Tuesday, 24 May 2011

After the DECC Quality Assurance Scheme

As mentioned in earlier posts, the UK Government is ending support for its Quality Assurance Scheme (QAS) for carbon offsets.  So what happens now?

The first point to recognise is that this isn't the end of the world for the voluntary carbon market. Few serious companies participated actively in the scheme, and even those sold relatively few QAS approved carbon offset credits. In terms of quality control and integrity, the QAS was obsolete before it even launched, having been overtaken by the Code of Practice launched in 2008 by the International Carbon Offset and Reduction Alliance (ICROA).  The ICROA Code is followed by some of the largest carbon offset retailers around the world and governs the types of carbon credits sold, the way carbon footprints are calculated, the reduction advice given to customers, and the way members and their customers communicate a company's "carbon neutral" status.  It should be no surprise to learn that Carbon Clear is a founding member and has actively led the evolution of the Code.

Last year the British Standards Institute launched a carbon neutrality specification that mirrors many aspects of the ICROA Code - but not the QAS.

The second point is that the end of the QAS helps unshackle the voluntary carbon offset market.  The original planners of the QAS sent mixed messages, describing the characteristics of a quality carbon credit, and then rejecting VCS and Gold Standard credits even when they were shown to meet those criteria.  What is more, subsequent Government guidance documents all pointed to the QAS as the arbiter of quality, despite rising criticism from indsutry.

VER credits from VCS, Gold Standard and elsewhere offer a number of benefits over the QAS approved varieties.  First, these credits are directly traceable to specific projects that often provide co-benefits unmatched in the compliance credit world.  Voluntary offset customers want credits that help them communicate their environmental and ethical credentials to stakeholders.  It's much easier to accomplish this objective with an improved cookstove project in rural Malawi than a faceless industrial gas destruction project in China, or even more-faceless European allowances from a German steel mill.  What is more, these VER credits are often half the price of compliance credits - and sometimes even less.  One wonders how many customers were discouraged from offsetting by these mixed messages from the QAS.

By announcing that Government would now look to the carbon markets to establish best practice, DECC is removing a barrier to the adoption of carbon credits that meet these and other quality standards. Companies that previously offset through QAS-approved credits will be in a better position to engage with their stakeholders, and DECC is to be applauded for this bold move.

Indeed, I expect the UK voluntary carbon credit market to experience a renaissance as a result of DECC's decision.  As always, Carbon Clear is here to help.