Ensuring Offset Quality

(What follows is an abridged version of the comments I delivered on a side event panel on  Ensuring Offset Quality sponsored by the Climate Action Reserve at COP15.)

What is an offset? An offset is an emission reduction in an uncapped sector that is used for compliance with an emissions cap in lieu of a reduction in a capped sector.

There are two parts to that definition. The first is an emission reduction in an uncapped sector, such as forestry or agriculture. The second is the use of those reductions as a substitute for reductions in a capped sector under a compliance regime.

I believe it is important to distinguish between these two parts of offsets. Why? Because while there are reasonable disagreements about the appropriate role that offsets should play in a compliance regime, there is widespread consensus that we need to achieve significant emissions reductions in the uncapped sectors. In particular, NRDC believes that we should be trying to maximize the contribution of the forestry and agriculture sectors.  In order to do that, we need to have credible, high-quality mechanisms to measure, report, and verify the impact of emission reductions activities in those sectors.

Once we have accounting standards and verification mechanisms in place to ensure that credits are only earned for real reductions, then it becomes feasible to incorporate the use of offsets into compliance regimes without threatening their integrity.  It also becomes possible to implement a range of other policies to achieve those emission reductions, including incentives using, for example, allowance auction revenues, and direct regulation.

To date, offsets have suffered from an unfortunate dynamic in which offsets are seen as nothing more than an opportunity for easy credits and cheap compliance.  Proponents work to make the rules as lax as possible, thereby undermining credibility. Opponents work to make the process as difficult and restrictive as possible, thereby undermining practicability. What is left are low quality, impractical offsets with no environmental credibility.  This is a dynamic that we must surmount by working together.  Credible, high-quality offset accounting mechanisms are in the interest of all parties, including NGOs, industry, and government. 

From my perspective, there are four key components to a credible, high-quality, offset accounting program.

  1. Full and accurate accounting using standardized protocols.
  2. Reasonable and appropriate minimum environmental safeguards.
  3. Strong baselines that ensure additionality.

And, for activities that require retention of sequestered carbon, an effective mechanism to ensure permanence.