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Carbon offsets

How are offset projects certified and why it’s important.

Published on
November 23, 2021

If your company is interested in using carbon offsets to reduce your emissions and help transition towards a consequence-free, net-zero future, chances are, you will want to evaluate their quality before you choose. This is especially true in light of some reports stating that some carbon offset projects are not offsetting the emissions they claim. 


Needless to say, you wouldn't want to purchase carbon credits from these types of offset projects. Fortunately, many certification/verification standards exist to provide you a level of assurance regarding the quality and effectiveness of carbon credits sold today. But how does this process work? How exactly are carbon offset projects certified? Are these standards reliable?


The Difference Between Certification and Verification


First and foremost, the offset standard differs depending on whether the project is a part of a mandatory compliance scheme or sold on the voluntary market. The carbon credits go by different names based on the specific standard. For instance, carbon credits generated under the Clean Development Mechanism (CDM) are called Certified Emissions Reductions (CERs). These CERs are sold to those parties participating in a mandatory compliance scheme around the world. These credits can contribute to the participating country's emission reduction targets. 


However, those offsetting projects that fall under a voluntary standard differ from those under mandatory compliance schemes. Instead of being referred to as Certified Emissions Reductions (CERs), voluntary standards generate Verified Emissions Reductions (VERs). In the voluntary offset market, companies and organizations can choose both from CERs or VERs. Because of this, verification and certification are often used interchangeably. Nevertheless, organizations should always choose offset projects that undergo certification or verification to ensure the emission reduction projects genuinely offset GHGs. 


What are Some Carbon Offset Standards?

Mandatory Compliance Reduction Standards

Clean Development Mechanism (CDM)

The Clean Development Mechanism is the standard defined by the United Nations Kyoto Protocol in 2006. It has been operational ever since. The CDM is the international standard designed to produce emissions reduction projects in developing countries. Offset projects that are certified under the CDM generate Certified Emission Reduction (CER) credits that they can sell to offset one tonne of CO2. Considering Article 12 of the Kyoto Protocol defined the CDM, these CERs can be used to meet countries' reduction targets defined in the treaty. CDM uses third-party auditing and verification of projects. Ultimately, the CDM Executive Board reviews all projects. 

 


Voluntary Emission Reductions Standards

Verified Carbon Standard

The Verified Carbon Standard (VCS) is a voluntary verification standard operated by Verra, a non-profit organisation. Verra states that there are over 1,700 projects verified under VCS. These projects are responsible for offsetting over 630 million tonnes of GHG emissions. The VCS was first defined by the Climate Group and International Emissions Trading Association (IETA). Once a carbon offset project is verified under the VCS, project developers can be issued Verified Carbon Units (VCUs). 

 

Gold Standard

The Gold Standard is one of the voluntary emission standards featured in the Consequence portfolio. There is a Gold Standard for the CDM and the voluntary market, referred to as the Gold Standard Verified Emissions Reduction (GS VER). The GS VER was first released in 2006 by the non-profit foundation WWF-UK. It is a simpler standard than the CDM version, but the verification methodology is the same. The Gold Standard only verifies carbon offset projects in developing countries, specifically those projects involved with renewable energy and energy efficiency.  

 

Voluntary Offset Standard (VOS)

The Voluntary Offset Standard (VOS) is one of the more recent voluntary standards. It was first launched in 2007. Like other standards, it is largely based upon the existing UNFCCC standards. The idea behind the Voluntary Offset Standard is to provide an offsetting standard similar to that of the Kyoto Protocol compliance market. 


Climate, Community and Biodiversity Standards (CCB)

The Climate, Community, and Biodiversity Standard (CCB) was developed by the similarly named Climate Community and Biodiversity Alliance. This standard is specifically designed for land-based carbon offsetting projects. Projects under the CCB seek to achieve climate biodiversity and benefits for the local communities. The CCB standard follows the Good Practice Guidance methodologies outlined by the Intergovernmental Panel on Climate Change (IPCC CPG). 


Keep in mind that this list is not exhaustive. There are other voluntary reduction standards that verify carbon offset projects beyond these. Nevertheless, these are some of the biggest standards in the voluntary market today. 


How does the Verification/Certification Process Work?

Here at Consequence, our carbon offset portfolio includes projects verified under the Gold Standard and United Nation ‘s frameworks. While these types of carbon offsets are sold in the voluntary market, as we mentioned, this standard still uses the same general methodology in its evaluation process. This is how it works:  

Planning of the Project and Consultations with Stakeholders 

Before the verification process begins, project developers must prepare a "Key Project Information" summary that confirms project designs, illustrates how it aligns with the Gold Standard safeguards and provides estimates for the project's climate impacts.


