93945 PMR Technical Note 6 (January 2015) Te chnic al N o t e 6 | J AN U A RY 2015 Overview of Carbon Offset Programs Similarities and Differences i This Technical Note was drafted and updated for the Partnership for Market Readiness (PMR) Secretariat by Anja Kollmuss and Jürg Füssler (INFRAS) with support from Felicity Spors, Pauline Kennedy and Pierre Guigon in the PMR Secretariat. The document is based on publicly available information on the Clean Development Mechanism (CDM), Joint Implementation (JI), the Gold Standard (GS), the Climate Action Reserve (CAR), the Québec Offset Program, Japan’s Joint Crediting Mechanism (JCM), the China CER (CCER), and the Verified Carbon Standard (VCS), as well as on interviews and feedback from officials and experts from these programs. The Technical Note was updated in October 2014 to include California’s Compliance Offset Program (CA COP), Australia’s Carbon Farming Initiative (AU CFI), and Switzerland’s Offset Program (CH OP). The update also includes relevant new developments under all of the originally covered offset standards and programs. The authors and the PMR Secretariat thank the representatives from the 11 programs for their much-appreciated collaboration and constructive feedback. An earlier draft of the first version was presented and discussed at the PMR Technical Workshop in Barcelona, Spain, on May 26, 2013. Feedback from participants has been taken into account for this final report. Special thanks go to Jessica Allen (Australia), Thomas Bernheim (European Commission), Bengt Boström (Sweden), and Rachel Child (Project Developers Forum). For the updated version, special thanks go to Stephen Shelby (California Air Resources Board), Ella McKinley (Australian Carbon Farming Initiative), Michelle Hermann (Federal Office for the Environment), and Tang Jin (SinocCarbon). Please direct any comments and questions to the PMR Secretariat (pmrsecretariat@worldbank.org). For more information on the PMR, please visit www.thepmr.org. Technical Note 6 | January 2015 Overview of Programs Carbon Offset ­ Similarities and Differences © 2015 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved 1 2 3 4 18 17 16 15 This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. 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The World Bank therefore does not warrant that the use of any third-party-owned individual component or part contained in the work will not infringe on the rights of those third parties. The risk of claims resulting from such infringement rests solely with you. If you wish to re-use a component of the work, it is your responsibility to determine whether permission is needed for that re-use and to obtain permission from the copyright owner. Examples of components can include, but are not limited to, tables, figures, or images. All queries on rights and licenses should be addressed to the Publishing and Knowledge Division, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. Cover design: Bill Pragluski / Critical Stages LLC PMR Technical Note 6 (January 2015) Contents 1. Introduction............................................................................................................................................... 1 2. Overview of Programs...............................................................................................................................2 3. Principles and Goals of the Programs........................................................................................................8 4. Approaches to Methodology Design.........................................................................................................8 5. Governance Structure.............................................................................................................................13 ........................................................14 6. Monitoring, Reporting, and Verification (MRV) and Project Cycles. 7. Sustainable Development Aspects..........................................................................................................18 8. Conclusions............................................................................................................................................. 20 Annex A: Overview Tables of Evaluated Offset Programs............................................................................22 Annex B: Other Offset Programs.................................................................................................................74 Boxes 1. Overview of Considered Offset Programs................................................................................................ 2 2. Does a Selective Scope Simplify Standardization of Approaches?......................................................... 12 Figures 1. Number of Registered Projects and Units Issued, as of July 2014.............................................................5 2. Average Number of Credits Issued per Registered Project (in Thousands) as of July 2014.......................5 Simplified Overview of Coverage of the Considered Programs in Terms of Project Types and 3.  Sector and International vs. Domestic Scope............................................................................................7 Offset Programs with a Broad Scope that Covers All Sectors in a Host Country versus Programs 4.  