The CarbonNeutral Protocol Index

Annex C1: Approved carbon credit standards

Carbon credits under the standards set forth in Table 6 have been determined to be legally attributable, measurable, permanent, additional, independently verified and unique, and therefore are qualified for use as external environmental instruments to reduce a subject’s GHG emissions. This list of standards is reviewed annually and updated to time to reflect developments in best practice and the performance of carbon credit standards.

Table 6: Approved Carbon Accounting Standards

While these standards are accepted, carbon credits used within CarbonNeutral® programmes are bound by the additional requirements stated within the section “Requirements/recommendations covering carbon credits” under Step 4 of the five steps to achieve CarbonNeutral® Certification.

However, if the carbon credits from these standards are not in accordance with all of the criteria covering carbon credits - legally attributable, measurable, permanent, unique and independently verified (see Step 4: Reduce) – they must not be used for offsetting; as a consequence Forward Mitigation Units from CAR, ex-ante forestry credits under GS, and t-CERs and l-CERs under the CDM are not acceptable.

Elaboration on additionality and baselines

It is essential for any carbon neutral programme to be robust and to offset emissions of the defined subject to zero. This requires that any carbon credits used must have credibly demonstrated additionality during their development process.

The carbon accounting standards which are eligible under The CarbonNeutral Protocol require each project to undergo tests for additionality, which is then checked by an independent third-party auditor during the validation process.

Without well-defined baseline scenarios and additionality tests, any claims of net emissions reductions would lack environmental integrity (i.e. they would not be reductions in the first place). Any statement by an organisation based upon these claimed “reductions” could be misleading or false.

Therefore, it is important that the additionality of a project is robustly tested and audited. The carbon accounting standards referenced in this Annex define best practice in assessing and determining the additionality of emission reduction projects.

When testing for additionality on a proposed project, the first step is to determine the baseline scenario – i.e. the hypothetical description of what would have most likely occurred in the absence of any intervention to mitigate the impact of GHG emissions. The baseline for a project activity is the projected GHG emissions that are calculated to occur in the absence of the proposed project activity. Once a suitable baseline has been determined it must be validated. Validation requires a third-party audit by a qualified auditor to ensure the baseline meets the requirements of the given carbon accounting standard and methodology.

When the project activity is in progress, GHG emissions from within the project area can be monitored and verified. Any reduction of emissions as compared to the baseline of the project are therefore additional and can be verified and issued as carbon credits (CERs, VCUs, GS VERs, CRTs, ERTs) in accordance with the rules of the applicable carbon accounting standard.

For a more detailed, technical discussion of the methods for calculating additionality or how best to define additionality, see the following resources: The UNFCCC Clean Development Mechanism Glossary Guidance-Standardized-Methods-v3.3_0.pdf See section 4.6 of the Verra guidance document: “Guidance for Standardized Methods” (8 October 2013, v3.3) for methods for determining additionality within a CarbonNeutral Protocol eligible carbon accounting standard - search “additionality” Articles on the challenges of defining and measuring additionality additionality/high-quality-offsets-additionality-how- carbon-offset-programs-address-additionality/ Further information on methodologies for determining additionality

Annex C2: Approved energy attribute certificate (EAC) standards

Under the provisions of the GHG Protocol Scope 2 Guidance, entities may purchase and retire EACs to support a zero-emission grid factor for Scope 2 emissions. This carbon accounting approach is not universally supported. See Brander, Gillenwater, and Ascui (2018), Creative accounting:

A critical perspective on the market-based method for reporting purchased electricity (scope 2) emissions for the arguments against this accounting approach. However, as the GHG Protocol is a respected third-party carbon accounting standard, its Scope 2 guidance is accepted under the CarbonNeutral Protocol.

Table 7 lists the EAC standards that are acceptable for a Scope 2 or Scope 1 claim within a CarbonNeutral® programme that follows the market-based GHG accounting approach defined by the GHG Protocol Scope 2 Guidance. It is not an exhaustive list, rather it details those EACs in most common use within CarbonNeutral® programmes.

Table 7: Approved Energy Attribute Certificate (EAC) Standards

Annex C3: Third-party certification and labelling of EACs

In some markets, a third party may also certify EACs based on an established standard that specifies a set of criteria which can be applied to determine which certificates can receive the label. The criteria used to define a subset of eligible EACs are typically based on technology or the commissioning date of the renewable energy facility.

Aligning procurement decisions with these criteria demonstrates impact that goes beyond the least cost EAC solution. Examples of voluntary certification programmes commonly used within CarbonNeutral® programmes include Green-e Energy in North America and EKOenergy, which is a global EAC label.

Annex D: Recognised Non-carbon Accounting Standards

The non-carbon accounting standards in Table 8 are recognised for adding measurable and independently verified value to emission reduction projects certified to the carbon accounting standards in Table 6. This list of standards is reviewed annually and updated to reflect developments in best practice.

Table 8: Recognised Non-carbon Accounting Standards