UK to set standard on voluntary carbon offsets

London, 18 January: The UK government is to develop a standard for voluntary carbon offsetting, which will be based on credits from markets created by the Kyoto Protocol.

But some offset providers are incensed that the government has ignored verified emission reductions (VERs) generated by non-Kyoto projects and have criticised the inclusion of allowances (EUAs) from the EU Emissions Trading Scheme (ETS) in the plans.

The government launched a consultation today on the standard and an associated code of practice, proposing that offset providers supply consumers with clear information and transparent prices.

Environment secretary David Miliband said: "People need to be sure that the way they offset is actually making a difference. The government's standard and code of practice, with a quality mark so people can check easily before they choose an offsetting product, will help to provide that certainty."

The government's standard would be based on credits from sources regulated by Kyoto bodies, such as Certified Emission Reductions (CERs) generated by Clean Development Mechanism (CDM) projects, and Emission Reduction Units from Joint Implementation (JI) projects, as well as EUAs.

Jonathan Shopley, chief executive of the CarbonNeutral Company, a UK-based offset provider, welcomed government support for voluntary standards, but said it was "missing a trick" by excluding verified emission reductions (VERs) that are not governed by the Kyoto mechanisms.

"CERs are often focused on large industrial-scale emission reduction projects… Voluntary schemes [generating VERs] which are more local- and community-based often have more relevance and consumers can more easily see the benefits," he said.

Mark Kenber, policy director at NGO The Climate Group, said the proposal "does provide some guarantee of quality, but only by artificially restricting the market. It doesn't seem to make an awful lot of sense – there are lot of good [carbon abatement] projects that don't want to go through CDM accreditation".

Both were surprised that EUAs were included in the government plans as a possible source of carbon offsets. The vast majority of allowances are given away free to companies in the EU ETS and are essentially a permission to pollute, not an emission reduction.

"This is an attempt by the government to tighten up the very lax markets in the EU ETS," said Shopley, referring to the oversupply of allowances in the first phase of the EU scheme.

Other standards for offsets have already been launched in the market, such as the Gold Standard and the Voluntary Carbon Standard, the latter being developed by The Climate Group and the International Emissions Trading Association.

A recent report by the Carbon Trust, an independent company funded by the UK government, noted five standards that met its minimum level of quality. These included CDM/JI, the Gold Standard and the Voluntary Carbon Standard.

Details of the consultation are posted on the Defra website. The closing date for responses is 13 April 2007.