with a Selective Scope that Covers Only Sectors Not Included in a Domestic Emissions Trading Scheme or by Mitigation Policies..................................................................................................7 5. Methodology Development Approaches of Offset Programs.................................................................12 6. General Sequence of Project Registration...............................................................................................15 7. General Sequence of Project Verification and Issuance Procedure.........................................................17 Tables 1. Project-Based versus Standardized Approaches to Crediting Methodologies.....................................10 2. Definitions of Types of Standardization...............................................................................................10 A.1. Overview of Programs (as of July 2014)...............................................................................................23 A.2. Principles and Goals of Programs.........................................................................................................28 A.3. Operationalized Principles (as of July 2014).........................................................................................36 A.4. Operationalized Principles: Additionality and Baselines......................................................................44 iii PMR Technical Note 6 (January 2015) A.5. Governance Structure..........................................................................................................................48 A.6. Project Registration Procedures.......................................................................................................... 54 A.7. MRV and Credit Issuance Procedures................................................................................................. 60 A.8. Renewal of Crediting Period................................................................................................................ 68 A.9. Sustainable Development Aspects...................................................................................................... 70 iv PMR Technical Note 6 (January 2015) 1. Introduction 1.1. Objective In an effort to reduce greenhouse gas emissions, countries are implementing a broad range of market-based approaches and carbon price-based mechanisms, including emissions trading schemes (ETSs), scaled-up crediting, offset schemes, and carbon taxes.1 Over almost two decades, a rich body of experience with offset mechanisms has been gained, which, in turn, is informing the considerations, design, and regulation of existing, proposed, and planned offset programs. This Technical Note documents a mapping exercise that outlines the key elements and design features of offset programs. It discusses the essential differences and similarities between programs. It identifies the main elements and design features of 11 different offset programs and discusses how these programs address key issues including efficiency, environmental integrity, applicability, and transaction costs. The Technical Note is prepared with the intent to provide an overview of the key features of selected offset programs and to draw out similarities and differences; it does not evaluate the implications of the different features. This may be useful for the Partnership for Market Readiness (PMR) Implementing Countries that are contemplating different designs of crediting mechanisms. It may also contribute to the general discussion on the options for the design of crediting mechanisms in the context of policy action for climate change mitigation. 1.2. Approach This Technical Note examines 11 offset programs. The programs were selected based on their relevance and because together they represent a wide range of different offset program designs. A study framework for mapping the 11 offset programs was developed that seeks to outline the main characteristics of each.2 The framework considered the following characteristics of each offset program: • Overview of offset programs • Principles and goals • Operationalized principles • Governance structure • Project registration procedures • Monitoring, Reporting, and Verification (MRV) and credit issuance procedures • Sustainable development aspects The analysis included desk reviews of literature and program documentation and was complemented with interviews and written input from program administrators. The design features of the 11 programs 1  In this Technical Note, the term carbon offset program is used to avoid potential confusion that may arise with terms such as standards or registry. A carbon offset program combines (a) accounting rules; (b) Monitoring, Reporting, Verification and certification rules; and (c) registration and enforcement systems. See also SEI and GHG Management Institute. 2  The Technical Note does not, however, seek to assess the overall benefits and potential limitations of offsets per se. 1 PMR Technical Note 6 (January 2015) are summarized in the tables in annex A.3 The most salient design features were examined to identify similarities, differences, and trends. A list of other offset programs that may be relevant but were not considered in the present study are provided in annex B. Preliminary results of this work were presented at the 5th PMR Partnership Assembly Meeting in Washington, DC, in March 2013, where preliminary feedback from participants was collected. A subsequent draft of the Technical Note was reviewed by the representatives of each offset program for another round of feedback; it was then presented at the PMR Technical Workshop in Barcelona, Spain, in May 2013 for further discussion and feedback. The Technical Note was published in August 2013. The first version of the Technical Note included the Clean Development (CDM), Joint Implementation (JI), the Gold Standard (GS), the Climate Action Reserve, the Québec Offset Program, Japan’s Joint Crediting Mechanism (JCM), the China CER (CCER), and the Verified Carbon Standard (VCS). The Technical Note was updated in 2014 to include California’s Compliance Offset Program (CA COP), Australia’s Carbon Farming Initiative (AU CFI), and Switzerland’s Offset Program (CH OP). The update also includes relevant new developments under all of the originally covered offset standards and programs. 