Strategies for Avoiding Lower-Quality Offset Credits

Quantification

Major carbon offset programs all have established protocols (or “methodologies”) for quantifying GHG emission reductions and removals from projects (see Avoiding Overestimation). These protocols provide consistent methods for both estimating baseline emissions and determining a project’s actual emissions. In general, these protocols can be relied on to credibly quantify a project’s emission reductions. Buyers should be aware, however, that different protocols under different programs may produce different results – even for the same project.[1] Recommended due diligence questions include the following:

For any project type…

  • Is the project applying the most recent version of the protocol to quantify emission reductions? Carbon offset programs regularly revise protocols to update assumptions and improve quantification methods. Previously registered projects are generally allowed to continue using prior protocol versions, even after an update (i.e., they are “grandfathered”). Buyers should check, however, whether applying the most recent version of a protocol would significantly affect a project’s emission reduction estimates. If applying the most up-to-date version would result in a downward revision of emission reductions, then buyers should avoid purchasing previously issued offset credits for the project and insist that it follow the current protocol going forward.
  • Is the quantification protocol methodologically and scientifically sound? (Does an internet search for the protocol/methodology bring up anything problematic?) One reason carbon offset programs update their protocols is to respond to discovered flaws in quantification methods or advances in scientific understanding. The UN Clean Development Mechanism, for example, revised its quantification methods for HFC-23 destruction projects once it was discovered that projects were taking advantage of a flawed baseline approach that allowed them to increase HFC-23 production in order to get credit for destroying it. For any project, it is worth doing some basic research to see if any credible critique has identified shortcomings with the protocol.
  • Does the project apply any deviations from the protocol/methodology and appropriately justify these deviations? Several carbon offset programs allow projects to deviate from protocol requirements if the project developers can justify an alternative approach to program staff. Deviations are often temporary, and typically involve situations where a project is not able to produce monitoring data according to prescribed methods but is able to estimate them using alternative methods. Programs will generally try to ensure that alternative methods are more conservative than what a protocol prescribes. Offset credit buyers may nevertheless wish to review cases where a deviation was applied for and approved.
  • Are there any gaps or other discrepancies in project monitoring data, and have these discrepancies been properly explained and addressed? Major carbon offset programs have rules and procedures to address gaps or discrepancies in project monitoring data (e.g., if a flow meter fails to collect data for a period of time). Such instances should be transparently reported, along with methods to address them. If monitoring reports and relevant data are not available and easily accessible (e.g., online), this lack of transparency should raise due diligence concerns.

For project types where quantification challenges are a particular concern…

  • Are protocol-prescribed methods for addressing quantification uncertainties – including leakage risks – appropriate for the specific project being examined? Protocols will generally prescribe methods to address quantification uncertainties, but such methods are often based on a what a typical or “average” project implementation looks like. In evaluating a specific project, it is important to determine whether the project’s circumstances differ from conditions or parameters assumed in the protocol’s methods. This task requires a thorough understanding of the quantification methods used and their underlying assumptions, and may require examination of scientific literature underpinning the methods. Leakage risks should come in for particular scrutiny, since many protocols apply standard “defaults” or discount factors to account for leakage, given the difficulties of actually measuring leakage effects (which may occur far away from a project site). Although these default approaches are designed to be conservative, buyers should still compare their underlying assumptions to a project’s specific circumstances. A project whose circumstances deviate significantly from those assumed in quantification methods may have emission reductions that are overestimated.
  • Would using another protocol for the same project (e.g., under a different program) produce substantially different emission reduction estimates? Different protocols for the same project type do not always produce consistent estimates of a project’s emission reductions or removals. As a result, project developers may seek out programs with more generous quantification methods. Especially for project types with greater quantification uncertainties, buyers should err on the side of purchasing credits from projects that have applied more conservative quantification methods.

[1] See, for example, http://www.sei-international.org/publications?pid=1607