CarbonSignal

While climate change policy attention has been focused on the fate of the mandatory carbon market via the Carbon Pollution Reduction Scheme (CPRS), the past fortnight has seen some significant developments in the voluntary market.

The National Carbon Offset Standard (NCOS), which will replace the well-known Greenhouse Friendly offset credit and carbon neutral accreditation schemes, was released on 24 November 2009. The NCOS will come into effect on 1 July 2010, at which time Greenhouse Friendly program will cease.

The existing Australian voluntary carbon market, which comprises project developers, retailers and brokers (for a full list see http://www.carbonoffsetguide.com.au/) is almost entirely comprised of entities creating, buying and selling offset credits in sectors that will be ‘covered’, or that can ‘opt-in’ under the proposed CPRS (for example, capturing methane from landfills (waste sector) and renewable energy (energy sector) are in covered sectors and reforestation (forestry sector can opt-in). With the exception of forestry activities, this means they will no longer be able to create offset credits.

The NCOS clarifies what activities will be eligible to create offsets in the voluntary market. While the Voluntary Carbon Markets Association (VCMA) points out that the NCOS is silent on the treatment of Greenpower as a voluntary carbon offset, the Standard provides confirmation that the following units will be recognised:

• “Carbon pollution permits, known as Australian Emissions Units, including those from forestry projects opting into the CPRS (and any other offsets allowed under the CPRS);
• Kyoto units recognised and accepted under the CPRS;
• Credits issued under the internationally recognised [Clean Development Mechanism] Gold Standard and Voluntary Carbon Standard (where these meet specific standards); and
• Credits issued by domestic offset projects that reduce emissions from sources currently not counted towards Australia’s Kyoto Protocol target.” (Source: Department of Climate Change 2009)

The recognition of CDM Gold Standard and Voluntary Carbon Standard is a good move, and enables Australia to leverage off the enormous work that global NGOs and other institutions have put in over recent years into developing credible, robust voluntary offset standards.

It will be interesting to see what non-Kyoto/ non-CPRS activities will have sufficient information to have methodologies accredited under NCOS. With the right research support from Governments, the voluntary market may be able to make projects that deliver multiple environmental objectives, such as de-stocking Western Australian rangelands, and improving soil management, financially viable.