2. Overview of Programs 2.1. Considered Programs The Technical Note examines 11 offset4 programs that represent a wide spectrum of approaches in terms of design and implementation (see box 1). Box 1. Overview of Considered Offset Programsa There are two offset mechanisms under the Kyoto Protocol. Offsets from these programs are used by countries with a reduction commitment under the Kyoto Protocol, by private buyers that are covered under an emissions trading scheme (e.g., EU-ETS), and by voluntary buyers. • Clean Development Mechanism (CDM): Offset projects have to be located in developing countries that have ratified the Kyoto Protocol. • Joint Implementation (JI) Track 1: Offset projects have to be located in countries that have a reduction commitment under the Kyoto Protocol. JI can be implemented under Track 1, under which host countries are responsible for most aspects of the project cycle (including registration and issuance). Under Track  2, which is overseen by the UNFCCC, requirements and procedures are similar to those of the CDM. This Technical Note focuses on Track 1 because of its relevance for national programs and because 97 percent of all JI offsets have been issued under Track 1. box continues next page 3  It should be noted that while some of the standards examined have been in operation for a number of years and thus have road-tested procedures (e.g., the CDM, GS, CAR, or VCS), others are very new (e.g., Japan’s Joint Crediting mechanism and the China CER). 4  In this Technical Note, the terms offsets and credits are used interchangeably because different offset programs refer interchangeably to these terms. 2 PMR Technical Note 6 (January 2015) Box 1. Overview of Considered Offset Programs (continued) This Technical Note looks at several offset programs developed and administrated by governments to supply offsets for their domestic climate mitigation programs: Programs generating domestic offsets: • Australian Carbon Farming Initiative (AU CFI): These offsets were primarily used for compliance by entities covered by the carbon pricing mechanism established by the Clean Energy Act 2011, which was repealed on July 17, 2014. The Australian Government has committed to expand the scope of the CFI and to establish the Emissions Reduction Fund, under which it would be the primary purchaser of offsets.b • California’s Compliance Offset Program (CA COP): These offsets are used for compliance by entities covered by California’s and Québec’s ETSs. • China CER (CCER): These offsets can be used for compliance under the pilot cap-and-trade systems that are being developed inter alia in five Chinese provinces and two cities. • Québec’s Offset Program (Québec): These offsets are used by entities covered by the Québec and the California ETSs for compliance.c • Switzerland’s Offset Program (CH OP): These offsets are used for compliance by producers and importers of motor fuels, and potentially by fossil-thermal power plant operators as well, to meet their mitigation obligations under the Swiss CO2 law. Program generating international offsets: • Japanese Joint Crediting Mechanism (JCM):d A bilateral project-based offset mechanism that both Japan and the host country may use to meet national climate targets. Voluntary programs that generate offsets that are used in the voluntary market as well as for compliance under some government compliance schemes: • Climate Action Reserve (CAR) • Verified Carbon Standard (VCS) As approved Offset Project Registries, CAR- and VCS-certified projects that apply offset protocols approved by California are eligible to operate in the California ETS (CA ETS). Both programs can issue offsets for certain project types under the California Air Resources Board (CARB) Compliance Offset Protocols. These offsets then have to be transitioned into ARB Offset Credits to be used for compliance under the CA ETS. Voluntary programs that generate offsets that are used in the voluntary market: • Gold Standard (GS): These offsets can be used as an add-on certification to CDM and JI or as a standalone offset program for voluntary projects. a  A list of other offset programs can be found in annex B. b  Like an offset mechanism, it will establish baselines for projects that, once approved, can bid into a government- funded auction. The latest information on this policy is available at http://www.cleanenergyregulator.gov​ .au​ /­Emissions-Reduction-Fund/Pages/default.aspx and http://www.environment.gov.au/climate-change​ /emissions​ -reduction-fund/about. c  The Québec and California cap-and-trade systems have been linked since January 1, 2014. d  Also known as Bilateral Offsets Crediting Mechanism. 3 PMR Technical Note 6 (January 2015) The regulatory, institutional and political landscape in which an offset program is designed influences its policy objectives, program design, and implementation.5 Objectives, scope, and size of offset programs, therefore, vary substantially. Table A.1 summarizes the regional and political scope, size, and age of each of the 11 programs examined. 2.2. Size of Programs The size of the program and the number of offsets issued varies significantly among programs. This is because some are still at an early stage of implementation while others have been operational for several years. In addition, some programs have fewer credits issued because they have a more limited scope in terms of eligible project types and geographic coverage. The offset mechanisms under the Kyoto Protocol—CDM and JI Track 1—are responsible for the lion’s share of issued offsets so far (of the 11 considered programs, CDM and JI Track 1 account for over 90 percent of credits issued (i.e., 59 percent and 33 percent of total credits issued, respectively). The CDM is also the mechanism that has by far the most registered projects (i.e., CDM projects account for 77 percent of all projects registered, followed by VCS at 10 percent and JI Track 1 at 5 percent). This in part reflects the longevity of the CDM and JI, which are two of the longest running offset standards; it also in part reflects their scope, which