Understanding Carbon Offsets
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Program Administration and Authority

All offset programs include some form of administrative body to oversee the project approval process to ensure that the offset projects developed meet established program requirements. Although there are common components of the project approval process, programs have developed varied approaches to key quality assurance concerns.

  • Validation requirements provide ex-ante assessment and confirmation of offset project eligibility as defined by the rules of the program.
  • Verification requirements provide ex-post assessments and confirmation of quantification of the volume of emission reductions or removals that have been produced from an offset project across a certain period of time.
  • Registries are used to reduce concerns regarding double counting by tracking information regarding ownership of the offset projects and the credits generated.
  • Third-party auditors are required by most programs to help limit any potential conflict of interest between offset project developers and buyers, which both have financial incentives for inflating the volume of offset credits generated.

The structure of program administrators varies by program type and design. Compliance programs are generally administered by either an existing regulatory agency or an administrative body established exclusively for the offset program, as in the CDM Executive Board. Voluntary offset providers are managed by a mix of Boards of Trustees, advisory committees, and paid program staff.

Nearly all offset programs require some form of project validation and verification. Programs require verification to be conducted by an approved third-party auditor independent the project developer. Some programs give their auditors the decision-making power to approve or reject a project. Others have a separate body to evaluate and approve projects based upon the verification report results. Such a program or standard-based decision-making body adds another layer of quality assurance, as well as administrative burden and cost.

Offset programs use carbon offset registries to keep track of project and credit ownership and to minimize the risk of double counting.  A registry assigns a serial number to each verified offset credit and once the credit is ‘used’ to claim emission reductions, the serial number is retired preventing the credit from being resold. No universal registry exists for either the compliance or voluntary offset markets, but the registries are generally attentive to each other and are able catch double-counting and double-claiming issues and clearly define ownership. More about registries.