The Regulatory Arena for Voluntary Offsets

horsed.jpgIn the wild west of offset sales, regulators are the saloon owners who kept their guns locked and loaded under the counter. Regulation schemes are filling in to provide some consistency in a wildly unreliable marketplace. As you know, carbon offsets are extremely abstract. A buyer can’t kick the tires, check the teeth, or do any sort of personal examination of the product before buying it. That’s why regulation is so important.
If you’ve considered buying offsets, you’ve probably heard that you should buy “verified” ones. The purpose of verification is to ensure that the carbon offset meets four standards of rigor. It should be verifiable (the project actually happened), additional (it wouldn’t have happened without your money), leakage-free (the carbon you’ve sequestered isn’t going anywhere), and permanent (those trees you paid for won’t be cut down and turned into paper napkins). In the absence of regulation, a nefarious offset retailer could actually be selling you nothing at all. So we’re all agreed we need to go regulated. The trouble is, the regulatory landscape is just about as complicated as the offsets market.

One of the problems with regulatory standards occurring in the private sector is that the regulators have a financial interest in maintaining good relationships with the project creators. This can lead to a conflict of interest where even tough standards can be softened to make a deal. At last count, I was able to find eight competing regulatory schemes floating around the internet. I won’t name them all so as to avoid giving press to the less rigorous ones, but I’ll discuss a few of my favorites.
Many people are calling for the government to step in and select a verification scheme to make the playing field a bit easier for consumers. The US environmental regulatory system has largely been driven by public pressure, and, though we are seeing increased interest among consumers in verification, we are a long way away from the groundswell needed to get government bodies to act. So unless the market favors a particular regulatory body enough to drive the others out of business, the status quo will remain in place until carbon offsetting becomes a requirement for businesses, at which point, the call for clearer guidelines on regulation will become louder in the commercial sector.
After all this uncertainty, you still want to buy offsets? I’ve personally chosen to focus on simple living and spend my hard earned cash on buying ethical products rather than offsets, but if you still want to go the offsets route, I recommend buying ones that are verified through one of four standards: the Gold Standard, the Voluntary Carbon Standard, Green-e certification, or through the California Climate Action Registry’s new Climate Action Reserve. Here are some details about each of these schemes:
The Gold Standard is based in Switzerland, and you know the Swiss are known for their impartiality (kidding! I mean, they are, but you shouldn’t let that be a reason to buy a carbon offset). Their registry has protocols that are based on the Kyoto protocol’s clean development mechanism, but they are more rigorous about the projects they accept. They have additionality constraints in place – to make sure the consumer doesn’t end up paying for a project that would have gone through without the offset money. They have made great efforts to be transparent with their methodologies. As a registry, they have no real interest in any particular project being certified. Finally, they are working on a tracking system to ensure that each offset is sold to one and only one buyer. Of course we would much prefer that the tracking system be up and running, but we’re dealing with the saloon owner with a pistol under the counter, remember?
Climate Check shared with you some of the concerns about the Voluntary Carbon Standard last week. I agree that they are not the ideal, but I think that they are much better than nothing, and they actually come out ahead of their competitors on many standards of rigor. For one, they have a steering committee of 19 members (including the California Climate Action Registry and the World Resources Institute, among other credible organizations) that helped develop the 2007 standards. Each project that is up for verification goes through a double approval process using two independent verifiers – just like your kid’s college application. Their project selection criteria includes everything you would want to see, except environmental and social co-benefits (discussed last week in my post on types of projects). VCS also has offices in Switzerland. I’m sensing a pattern here.
The Green-e certification is a certification for offset sellers, so you could conceivably buy an offset that was verified through one of the above standards from a company that is green-e certified. Seeing the Green-e certification on the website of your retailer is definitely a good thing. Green-e has an extremely trustworthy governance board, including staff from my own beloved Union of Concerned Scientists. They go above and beyond in terms of ensuring that their certification process is extremely rigorous, by utilizing the expertise of impartial analysts to develop their standards.
Finally, one to watch: the California Climate Action Registry has announced a new verification scheme called the Climate Action Reserve. CCAR has spent the last 6 years registering California businesses’ carbon inventories (how much of each of the 6 main greenhouse gas emissions each company creates in the course of a year). Having been through one of their audits, (that’s right. They call them audits because they are just as invasive as the financial ones), I can say for sure that they have a high standard of rigor. The Climate Action Reserve will be using a tracking system to ensure that each offset is sold to one and only one party. The main problem with this scheme is that it CAR verified offsets aren’t on the market yet.
At the end of the day, what is a consumer of business to do? If you are going to buy offsets, buy ones that are verified through one of these standards. More importantly, make sure and ask questions of your retailers: where did their offsets come from, and who verified them? Did the verification include the four standards (verifiable, additional, leakage-free, and permanent)? Don’t be shy. Even if you don’t know the lingo, or especially if you don’t, ask your retailers to explain them. If they can’t, that’s not a good sign. Nothing in the absence of actual government regulation will whip those retailers into shape faster than a discerning, demanding customer base. Next up, what in the world is a fair price for offsets?
Jen slings 100% post consumer recycled paper for the Union of Concerned Scientists as the Berkeley office manager, but she’s not representing said scientists on this blog. Of course, she fully intends to swipe facts and figures from their materials in addition to her own research as an MBA student in Sustainable Management. You can reach her at

Jen Boynton

Jen Boynton is editor in chief of TriplePundit and editorial director at 3BL Media. With over 6 million annual readers, TriplePundit is the leading publication on sustainable business and the Triple Bottom Line. Prior to TriplePundit, Jen received an MBA in Sustainable Management from the Presidio Graduate School. In her work with TriplePundit she's helped clients from SAP to PwC to Fair Trade USA with their sustainability communications messaging. When she's not at work, she volunteers as a CASA -- court appointed special advocate for children in the foster care system. She enjoys losing fights with toddlers and eating toast scraps. She lives with her family in sunny San Diego.

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