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Carbon Credit Verification and Standards

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Certificate Types

There are a number of different certificate types, certified by different certifying bodies with different "standards". However, they fall into three broad categories:

  • Kyoto Protocol compliant standards
  • Voluntary standards
  • Premium standards

Kyoto Protocol compliant standards

The Kyoto Protocol invented the concept of carbon emissions trading, whereby carbon credits were a "flexibility mechanism". Under this flexibility mechanism Annex 1 (developed countries) could use the carbon credits to meet their emission reduction commitments. These flexibility mechanisms were also designed to be able to assist with transferring resources and sustainable technologies to developing countries. There are 2 kinds of carbon credits that can be created to this end: Joint Implementation and The Clean Development Mechanism. The United Nations Framework Convention on Climate Change (UNFCCC) created methodologies for both of these kinds of credits, and also have organisations that approve, certify and register projects under these mechanisms.

Joint Implementation (JI)

Joint Implementation allows emitters in developed countries (referred to as Annex-I countries under the Kyoto Protocol) to purchase carbon credits via "project-based" transactions (meaning from greenhouse gas-reduction projects) implemented in either another developed country or a country with an economy in transition.

Carbon Credits from these JI projects are referred to as Emission Reduction Units (ERUs).

The Clean Development Mechanism (CDM)

Like JI, CDM is a project-based transaction system through which industrialised countries can accrue carbon credits. However, unlike JI, CDM credits are acquired by financing carbon reduction projects in developing countries. The CDM is currently set to run until 2012.

Carbon offsets originating from registered and approved CDM projects are called Certified Emission Reductions (CERs).

Note: CDM projects are often certified under the Voluntary Standards creating VER (Voluntary Emission Reduction Units) Carbon Credits. These projects use the same methodology, but do not have their projects approved and registered via the UNFCCC registration body, they instead have them approved and registered under one of the other voluntary certifying bodies listed here.

Voluntary Standards

Voluntary carbon credit standards refer to the emerging market for carbon credits outside the Kyoto Protocol compliance regime. The following are the main standards used in Australia. There are other standards from around the world, and Australia is now bringing it's own standards into line with those in Europe, UK and USA.

Voluntary Carbon Standard (VCS)

The VCS Programme provides a robust, global standard and programme for approval of credible voluntary offsets. VCS offsets must be real (have happened), additional (beyond business-as-usual activities), measurable, permanent (not temporarily displace emissions), independently verified and unique (not used more than once to offset emissions).

NSW Greenhouse Gas Reduction Scheme (GGAS)

The NSW Greenhouse Gas Reduction Scheme (GGAS) commenced on 1 January 2003. These were some of the first third party certified carbon credits available in the world. NSW

Forests produced NGACs that were the first third party certified forestry carbon credits traded globally.

Assessing abatement projects, accrediting parties to undertake eligible projects and then create certificates, and monitoring compliance with GGAS is the responsibility of Independent Pricing and Regulatory Tribunal of NSW IPART. IPART also manages the Greenhouse Registry which records the registration and transfer of certificates created from abatement projects.

Renewable Energy Certificates (REC)

Renewable Energy Certificates (RECs), also known as Green tags, Renewable Energy Credits, Renewable Electricity Certificates, or Tradable Renewable Certificates (TRCs), represent proof that 1 megawatt-hour (MWh) of electricity was generated from an eligible renewable energy resource.

There are many different types of REC standards around the world. In Australia, there are several ways of producing RECs, including GreenPower®.

Note: RECs are different from carbon credits which certify that 1 tonne of CO2 e has been saved or removed.

Premium Standards

Above and beyond both the Kyoto and Voluntary standards are a number of "Premium" standards. Projects with these premium standards are generally first certified either under the VCS or as CDM CERs or JI ERUs.

Social Carbon Standard (SC)

The Social Carbon Standard utilises a set of analytical tools that assesses the social, environmental and economic performance of projects; thereby demonstrating, through continual monitoring, the project's contribution to sustainable development. The certification guarantees the project's contribution to sustainable development and guarantees true social and environmental benefits of the project.

Gold Standard (GS)

The Gold Standard is a non profit foundation under Swiss law and is funded by public and private donations. Working in the Clean Development (CDM), Joint Implementation (JI) and voluntary markets to provide high quality premium carbon credits.

The Gold Standard's objectives are to to help boost investment in sustainable energy projects, ensure significant and lasting contributions to sustainable development, provide assurance that investments have environmental integrity and increase public support for renewable energy and energy efficiency.

The GS is based upon a rigorous assessment framework that makes an assessment of the project type and its sustainable development. Projects must be 'additional' meaning that the people behind a project need to demonstrate that the project would not have occurred without the combined incentives that carbon credits provide. Due to financial, political or other barriers, the project must prove it goes beyond a "business as usual" scenario and that greenhouse gas emissions are lower with the project rather than without the project.

Climate, Community and Biodiversity Alliance (CCBA)

The Climate, Community and Biodiversity Alliance (CCBA) is a partnership between leading companies, NGOs and research institutes seeking to promote integrated solutions to land management around the world. With this goal in mind, the CCBA has developed voluntary standards to help design and identify land management activities that simultaneously minimise climate change, support sustainable development and conserve biodiversity.

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