Government code sidesteps issue of voluntary offsets

The government has side-stepped the issue of whether to allow voluntary emission reductions under its code for carbon offsets. They will be excluded until the unlikely event that the industry comes together under a "single" standard.

Voluntary emissions reductions will not be eligible under the government’s carbon offsets code when it is launched in April, the Environment Department (DEFRA) has announced.

The final draft of the code was published in February - over a year after it first went to consultation (ENDS Report 384, p 5 ).1 It has been developed by DEFRA to improve standards in the market and increase consumer confidence in offsetting.

Controversially the final draft excludes voluntary offsets, even though the market for them is expected to reach 400 million tonnes of CO2 per year by 2010 (ENDS Report 383, p 12 ). This means anyone who wants to buy a government-approved offset will be restricted to certified credits issued under regulatory regimes such as the Kyoto Protocol or EU emissions trading scheme. Unlike certified credits, voluntary offsets can be offered by anyone, opening the door for small-scale projects such as energy-efficiency schemes in developing countries.

DEFRA’s initial proposals, issued in 2006, were heavily criticised for excluding voluntary offsets. Last August, the House of Commons Environmental Audit Committee said excluding them would create "more problems than it solved" (ENDS Report 391, pp 56-57 ).

The committee recognised that some voluntary offsets - such as those associated with tree-planting schemes - had questions over their permanence or "additionality" (whether the projects only go ahead due to the finance from offsetting). However, the majority of voluntary offsets produced "methodologically sound and verifiable" emissions reductions.

DEFRA was expected to accept the committee’s recommendations in the final code. But according to an open letter accompanying the code from Environment Secretary Hilary Benn, offsetting firms will need to develop a single standard for "good quality offsets" before they will be accepted.2 There are currently seven standards for voluntary offsets worldwide, although there are two main ones in the UK: the NGO-backed Gold Standard and the industry-backed Voluntary Carbon Standard. The operators of the Gold Standard have criticised the VCS for its lack of rigour (ENDS Report 385, p 46 ).

Hilary Benn’s letter includes a list of the "minimum criteria" the government wants to see in an industry standard, such as additionality and avoidance of leakage - where offset projects simply displace carbon intensive land uses. Confusingly both the VCS and Gold Standard already have such criteria.

DEFRA will establish a workshop to help the industry develop a ‘good quality’ standard and will appoint an independent moderator to oversee discussions. DEFRA is unwilling to develop an "umbrella standard" that could encompass both the VCS and Gold Standard, a spokesperson added.

Outside this issue, the government’s code has changed little from the version issued for consultation 13 months ago. It sets standards for:

  • Emissions reduction credits that can be used
  • Calculating the emissions to be offset (emissions factors for energy use, passenger and freight transport are included)
  • Provision of information to consumers
  • Transparent pricing
  • The time in which offsets must be bought and retired

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