Then, once this summary is prepared, project developers must participate in the Stakeholder Consultation Meeting. 

 

Preliminary Review by SustainCERT

After the project developers complete the initial consultation, SustainCERT, a Gold Standard spin-off certification organisation, provides a preliminary review of the offset project. 

 

Preliminary Design Approval

If everything aligns with the Gold Standard requirements, offset projects may receive preliminary design approval from SustainCERT. This initial approval allows the project to continue with the Gold Standard verification process. 

 

Third-Party Validation

All projects verified under the Gold Standard will need to be validated by a third party. Following the approval of the project design, independent auditors will review the carbon offset project. This involves another review of project documentation and field visits. Then, these third-party auditors confirm that the offset project aligns with Gold Standard requirements. 

 

Final Project Design Review and Certification by SustainCERT

Once the project is validated by an independent auditor, SustainCERT, once again, reviews project documentation. If necessary, SustainCert may request clarification or request corrective actions in some cases. Once this review process is complete, SustainCERT can issue a certification of the carbon offset project. If so, projects will officially be "Gold Standard Design Certified." To receive a project design certification, the project must include a stakeholder-inclusive design, climate impact estimates, and a project monitoring plan. 

 

Project Monitoring

Once the project is certified and implemented, the project must be monitored to ensure it maintains its alignment with Gold Standard requirements. Project developers are responsible for monitoring their offset projects according to the approved monitoring plan provided during the design certification. This involves consistent engagement with project stakeholders and annual reports. 


Third-Party Validation of Project Performance 

Once more, offset projects will need to be audited by a third party. The validation process is similar to the first auditing process, involving documentation review and field visits. However, rather than being focused on project design, the project's performance is validated. 


Performance Review and Certification by SustainCERT 

Finally, SustainCERT reviews the project documentation and monitoring reports. If, after implementation, the project still aligns with Gold Standard safeguards and requirements while achieving the estimated climate impacts, SustainCERT issues a final performance certification.


Mandatory Compliance Process

To be clear, the certification process for Mandatory Compliance Schemes such as the Clean Development Mechanism follows a very similar process. However, the certification process for Mandatory Compliance Schemes places more emphasis on the additionality of the project. This means that project developers must demonstrate that the development and implementation of their carbon offset projects would not have occurred otherwise. Doing so will establish a baseline where predictions can be made regarding future GHG emissions if the carbon offset was never developed. All in all, CDM certifications require that projects reduce emissions more than would have occurred in the absence of CDM intervention.


Like other offset verification processes, the CDM uses third-party agencies, called Designated Operational Entities (DOE), to evaluate the project and its case for additionality. 


The CDM Executive Board is ultimately responsible for determining the additionality of proposed offset projects. They will consider a project additional if its developers can provide realistic alternative scenarios besides their project being developed. If the GHG emission reductions would not have occurred, the project may be issued CERs. The number of CERs is determined by regular monitoring of emissions reductions and verification by the DOE. 


Small and medium sized organisations are able to leverage these standards and processes developed and enforced over many years by organisations, potentially significantly larger and more knowledgeable than themselves with regards to offsets. Not all positively impactful offset projects are certified or verified, but selecting one that goes a long way to ensuring a quality project that provides value for money and is defensible when scrutinised. In the end, the choice belongs to your organisation. Projects do fail, even if certified.


Sources for reference.

  • Source Carbon Offset Guide, Mandatory & Voluntary Offset Markets, 2021
  • Source Elgin, Ben, A Top U.S. Seller of Carbon Offsets Starts Investigating Its Own Projects, 2021
  • Source United Nations Framework Convention on Climate Change, The Clean Development Mechanism, 2021
  • Source United Nations Framework Convention on Climate Change, Joint Implementation, 2021
  • Source Verra, Verified Carbon Standard - The world's leading voluntary GHG program, 2021
  • Source Gold Standard, A Higher Standard For A Climate Secure and Sustainable World, 2021
  • Source Carbon Footprint, Gold Standard Carbon Offsetting, 2021
  • Source Global Greenhouse Warming, Voluntary Offset Standard, 2021
  • Source CCBA, 2021
  • Source Gold Standard for Global Goals, Certify a Project, 2021
  • Source SustainCERT, 2019

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