is both global and allows the accreditation of project activities that generate relatively large quantities of emissions reductions (e.g., industrial gas projects). The average number of offsets a project receives varies dramatically among the different programs (see figure 2). The number of credits depends on the project size and the length of the period for which it has received credits. The CDM has issued on average close to 200,000 offsets. The GS, California’s Compliance Offset Program (CA COP), and AU CFI have issued on average only about a third as many offsets per project as the CDM. In the case of AU CFI, this may be due to the limited number of years for which projects have received offsets; in the case of GS and CA COP this is probably due to smaller projects size (e.g., neither program includes large industrial gas projects that can generate very large number of offsets). The CH OP system focuses on micro projects, as larger emissions sources are generally covered by other carbon regulation. JI Track 1 issued over 1.5 million offsets per project, an order of magnitude more than any other program. This is due to a number of very large projects that were registered in 2012 and that have received credits retroactively. Almost all of these projects were implemented well before they applied for JI status. The quality of these projects has therefore been questioned.6 2.3. Scope of Programs The following figure provides a simplified overview of the scope of eligible project types in the considered offset programs. Scope includes both the geographic and the sectoral eligibility of an offset program. Two different approaches in terms of the scope of eligible project types can be distinguished: • Broad Sectoral and Geographic Scope: These programs are generally open to all project types, with some very limited exceptions (e.g., nuclear projects are excluded in most examined standards). 5 Table A.2 provides an overview of the primary users of credits/offsets generated by the offset programs.  Analysis by the authors based on UNEP Riso JI database, April 2014. 6 4 PMR Technical Note 6 (January 2015) Figure 1. Number of Registered Projects and Units Issued, as of July 2014 7,000 1,400 6,000 1,200 Number of projects registered 5,000 1,000 Credits issued (in millions) 4,000 800 3,000 600 2,000 400 1,000 200 0 0 ec ER OP R k1 P S M GS M I CF VC CA CO éb JC CD CC ac CH AU Qu CA Tr JI Number of projects registered Credits issued (in millions) Source: Information provided by offset programs and UNFCCC websites. The CCER, JCM, and Québec program had not issued units as of July 2014. Note: One unit typically represents 1 metric ton of CO2 equivalent in GHG reductions. AU CFI = Australia’s Carbon Farming Initiative; CA COP = California’s Compliance Offset Program; CAR = Climate Action Reserve; CCER = China CER; CDM = Clean Development Mechanism; CH OP = Switzerland’s Offset Program; GS = Gold Standard; JCM = Joint Crediting Mechanism; JI = Joint Implementation; Québec = Québec Offset Program; VCS = Verified Carbon Standard. Figure 2. Average Number of Credits Issued per Registered Project (in Thousands) as of July 2014 1,564 196 162 122 67 60 50 2 k1 M R S P GS I OP CF VC CO CA CD ac CH AU CA Tr JI Note: Programs ordered by total credit issuance (highest issuance left, no issuances right). One credit represents 1 metric ton of CO2 equivalent in GHG reductions. AU CFI = Australia’s Carbon Farming Initiative; CA COP = California’s Compliance Offset Program; CAR = Climate Action Reserve; CDM = Clean Development Mechanism; CH OP = Switzerland’s Offset Program; JI = Joint Implementation; VCS = Verified Carbon Standard. 5 PMR Technical Note 6 (January 2015) Programs with a broad scope include the CDM, JI Track 1, CCER, JCM, and VCS. With the exception of the CCER these are all programs with international scope. • Selective Sectoral and Geographic Scope: These programs are usually national or sub-national in scope and are designed to complement other domestic mitigation policies (such as domestic cap-and-trade systems and other domestic mitigation/energy policies). These programs have a limited number of eligible project types. Examples include AU CFI, CA COP, the Québec program, and CAR. Offset programs with a broad scope aim to ensure maximum coverage to foster offset projects in many different areas and sectors. They may be able to tap into a large pool of potential offset projects and thereby potentially offer greater opportunities for mitigation. But establishing project baselines and additionality7 and accounting for mitigation action may be challenging for programs with a broad scope that includes projects that generate offsets in sectors covered by other policies and instruments. For example, issues such as the risk of double counting in case of overlap with a cap-and-trade system8 need to be addressed. As a result, programs with a broad scope are often established in sectors or countries that do not have mitigation pledges (e.g., CDM) or have strict accounting requirements to avoid double counting of emissions reductions. For example, JI projects are located in countries with a mitigation commitment under the Kyoto Protocol. To avoid a situation where emissions reductions from JI projects are counted by both the host and the buyer country, the host country has to convert one of its Kyoto allowances for each JI offset it issues. Even if a country does not have a mitigation pledge, some sectors may be covered by other regulation or policies that impact greenhouse gas (GHG) emissions (e.g., feed-in tariffs for renewables). This can pose serious challenges in determining additionality and defining an accurate baseline (e.g., the so-called “E+/E- issue” discussed under the CDM9). Programs with a broad scope therefore require in-depth proof of additionality and baseline setting, which may add costs and uncertainty for the project developers. 