Criteria
All carbon credits used towards the achievement of CarbonNeutral® certification must meet the following criteria:
Additional: Refers to an external emission reduction project from which emissions reductions are verified as carbon credits under an applicable carbon accounting standard. An emission reduction project is said to be additional when it can be demonstrated that in the absence of the availability of carbon finance the project activity would not have occurred (the “baseline” scenario); and, such baseline scenario would have resulted in higher GHG emissions.
Each eligible carbon accounting standard under The CarbonNeutral Protocol provides tools for how additionality at a project level is tested and demonstrated. For further discussion of this topic, see Guidance 4.4.
Legally attributable: Carbon credits must have a clear record of ownership from project owner and thereafter.
Measurable: Emissions reductions are quantified relative to a transparent and robust baseline scenario using recognised, peer reviewed, published methods and project-specific data; or, using recognised performance standard procedures.
Permanent: Emissions reductions are permanent. Where reductions are generated by projects that carry risk of reversal, adequate safeguards must be in place to ensure that the risk of reversal is minimised and that, if any reversal occurs, a mechanism is in place that guarantees the reductions will be replaced.
Unique: Emissions reductions are held and retired on a registry to ensure that no more than one carbon credit can be associated with a single emission reduction.
Independently verified: Emissions reductions are verified by an expert third party qualified to verify carbon credits to ensure the criteria above have been met.
Further considerations
Emission reduction projects have effects in addition to GHG emission reductions. While many projects have positive co-benefits, some may have negative impacts. Carbon credit standards accepted by The CarbonNeutral Protocol have requirements that material negative impacts should not arise from emission reduction projects.
Approved carbon credit standards and project types
Carbon credits verified under the standards set forth in Table 18 have been determined to be additional, legally attributable, measurable, permanent, unique and independently verified, 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 from time to time to reflect developments in best practice and the performance of carbon credit standards.
In general, any mitigation project recognised under the standards is accepted under the Protocol, and carbon credits are treated equally across standards and project types. There are exceptions to this general approach, as set out below which identifies projects types that are not accepted under the Protocol and the reasons for the exclusions.
Table 18: Approved Carbon Accounting Standards
Exceptions
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 – they must not be used for offsetting. As a consequence Forward Mitigation Units from CAR, ex-ante forestry credits under GS, Pending Issuance Units (PIUs) under the UK Woodland and Peatland code, and t-CERs and l-CERs under the CDM are not acceptable.
Removal carbon credits
The Protocol treats mitigation projects that avoid and reduce emissions and those that remove GHGs from the atmosphere as equal. The logic underpinning this approach is the “over-flowing bath-tub” analogy. With the taps on, a balance is achieved either by turning down the taps (avoid or reduce emissions) or by draining an equal amount down the plug (removing emissions from the atmosphere and capturing them in carbon sinks). Both approaches have a critical role to play in mitigating climate change. However, as we get closer and closer to the safe limit of GHG concentrations in the atmosphere, clients should consider an increasing role for removal projects.
Excluded project types
For reasons laid out in Guidance 4.7, the following project types must not be used towards the achievement of CarbonNeutral® certification, although they are recognised under some carbon credit standards in Table 18:
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. For non-owned renewable energy consumption, EACs are the most credible evidence, and claims without EACs in geographies where they are available are questionable / potentially problematic (see Brander, Gillenwater, and Ascui, 2018, Creative accounting: A critical perspective on the market-based method for reporting purchased electricity (scope 2) emissions, link), for a critical review of accounting approaches for renewable energy. However, as the GHG Protocol is a respected third-party carbon accounting standard, its Scope 2 guidance is accepted under the CarbonNeutral Protocol.
Table 19 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.
EAC programmes generally prescribe applicable validity periods. In cases where validity periods are not prescribed, EACs issued within 1 year of the period covered by the CarbonNeutral certification must be used.
Table 19: Approved Energy Attribute Certificate (EAC) Standards
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.