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Offset Provider Evaluation Criteria

Preparing to Purchase Offsets: Things to Consider

Once individuals and businesses have worked to avoid and reduce their GHG emissions, they may choose to purchase carbon offsets to mitigate some or all of their remaining GHG emissions. A carbon offset represents an emission reduction achieved to reduce the level of greenhouse gases in the atmosphere. Examples of projects that may generate offsets included increasing energy efficiency in buildings, industrial processes, or transportation; generating electricity from renewables such as wind or solar modifying a power plant or factory to use fuels that emit fewer greenhouse gases; putting wasted energy to work via cogeneration; and, capturing carbon dioxide in forests and agricultural soils. However, offsets can vary greatly in quality and price, and there are so many providers out in the market place (both those that manage the projects directly and those that act as intermediary resellers in the marketplace) that it is hard to know which offset provides the greatest environmental benefits.

To address this concern, the Carbon Concierge has created a methodology for evaluating carbon offset providers. We have developed offset criteria in eight different areas. These are:

Following is a brief description of each of the criteria. Carbon Concierge offers a custom service to clients where the different criteria can be weighted according to the clients' priorities, however, our offset provider recommendations are based on the weighting suggest.

Business and Project Transparency

In this criterion we are looking for offset providers to disclose background information about its business as well as details regarding projects including the nature, location, and case for additionality (see explanation in Offset Quality discussion below). The best offset provider will provide an open, comprehensive view of all aspects of their business, including projects.

Offset Quality

Offset projects vary greatly in nature as well as "quality." The Carbon Concierge defines offset quality based on the method used to generate the offset. That is, if the method has strong potential to provide additional and permanent emissions reductions through a proven technique, then it is considered to be of high quality. Examples of offsets include increasing energy efficiency in buildings, industrial processes, or transportation; generating electricity from renewables such as wind or solar (although not all such projects meet "additionality" criteria); modifying a power plant or factory to use fuels that emit fewer greenhouse gases; putting wasted energy to work via cogeneration; and, capturing carbon dioxide in forests and agricultural soils and carbon storage (see sequestration).

Of these methods, however, the Carbon Concierge does not consider carbon storage or carbon sequestration via forestry, to be high quality. In the case of carbon storage, this is still an emerging technology for which there are a number of pilot projects, but no proven track record regarding the integrity and time-frame of the "storage." In the case of forestry, there are two issues. Firstly, is the question of permanence. Projects that are established in perpetuity have some value, that is, where the land was not forested, but as a result of the project will permanently established as forestland, and should the forest be consumed in a fire (or other such event) it would be reestablished as forestland. The second issue is that of "significance and scalability." Reforestation projects do not represent a viable solution to addressing climate change because there simply isn't enough arable land (currently un-forested) that could accommodate forests to capture a meaningful amount of the world's annual GHG emissions for years to come. Additionally, sequestration projects tend to reduce the emphasis on reducing GHG emissions and increasing efficiency and renewable energy which are the key areas for achieving the necessary stabilization in GHG concentration levels.

In this discussion of offset quality we refer to a key issue: additionality. Meeting an additionality criterion requires demonstrating that it is unlikely that an action would have occurred without the funding for the offset. That is, if the project / emissions reduction would have occurred as a result of "business as usual" then it is not additional. A quality offset project must be in addition to any regulatory requirement, carbon-based or otherwise, as well as in addition to what would have occurred otherwise for cost savings or other reasons. Determining additionality is inherently problematic because it requires resolving a counter-factual question: What would have happened in the absence of funds for an action that results in the offset? In addition to looking at common practice, it requires a consideration of the barriers that the offset funding helps overcome. There can be economic and other benefits from a project, but it is necessary to determine that the other benefits alone were not sufficient for the project to happen.