7  In the context of CDM, additionality is defined as follows: “A CDM project activity is additional if anthropogenic emissions of greenhouse gases by sources are reduced below those that would have occurred in the absence of the registered CDM project activity” (3/CMP.1, annex, paragraph 43). In practice, additionality is the principle that only those projects that would not have happened anyway should receive carbon credits. A project is additional if its proponents can document that realistic alternative scenarios to the proposed project would be more economically attractive or that the project faces barriers that carbon finance helps it overcome. Some offset programs determine ex ante a list of project types that are automatically deemed additional. 8  For more information on the risk of potential double-counting, see Schneider, L., Kollmuss, A., and Lazarus, M. (2014). “Addressing the Risk of Double-Counting Emission Reductions under the UNFCCC.” SEI Working Paper No. 2014-02., Stockholm Environment Institute, Seattle, WA. See also Erickson, P. A., and Lazarus, M. (2013). “Implications of International GHG Offsets on Global Climate Change Mitigation.” Climate Policy, 13(4). 433–50. DOI:10.1080/146 93062.2013.777632. 9  For more information on additionality and baseline determination challenges in the context of other mitigation policies and pledges/contributions see annex III of Füssler, J. (2012). “CDM Baseline Approaches for PoA Upscaling and New Market Mechanisms (NMM):. Building NMM on CDM Elements. Final Report, KfW Bankengruppe, Zurich, Switzerland. See also Füssler, J., Herren, M., and Kollmuss, A., with Lazarus, M., and Schneider, L. (2014). “Crediting Emission Reductions in New Market-Based Mechanisms—Part II: Additionality Assessment & Baseline Setting under Pledges.” Final Report, Ministry of Infrastructure and the Environment (I&M) of the Netherlands and the Federal Office of the Environment (FOEN) of Switzerland. 6 PMR Technical Note 6 (January 2015) Figure 3. Simplified Overview of Coverage of the Considered Programs in Terms of Project Types and Sector and International vs. Domestic Scope Renewables and energy efficiency Afforestation and reforestation Protection of existing forests Other industrial gases Agricultural practice Waste management Agricultural manure Coal mine methane International scope ODS destruction N2O abatement CDM JI Track 1 AU CFI CA COP CCER Québec CH OP JCM CAR GS VCS Note: AU CFI = Australia’s Carbon Farming Initiative; CA COP = California’s Compliance Offset Program; CAR = Climate Action Reserve; CCER = China CER; CDM = Clean Development Mechanism; CH OP = Switzerland’s Offset Program; GS = Gold Standard; JCM = Joint Crediting Mechanism; JI = Joint Implementation; Québec = Québec’s Offset Program; VCS = Verified Carbon Standard. Figure 4. Offset Programs with a Broad Scope that Covers All Sectors in a Host Country versus Programs with a Selective Scope that Covers Only Sectors Not Included in a Domestic Emissions Trading Scheme or by Mitigation Policies Broad scope of eligibility of project types in offset program MiƟgaƟon Offset sectors: Sectors covered by Sectors covered by Sectors not covered program other mitigation domestic ETS by policy scope policies Selective scope of eligibility of project types in offset program Mitigation Sectors covered by Offset sectors: Sectors covered by Sectors not covered program other mitigation domestic ETS by policy scope policies Note: ETS = emissions trading scheme. 7 PMR Technical Note 6 (January 2015) Offset programs with a more selective scope, on the other hand, are able to restrict eligibility of project types to those activities where demonstration of additionality is more straightforward and where double- counting risks are lower. A selective scope may limit the program’s overall potential to generate large volumes of offset credits. The rationale for adopting such an approach may be to provide clear signals as to which types of projects are to be incentivized through offsets (e.g., to ensure avoidance of double counting with projects covered under a cap-and-trade system). Furthermore, a selective scope can have the positive effect of limiting the ambiguity surrounding emissions reduction calculations as well as lowering costs and risks for project developers. For example, entities covered by the California ETS or by the Québec ETS may use offsets to cover up to 8 percent of their compliance obligation under the ETS. To avoid double counting, no offset can be issued in sectors covered under the ETS or in those that fall into specific regulation (e.g., landfills in California). 3. Principles and Goals of the Programs All offset programs state environmental integrity and economic efficiency as their main goals for achieving mitigation action. See tables A.2–A.4 for a summary of the stated principles and goals of offset programs. The way these principles are interpreted and operationalized varies significantly. Tables A.3 and A.4 summarize how these overall principles are operationalized including: • Eligibility of projects types under the program • Processes for the development and approval of methodologies • Additionality and baseline rules • Requirements for third-party validation and verification • Transparency and stakeholder participation 4. Approaches to Methodology Design The considered offset programs differ in terms of how they develop their project rules. Methodologies spell out the rules and procedures that determine how emissions reductions are to be measured and calculated for a particular project type. This section discusses how these methodologies are developed under each program and the use of project-based and standardized approaches for determining additionality and baselines. 