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User:Dtetta/Carbon offsets and credits

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This is an outline for a proposed article that includes the content of both the Carbon offset article and the Carbon credit articles. The new title of the combined article could be “Carbon offsets and credits”, as shown above. Note: there are several examples of other WP articles covering closely related concepts that use “and” in the title, such as: Provinces and territories of Canada, 2004 Indian Ocean earthquake and tsunami, and List of United States counties and county equivalents.

The outline generally follows the current flow of ideas in the Carbon offset article, though I’ve done a litte reorganizing and added a couple of sections/subsections.

The lead is still to be developed (as is the recent trends section); the rest of the article outline is below. Notes in italics are meant to indicate what portions of the current articles are being incorporated into the various elements of this outline. References that show just a citation number indicate citations being used from the current Carbon offset article - where a reference is from the Carbon credit article, that is specifically indicated.

Definitions

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Note: Includes a brief mention of VER/CER concepts from “Types” section in Carbon credit article, with updated citation.

  • “Offset” refers to a reduction in GHG emissions used to compensate for emissions that occur elsewhere. “Offset credit” or “credit” is a transferrable instrument certified by governments or independent certification bodies to represent an emission reduction of one metric ton of CO2, or an equivalent amount of other GHGs. (Carbon Offset Guide)
  • Voluntary emissions reduction (VER) and certified emissions reduction (CER) - Fairclimatefund.
  • Carbon offsets and credits, along with carbon taxes and subsidies, are forms of carbon pricing .
  • Concepts of offsets and credits are historically intertwined. Carbon credits can move into voluntary (offset) markets. Cadman 2022 p 79
  • Distinctions between credits and offsets sometimes unclear in the literature – i.e.  World Bank 2022 and NICA 2019  reports refer to Australia Emission Reduction Fund as a credit scheme, but Grattan Institute 2021 (funded in part by Australia gov’t), uses “offsetting” to describe that program.

Background and general features

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Generally adheres to language in “Features” section, some citations would be updated. Oxford, SBTi descriptions have been moved to “Ensuring quality and identifying value” section.

  • 1997 Kyoto protocol and Clean Development Mechanism (UNFCC, Gillenwater)
  • Offsets and offset credits cover Kyoto categories of greenhouse gases.
  • Common features:  Vintage (Citation #12), project type, certification regime, carbon retirement. (Offset guide)
  • 2015 Paris Agreement - Article 6 developments (Terrapass )

Project types

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Propose to condense the current "Project Types" section into two or three paragraphs, and focus just on project types.  “Links with emissions trading schemes”now covered in “Markets/Certification programs section”.  “Carbon retirement”moved to “general features”. “Small scale schemes” moved to “Voluntary Markets subsection.

Programs and markets

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Note: Incorporates some text from “Markets” section and subsection 3.3 of carbon credits article, though most of this is new.