Project Location and Offset Traceability

Does the offset provider provide details on its project locations and traceability? The best offset provider will provide an open, comprehensive view of the location of each project. Serialized offsets are preferred. In this criterion we also consider "regionality" which seeks to convey the significance of the offset project location, that is, the implementation of offset projects in the same region in which the emissions being offset were generated. The Carbon Concierge believes regionality is important for two reasons. Firstly, regionality enables improved community connections and education on climate change issues by providing a greater sense of tangibility of the offset project. Secondly, regionality has the effect of providing local accountability. That is, where emissions are generated, we should take actions to reduce emissions, rather than export the responsibility of emissions reductions to others. Given that the US is the world's first or second largest GHG emitter, American's have a direct responsibility to show leadership by reducing our emissions domestically. Of course, some would argue that it would be more economical to engage in emissions reductions globally based on the least cost perspective, which is a valid argument, however, we believe that local accountability will be the most important way to enact the change necessary on a global scale to avoid catastrophic climate change.

Note: in our criteria we assume that users of this tool are North America based and/or selecting offset providers for North American operations. The goal of this criterion is to facilitate taking responsibility and action within the US while an additional is to support regional economies, and support more tangible offset projects that could potentially be in communities of significance for the offset purchaser.

Industry Leadership

Has the offset provider been active and contributed to the development of high standards in the industry? The best offset provider shows industry leadership and encourages the development and use of open standards.

For example, we give preference to providers that have been active in the offset market since the early days (1999) and have demonstrated clear leadership through advocating for comprehensive and rigorous industry standards. Industry Standards that the Carbon Concierge holds in high regard include: The Voluntary Carbon Standard (VCS), California Climate Action Registry (CCAR), The Climate, Community and Biodiversity Alliance (CCBA), and the Gold Standard. Leadership could also be demonstrated via political lobbying for national standards, so long as this lobbying supports rigorous quality standards.

Business Model and Program Services Ratio

Does the offset provider have a business model that is focused, at a minimum, on the triple bottom line? The best offset providers will be focused on delivering the greatest positive impact on society through its operations and projects, considering all stakeholders. This criteria seeks to enable the avoidance of organizations that have entered the carbon offset market based purely on financial gain motivations, which may compromise environmental benefits. While the Carbon Concierge seeks to support financially sustainable organizations, we also seek to ensure genuine intention for developing environmentally sound solutions for addressing climate change.

In order to achieve the highest score in this criteria, the offset provider would need to be a reputable non-profit with environmental mission, or a for profit organization with a modified charter (or bylaws) stating an environmental mission and/or having a portion of revenues are directed to environmental non profit organizations. For a non profit organization, program services must account for 90% or more of total expenses. For profit organizations must disclose the proportion of expenses related to program services. This ensures that the majority of offset funding goes toward the actual implementation of projects, rather than toward supporting excessive overhead.

3rd Party Evaluation

This refers to the involvement of a third party, with no financial interest in the project, either verifying or validating a project and its emissions reductions. Specifically, verification is the periodic independent review of monitored and quantified reductions in anthropogenic emissions by sources of greenhouse gases that have occurred as a result of a project activity during the verification period. This type of third party evaluation should be performed by technical experts such as engineering firms etc. Validation, on the other hand, refers to the evaluation of a proposed project against the requirements selected for validation. That is, validation occurs on the basis of the project design (including evaluating the baseline, monitoring plan, etc.), and can vary in meaning depending on which standard the project is being validated under. The objective of validation is to confirm that the project design as documented is sound and reasonable and meets the stated requirements and identified criteria (including additionality). The Carbon Concierge prefers projects that are validated and verified by Kyoto Protocol DOEs or other evaluators approved under the California Climate Registry.

Education

Does the offset provider strive to educate their clients on issues related to Climate Change and the offsetting industry? Given that there is a difference between retail and institutional customers in terms of their educational needs, their direct impacts, and how to measure them, it is important that an offset provider address the needs of its target audience, at a minimum. The best offset providers will provide useful educational information and activities beyond their target market, and will emphasize the importance of conservation before offsetting.

Social Benefit

The best offset provider will execute projects with significant social benefits in addition to the environmental benefits of GHG reduction. Projects that include social benefits as a formal part of the offset provider's requirements and provide community engagement in the project region show leadership in this area.

Specifically, projects that meet the Climate, Community and Biodiversity Alliance (CCBA) or the Gold Standard perform strongly against the social benefit criteria. Another example of high performing projects are those that provide benefits to low income members of society or otherwise underserved communities

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