4.1. Bottom-Up versus Top-Down Approaches to Methodology Development Bottom-Up Programs that were started earlier, such as the CDM and JI Track 1, have tended to use a more bottom- up process to develop project methodologies. Under a bottom-up process, methodologies are typically developed by individual project participants who propose specific methodological approaches for their project.10 These are then evaluated and approved by the relevant authority of the offset programs.  Although methodologies are often prepared by individual project developers, they typically become available to 10 others once they are approved by the relevant authority. 8 PMR Technical Note 6 (January 2015) Offset programs that use a bottom-up process tend to have a broader scope in terms of geographic coverage (i.e., international) and in terms of project eligibility (i.e., few limitations on eligible project types). Examples of such bottom-up programs include CDM, JI, VCS, and GS. The CDM has generated the largest number of methodologies, and many of the CDM methodologies have been used as the basis for the majority of methodologies of other offset programs. The CDM methodologies are either directly eligible by other offset programs (e.g., JI, GS, VCS) or have been modified by other programs to fit their scope and circumstances (e.g., CAR, CCER, GS, VCS, CH OP). Top-Down Under a top-down approach, methodologies are developed by the programs themselves, usually in consultation with external experts and stakeholders. Programs that are more selective in terms of their geographic scope and their project type eligibility often use a more top-down approach (e.g., CA COP, the Québec offset program, and CAR). These programs may have sought to avoid the experience of the bottom-up approach, which is, in general, more costly for project developers and can provide less predictability (in terms of ensuring that a project or methodology will be eligible). Most programs use a combination of top-down and bottom-up approaches. Bottom-up approaches rely on project developers to develop a methodological approach that, once approved, can then be used by others. In recent years, bottom-up programs have also worked to introduce methodologies, defined in a “top-down” approach, to try to address gaps in methodological coverage. For example, the CDM has a whole work program that includes the development of top-down methodologies for project types that have been deemed priorities.11 4.2. Standardized Approaches Standardized approaches have been applied to setting baseline emissions, determining additionality and for streamlining and simplifying certain parameters for project emission calculations. Table 1 compares standardized and project-based offset program approaches. Table 2 provides an overview of the common types of standardization. All offset programs use standardized approaches to some extent, such as the use of default parameters instead of requiring monitoring of actual emissions or the use of sector-wide performance standards to assess additionality and baseline setting. Such standardization tends to reduce costs and risks for project developers. For example, under a “positive list” approach (or list of predetermined eligible project types), all projects of a particular type are automatically deemed additional and therefore do not have to go through a lengthy process of proving additionality for each individual project. It appears that programs that use a more top-down approach to methodology development also tend to use a more standardized approach to determining additionality and baselines. Even programs that were originally set up with a bottom-up approach—often to be able to start rapidly and to be open to different mitigation opportunities in different contexts and countries—have recently started to use more top-down,  For example, CDM EB Meeting 78, April 2014: Annex 8—Further Work on Methodologies, Tools, and Standards. 11 9 PMR Technical Note 6 (January 2015) Table 1. Project-Based versus Standardized Approaches to Crediting Methodologies Project based Fully standardized Can take project-specific conditions into account Common standards applied to all projects of a given type (e.g., baseline, monitoring, additionality) In-depth project evaluation is necessary for each Simplified, more transparent, and streamlined project individual project approval process Evaluations often have subjective components Subjectivity during the design phase of the performance standard. (e.g., decisions on stringency levels) Typically, project-specific additionality tests (e.g., Additionality of a project can be easily determined and investment and barriers analysis) that take into is based on predetermined criteria (e.g., emissions account project-specific conditions threshold or technology list) Expensive and time-consuming for project Costly and time-consuming to design (and update) developers and evaluators. Project developers may Reduced risk of project rejection during approval process face risk of project rejection. Table 2. Definitions of Types of Standardization Term Definition Examples Standardized approach Catch-all term that includes all of the approaches noted below Common criteria Terms or conditions applied across •  “Not mandatory by law” applicable multiple methodologies • “Does not generate non-carbon related across multiple Commonly applied to additionality revenue” methodologies language Common methods, Emissions factors, default value, •  IPCC 2006 Guidelines factors, and and estimation methods used to • Avoided electricity emissions module used equations applicable address common circumstances in across CDM methodologies across multiple a consistent fashion across multiple • Uncertainty discounts based on IPCC methodologies project types guidance (used in CDM) Project-specific default Used to calculate baseline and/or 90 percent N2O destruction as baseline for •  values project emissions; only applicable to adipic acid JI projects a specific project type Performance standard: Emissions rate/intensity per unit of Emissions rate: X tons of CO2 per ton of •   emissions intensity output, input, or throughput cement benchmark