  • Overview
    • For offsets and credits, there is a diverse range of sources of supply, sources of demand, and trading frameworks (World Bank 2022-p.35)
      • International crediting mechanisms established under international treaties—Clean Development Mechanism [CDM]) and the Paris Agreement.
      • Domestic crediting mechanisms established by regional, national, or subnational governments - California Compliance Offset Program,  Australia Emissions Reduction Fund
      • Independent crediting mechanisms includes standards and crediting mechanisms managed by independent, nongovernmental entities, such as Verra and Gold Standard.
      • Demand derives from a range of compliance obligations established under international agreements and national laws, as well as voluntary commitments adopted by companies, governments, and other organizations.
      • International compliance markets primarily respond to commitments made under international agreements – CDM, Paris Article 6, CORSIA
      • Domestic compliance markets involve companies purchasing credits that are eligible for meeting their obligations under a domestic law, usually an ETS. These may include credits issued under international, domestic, or independent crediting mechanisms depending on the rules established by respective governments.
      • Allowances created by government under Kyoto and ETS schemes help create trading mechanisms (Offset Guide Citation #12 p.13 from carbon credit article). Purchases from non-covered participants creates an alternative to more common offset purchases on voluntary market. Note: this item would incorporate information from the “Allowances” section of the carbon credit article,
      • Voluntary carbon markets -(mostly private) entities purchasing carbon credits for the purpose of complying with voluntary mitigation commitments. Credits issued under independent crediting standards, though some entities also purchase those issued under international or domestic crediting mechanisms.
    • Participants in offset/credit markets include developers, brokers, auditors, buyers, (Offset guide, WWF 2008 pp.11-12)
    • International credit mechanisms have been suffering from a lack of demand, but national/subnational increasing in popularity (NICA 2019 p.3)
    • Forestry projects currently have highest level of growth-EDF 2021
  • International/National Compliance Programs – covers credits
    • Kyoto Protocol Mechanisms -Note: Based on “Kyoto’s flexible mechanisms” sub section of Carbon credit article
      • Three mechanisms that enable countries or operators in developed countries to acquire greenhouse gas reduction credits (Citation #16 from Carbon credit article)
        • Clean Development Mechanism (CDM) a developed country can 'sponsor' a greenhouse gas reduction project in a developing country
        • Joint Implementation (JI) a developed country with relatively high costs of domestic greenhouse reduction would set up a project in another developed country.
        • International Emissions Trading (IET) countries can trade in the international carbon credit market to cover their shortfall in Assigned amount units.
    • Paris Agreement Article 6 – World Bank 2022
      • Overview -(Carbon Markets Express, ADB 2018 pp. 4-7)
      • Under new rules, national governments will have more say in shaping voluntary mechanisms in their countriesI
      • Increased diversity in approaches, credit types and prices
      • Four major shifts (NDCs in all countries, New market models, Progression in ambition: Promotion of sustainable development: (Gold – VCM Transition Framework)
    • Emissions trading systems
    • Other Carbon Credit Systems
      • REDD+ MRV program (CRS 2021 pp.9-13, Kim 2021 pp.2-5)
      • CORSIA International Aviation Trading System (ICAO)
  • Other Domestic Programs
    • California Compliance Offset Program (CARB) – offset portion that supports ETS
    • Australia Emission Reduction Fund (EFR)
    • Taiwan Offset Program
  • Voluntary markets for offsets
    • Size of voluntary market – Ecosystem Marketplace 2022
    • VERRA
      • Developed in 2005 - most widely used voluntary carbon standard. 300 MtCO2e worth of credits/offsets issued in 2021 for 110 projects (World Bank 2022-fig.11,p.37)
      • As of 2020 over 1500 certified VCS projects covering all relevant mitigation sectors (energy, transport, waste, forestry, among others) (VERRA>Methodologies)
      • 14 approved methodologies for forestry and REDD+, with CDM methodologies also being accepted.
      • Standard of choice for the most forest credits generated for the voluntary carbon and almost all REDD+ projects. (Chagas et. al. 2020  p.5)
      • Criteria include types of projects allowed, allowable project start dates, and project boundaries, a 10 year crediting period, a requirement that the project boundaries all primary effects, and significant secondary effects.  Additional criteria to avoid double counting, requirements of additionality, a prohibition on any negative impact on sustainable development in the local community, and requirements for monitoring based on CDM standards. (Carbon footprint)
    • Gold standard
      • Launched in May 2006, administered by the Gold Standard Foundation.
      • Open to any non-government, community-based organization, especially those with an interest in the promotion of sustainable development or a focus on climate and energy issues.
      • As of October 2018, more than ?? non-profit organizations internationally had officially endorsed it
      • Eligibility includes -Be a Gold Standard-approved project type - Address eligible Green House Gases: Carbon Dioxide (CO2), Methane (CH4) and Nitrous Oxide (N2O) -Not employ Official Development Assistance (ODA) -Not be applying for other certifications, to ensure there is no double counting of credits -Demonstrate its additionality using CDM Large Scale Additionality Tool, and show that the project is not a 'business-as-usual' scenario -Make a net-positive contribution to the economic, environmental and social welfare of the local population that hosts it, in the form of contributions to a minimum of three Sustainable Development Goals (SDGs)
    • Others – American Carbon Registry, Climate Action Reserve, Credible Carbon (South Africa)

Ensuring quality and identifying value

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Note: Incorporates information from “Quality assurance schemes” section, though most of this is new material.

  • Ensuring quality
    • Principles  (SEI 2020 p.18) - (Grattan Institute 2021 pp.15-16), (NICA 2019 pp.24-29) (WWF2008 pp.15-19) - Additional, not overestimated, permanent, not claimed by another entity, not associated with significant social or environmental harms, minimum leakage, scientific methodologies, third party verification
    • Oxford principles and SBTi net zero principles – focus on reducing emissions first before offsets or credits (Citations #20,  #21)

Effectiveness and limitations

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  • Ongoing Article 6 negotiations around building mechanisms to support offset/credit markets and ensure quality. (Terrapass )
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