events held under the British EU and G8 presidencies in 2005.

All providers of offset solutions measure their projects against special criteria and have them evaluated either externally or internally. The same applies to verification and certification of the emission reductions achieved. Many providers carry out their projects under the official CDM procedure. Some projects also meet the CDM Gold Standard developed by an international panel of experts at the initiative of the World Wide Fund for Nature (WWF). The Standard comprises a set of quality criteria which supplement those of the CDM to facilitate evaluation of a project’s additionality and sustainability. Other providers evaluate their projects using their own criteria. While these are often based on the CDM Standard, they are more simplified and are tailored to specific project types. To achieve greater transparency and uniformity in their criteria and evaluation procedure, the CDM Gold Standard Organisation has created its own standards for voluntary offset projects. A new standard is currently being developed jointly by the International Emissions Trading Association, which represents the interests of businesses wanting to participate in emissions trading, and The Climate Group, a combination of businesses and governments looking to promote climate change activities.