Applied to baseline and/or • Often based on a top percentile approach additionality determination (e.g., CDM often use average of top 20 percent performance) Performance standard: Market share of current product sales Cumulative penetration rate: e.g., •  market penetration or cumulative market penetration technology in use at 20 percent or less of rate rate (of existing stock) of a technology all installations (e.g., methane recovery and or practice combustion at landfills) Applied to additionality determination Market share: e.g., less than 5 percent of •  current sales (e.g., air conditioners exceeding a certain coefficient of performance) table continues next page 10 PMR Technical Note 6 (January 2015) Table 2. Definitions of Types of Standardization (continued) Term Definition Examples Positive lists Usually a technology-specific list that Specific project types (e.g., small- •  deems all projects of that technology scale projects, agricultural methane additional destruction, solar PV) might be considered The underlying rationale is usually automatically eligible (no additionality performance based assessment required) Standardized Standardization of requirements Prescription of minimum accuracy of •  monitoring for baseline and project monitoring measurement equipment across project types Tools for determination of boiler efficiency •  Note: CDM = Clean Development Mechanism; IPCC = Intergovernmental Panel on Climate Change; PV = photovoltaic. standardized approaches. For example, CDM, VCS, and GS have developed procedures to streamline and to standardize methodologies.12 Highly standardized project methodologies reduce costs and risks for project developers and may also reduce the administrative burden during the project approval and credit issuance process. It is important to note that although highly standardized project methodologies reduce administration costs for the program at the point of project registration as well as at credit issuance, these may not necessarily reduce the costs of the offset programs overall. Standardized approaches require offset programs to carefully assess how particular parameters or project types can be standardized. This requires significant research and data availability for the sectors to be covered. Standardized approaches are often praised for removing the subjectivity during the project review process. It is important to keep in mind, however, that such subjectivity is not eliminated in a standardized approach but rather separated from the individual project approval process. In other words, decisions about scope and stringency of a standardized approach are also subjective (i.e., influenced by the program goals, the political context in which it is implemented, and the overall mitigation strategy of the region). These policy decisions are made upfront during the development of the standardized methodology. Once the parameters are defined, they apply equally to all projects and therefore increase certainty for project developers and help streamline the approval process. Figure 5 maps the considered standards in terms of their design and highlights some of the dynamics of more standardization and top-down approaches. Developing positive lists of specific eligibility criteria may more easily allow for the standardization and streamlining of baseline and additionality determination (see box 2). 12  For CDM, see http://cdm.unfccc.int/methodologies/standard_base/index.html. For VCS, see http://v-c-s.org​ standardized-methods /­ 11 PMR Technical Note 6 (January 2015) Figure 5. Methodology Development Approaches of Offset Programs Top-down Québec CA COP CA CAR JCM CCER AU CFI GS Standardized Project-by-project VCS CH OP CDM JI Track 1 BoƩom-up Note: AU CFI = Australia’s Carbon Farming Initiative; CA COP = California’s Compliance Offset Program; CAR = Climate Action Reserve; CCER = China CER; CDM = Clean Development Mechanism; CH OP = Switzerland’s Offset Program; GS = Gold Standard; JCM = Joint Crediting Mechanism; JI = Joint Implementation; Québec = Québec’s offset program; VCS = Verified Carbon Standard. Box 2. Does a Selective Scope Simplify Standardization of Approaches? A selective scope for geographic and project type eligibility may more easily allow for the standardization and streamlining of baseline and additionality determination, as it allows for the selection, upfront, of project types that are especially suitable for such approaches. California’s Compliance Offset Program and Québec’s offset program, for example, have only five and three approved methodologies, respectively; all but one of these (forestry sinks) are for non-CO2 project types (e.g., methane, nitric acid, and ozone-depleting substances) that are not covered under other mitigation or energy policies. In some cases, these project types do not generate other revenue streams (i.e., there are no other significant revenues than those associated with emissions reductions). The eligible project types and technologies are also rarely observed to be implemented without support of an offsetting scheme or specific policies and can therefore be categorized as “not common practice” (e.g., methane projects from small landfills and livestock operations). It appears that limiting (or preselecting) the eligibility of projects to those that are not covered by other mitigation policies and that are not likely to generate significant revenues other than those from generating offsets makes it easier to apply standardized approaches to additionality determination. Developing positive lists that include technologies and project types that are automatically considered additional and establishing standardized additionality benchmarks in sectors seems more difficult for programs that are international in scope and cover project types in sectors that generate significant revenue and are likely to be covered by other policies (e.g., the power sector). Under the Clean Development Mechanism, for example, the majority of projects, and a substantial fraction of credits, are associated with project types for which there is considerable business-as-usual activity–energy efficiency, renewable energy, and fuel switching–and straightforward practice-based or performance-based standards are particularly difficult to establish. 