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Certification of Carbon Offset Projects

In light of climate change and its many environmental, societal, political, and economic consequences, governments and businesses around the world are setting a goal: carbon neutrality by 2050 (or 2030 for some). This is the case in France, for example, which has set this goal in its national low-carbon strategy, revised in 2022.

Carbon neutrality refers to a situation in which the amount of greenhouse gases (GHGs) emitted is offset by the amount absorbed by carbon sinks (oceans, photosynthesis [forests], and the atmosphere). To stay within the absorption capacity of these carbon sinks, a drastic reduction in greenhouse gas emissions is required.

The first step in reducing emissions is to conduct a GHG assessment, or Bilan Carbone®, which will quantify an organization’s emissions over the course of a year and identify the main sources of emissions. Sometimes, certain emissions cannot be reduced. In such cases, the organization may turn to carbon offsets(as a last resort).

1. Carbon offsetting: funding a certified project.

1.1 Offset, not reduce.

1.2 To be distinguished from philanthropy or sponsorship

1.2 Examples of Projects

2. Certification

2.1 What is a carbon offset label?

2.2. Criteria for Carbon Offset Projects

2.3. The certification process

3. The various existing certifications.

3.1. Kyoto Certification

3.2. Voluntary Standards

3.3. The “Low-Carbon” Label

Carbon Offsetting: Funding a Certified Project.

❌Offset, not reduce.

Carbon offsetting for businesses refers to the funding of a project aimed at reducing greenhouse gas emissions or sequestering carbon. By funding such a project, an organization or individual can offset its GHG emissions up to the amount of its funding. Thus, the funder does not directly reduce its own emissions but contributes to the overall reduction of GHG emissions in the atmosphere.

Offsetting is based on the principle that a given amount of GHG emissions has the same impact, regardless of where they are emitted. In theory, reducing emissions at home or facilitating a reduction elsewhere therefore has the same ultimate benefit on the concentration of greenhouse gases in the atmosphere.

This offsetting does not constitute a right to pollute. Offsetting emissions does not reduce their impact. However, it can be helpful when certain emissions are unavoidable.

In practical terms, the financier purchases carbon credits linked to a certified and accredited project. These credits are certificates representing reduced GHG emissions or sequestered carbon, calculated in CO2 equivalents. There are several types of certificates, depending on the nature of the emissions (reduced emissions or sequestered carbon) and on whether they are verified before or after purchase.

💰 Not to be confused with philanthropy or sponsorship

A carbon credit can only be linked to a certified and accredited project, which is the subject of this article. Other types of non-certified projects exist, but they are classified as philanthropy or sponsorship. Philanthropy provides funding for projects carried out by nonprofit organizations and qualifies for a tax deduction. Sponsorship, on the other hand, is funding provided to projects in exchange for a benefit, such as publicity. It does not qualify for a tax deduction.

In addition to these administrative differences, since philanthropy and sponsorship projects are not certified, they do not allow for very precise tracking of their impact on GHG emissions, unlike certified projects.

📃Project Examples

According to ADEME, the five main types of carbon offset projects are those that:

The development of renewable energy.
Reducing greenhouse gas emissions from waste (particularly methane emissions from landfills)
Sound Forest and Soil Management
Replacing household appliances with more energy-efficient models.
Improving the energy efficiency of buildings.

There are also other types of projects in the agriculture, transportation, and industrial sectors.

Certification

📜What is a carbon offset label?

A carbon offset label or standard certifies that the project in question meets certain criteria and follows specific methodologies for measuring greenhouse gas emission reductions or carbon sequestration, depending on the project. These labels are therefore intended to provide a framework for projects by imposing criteria that must be met, particularly in terms of transparency regarding the credits traded.

🎯Criteriafor Carbon Offset Projects

To be considered a carbon offset project and obtain credits for sale, the project must meet five criteria:

Additionality: The project must be financed, at least in part, by the sale of carbon credits, which are in addition to other sourcesof funding (such ascarbon offset grants ).
Measurability: Reduced or sequestered GHG emissions must be measured and monitored using internationally or nationally recognized methodologies.
Permanence: The project must have a permanent impact on GHG emissions and must not merely shift those emissions over time.
Uniqueness: The same carbon credit cannot be sold to two different entities.
Transparency and Verifiability: The process for obtaining the label includes a comprehensive verification by external parties as well as transparent tracking of credits.

🔜Thecertification process

If a project meets these criteria, it can then begin the certification process, which certifies not only compliance with the above criteria but also adherence to international methodologies for measuring and monitoring reduced or sequestered emissions.

The project must go through 6 mandatory steps:

The project description provided by the project leader.
The project will be reviewed by stakeholders and then submitted to the certification body.
Project implementation and monitoring.
Verification by external parties that the methodology is being properly followed.
Credit certification, once the profits have been verified.
The sale of credits generated by the project. In theory, a credit can onlybe sold once it has been verified and recognized; however, to ensure the project’s financial security, some stakeholders sell credits before they are certified. In this case, the financier who committed to the project prior to certification assumes the risk that the credit may ultimately not be certified.

Once these steps have been completed, the project can be certified.

📑Thevarious existing certifications.

Before presenting the various existing labels (or standards), it is important to distinguish between two carbon offset markets:

The regulatory market, established following the Kyoto Protocol (1997), in which governments and companies subject to greenhouse gas emission reduction obligations participate.
The voluntary market, which has developed alongside the regulatory market, where individuals and businesses that wish to voluntarily offset their emissions participate.

There are two types of labels: the Kyoto certification and voluntary labels.

⛩️Kyoto Certification

This certification applies only to projects known as “CDM” (Clean Development Mechanism) or “JI” (Joint Implementation), which are two mechanisms established by the Kyoto Protocol. CDM projects are implemented in developing countries, while JI projects are implemented in countries that have ratified Annex I of the Kyoto Protocol.

The carbon credits associated with these projects are certified by the UN.

👋Voluntary standards

Since carbon credits traded on the voluntary market are not required to be certified, voluntary labels have been created to provide certification for these credits and address the lack of credibility and transparency in the voluntary market. This is how certified projects are distinguished from the corporate philanthropy or sponsorship projects discussed earlier.

Some of the most popular international standards include:

The Gold Standard
Verra (formerly the Voluntary Carbon Standard)
The REDD+ Program

These standards offer the advantage of providing a wider variety of projects, being less expensive, and having shorter lead times. However, the methodology for monitoring and measuring reduced or sequestered emissions varies from one label to another, and it is up to the investor to verify the credibility of the label purchased. Other, less commonly used labels include:

The American Carbon Registry
The Climate Action Reserve
The Vivo Plan

🇫🇷The “Low-Carbon” label

The “Bas-Carbone” label is a French certification program developed by the Ministry of Ecological Transition in 2018 in response to growing demandfrom French carbon offset stakeholders seeking to reduce emissions within the country.

Like other existing labels, its purpose is to certify the quality and impact of submitted projects. It applies to all projects in sectors not covered by European regulations, for projects taking place in France.