To Offset Or Not To Offset, That is Still The Question
The announcement by the Government to delay the implementation of the CPRS until after 2012 will not impact on the timing of the commencement of the National Carbon Offset Standard (NCOS), which will still come into effect on 1 July 2010. But those who help manage the voluntary market for carbon credits and offsets have their own views on the change and the lack of Government clarity on this important issue.
The announcement by the Government to delay the implementation of the CPRS until after 2012 will not impact on the timing of the commencement of the National Carbon Offset Standard (NCOS), which will still come into effect on 1 July 2010. This from a spokesperson for the Federal Department of Climate Change and Energy Efficiency.
Government tells us that as previously announced, the Greenhouse Friendly program will be replaced on 1 July 2010 by the NCOS. Under the NCOS, businesses will be able to become carbon neutral or develop carbon neutral products. A logo will be made available so that consumers can have confidence that organisations and products bearing the logo have achieved carbon neutrality in a way that achieves genuine emissions reductions.
Here’s further word on this from the Department:
- The NCOS will also establish robust standards so that consumers can have confidence in the voluntary carbon offset market and the integrity of carbon offset and carbon neutral products they purchase.
- The NCOS identifies a range of international carbon offsets that can be used for voluntary carbon offsetting.
- The NCOS also recognises offsets generated within Australia, from emission sources which do not count towards Australia’s Kyoto Protocol target, where they meet eligibility criteria and use an approved methodology.
- The Government is currently establishing a Domestic Offsets Integrity Committee to assess proposed methodologies to ensure offsets constitute genuine, additional emission reductions.
abc carbon express asked three industry experts to give their views on the status of the National Carbon Offsets Standards (NCOS) in light of the delays in implementing the CPRS.
Rob Cawthorne of Carbon Reduction Institute had this to say:
There are two parts to the NCOS, a standard for offsets, and a standard for accounting.
I can’t say anything about the accounting side. We don’t accept the standard as thorough enough to make Carbon Neutral claims and therefore reject it as a standard for Carbon Neutrality.
As for the carbon offsets, it has been common belief that the CPRS is the primary reason for the closure of the Greenhouse Friendly program and the need to have the NCOS. I believe this is a misconception, with the main reason for the NCOS being because we ratified Kyoto and have no way of allowing these to be additional to that commitment.
As our Kyoto commitment is between 2008 and 2012, the only issue should arise when we might have a gap in 2013. Once this gap forms it may be possible to produce additional voluntary credits in Australia, albeit if the CPRS comes in or we bind ourselves to any other reduction commitment the NCOS will still need to stand.
I can’t see why the CPRS announcement would have any real effect over the NCOS standard until our Kyoto commitment is complete in 2012. Unfortunately, there a large amount of confusion caused by the continued reference to the CPRS when it really should be the Kyoto.
This from Dave Sag, founder of Carbon Planet:
The NCOS becomes all the more important as voluntary action is the only game in town since the Government backslid on the CPRS. But the NCOS was designed to sit alongside the CPRS and so there are certainly some uncertainties. For starters, qualifying offsets under the NCOS are meant to be from sectors NOT covered by the CPRS, and that’s, well, everything now isn’t it!
The one sure thing in all of this is still the NGER act however that is forcing the big emitters to at least report, and the EEO act that requires energy efficiency opportunities with low payback periods to be enacted; but for now it’s anyone’s guess.
We just heard that Carbon Planet’s operations and services have been accredited again as carbon neutral under Greenhouse Friendly and the DCCEE emphasised in their letter that we will have to transition to the NCOS as planned. So we can be sure from that that the Greenhouse Friendly programme is still slated to be discontinued, and rightly so I feel.
The NCOS is an innovative and positive step, and I still believe a price on carbon is inevitable in Australia. Minister Penny herself stated clearly that Australia won’t be able to meet its Kyoto obligations without a carbon price. Whether that’s via an emissions trading scheme, a carbon tax or some other mechanism is of secondary importance I feel.
NCOS will almost certainly need to be adjusted, especially when it comes to determining what are qualifying offsets. The carbon accounting rules are unaffected by the slippage of the CPRS and firms are still progressively introducing green procurement, green tendering and other supply chain pressures that provide incentives for smaller businesses to measure, manage and minimise their emissions. And energy prices are still going up regardless, and our experience is that a typical client saves money by engaging us to help them manage their emissions and energy.
Freddy Sharpe of Climate Friendly, was also asked to comment on the NCOS, but admitted he was in the dark as to its implementation and what it would be linked to with the demise of Greenhouse Friendly and the delay of the CPRS.