12 PMR Technical Note 6 (January 2015) 5. Governance Structure Governance and decision-making structures are set up to balance the goals of quality assurance and economic efficiency. The examined programs have similar governance structures, and include an executive body, program administrators, advisory boards, and third-party auditors. Table A.5 summarizes the governance structures of offset programs. Although the governance bodies differ to some extent in terms of their roles and responsibilities, there are common features in all the considered programs: 5.1. Executive Body The executive body provides strategic governance and guidance and approves new methodologies and significant revisions. Under some programs, the executive body also approves project registrations and credit issuance and accredits and monitors auditors. 5.2. Program Administrators Program administrators ensure the day-to-day operation of an offset program. They conduct completeness checks for project registrations and credit issuance documentation. In some programs, administrators also work on the approval or development of methodologies and procedures (together with advisory boards). They are responsible for communication on the rules and procedures of the program and may also provide training to a variety of stakeholders (e.g., auditors and project developers). Adequate capacity of administrators and sufficient training for stakeholders and auditors are important factors for offset programs. 5.3. Advisory Boards Advisory boards develop technical guidelines and the rules for specific topics (e.g., forestry, standardization, accreditation of auditors). All the programs examined use technical advisory boards and external experts. This allows the programs to take advantage of external expertise for project evaluation, protocol development, review, and other technical issues that need to be addressed. 5.4. Third-Party Auditors All programs require the use of third-party auditors to validate (if done separately) and verify projects and their emissions reductions. Third-party auditors are a key component of offset programs’ overall quality assurance procedures. They must be competent to execute the project validation and/or to verify the reported emissions reductions. Having a robust accreditation and quality control system for auditors is seen as critical in establishing a successful offset program. Of the examined programs, all require accreditation of project auditors. California’s COP accredits and oversees third-party verifiers and may perform site visit spot audits. Both CA COP and CAR ensure that verifiers work with the same project operator only for a limited time to avoid conflict of interest (i.e., up to six years, followed by a three-year cool-off period). Training for verifiers is required for each applicable CA COP and CAR protocol. CAR, Québec, and (partly) VCS rely on the American National Standards Institute–which offers an accreditation program for third-party auditors of offset projects and is based on the requirements of ISO 14065–to provide accreditation to their respective program’s auditors. The CDM has an auditor accreditation process in place and also conducts spot checks to ensure that CDM auditors perform adequately. When deemed necessary, the CDM and CAR issue 13 PMR Technical Note 6 (January 2015) warnings and can suspend verifiers for poor performance. The GS requires CDM-accredited auditors and provides requisite training on sustainable development audits. A well-designed program infrastructure helps to ensure quality and to reduce transaction costs. The particular structure of an offset program has to be shaped by its objective and scope. Although all of  the examined programs have similar governance structures, there are differences in terms of the responsibilities that these bodies have. Clarity of rules and guidance and predictability in decision making are important elements to encourage investment in an offset program. The next section examines in more detail how decisions are made during the offset project cycle. 6. Monitoring, Reporting, and Verification (MRV) and Project Cycles MRV13 systems aim to ensure that the number of offset credits issued is equal to the number of achieved GHG reductions. The project cycles of the programs examined have common features and elements, but also some noteworthy differences that we elaborate on in the following sections. 6.1. Project Registration Procedures The initial project review process includes the assessment and approval (or rejection) of an offset project by a program. This review process usually occurs before or during the early stages of implementation. Approval of a project commonly includes listing the project in the program’s registry or database. Figure 6 lays out the general sequence of the project registration process. The dashed lines indicate steps that are not required by all programs. Table A.6 summarizes the project registration procedures and is structured based on the general sequence of steps in the project registration process. This Technical Note uses the following terms: Validation is the detailed assessment of a proposed offset project to evaluate whether the project meets the offset program requirements and standards as an eligible project. Validation may include an evaluation of baseline determination, additionality testing, and monitoring plans. Validation is most commonly done by a third-party auditor. This step is part of the project registration process in CDM, JI, CCER, CH OP, and  GS. There is no separate validation step under AU CFI, CA COP, CAR, VCS, and Québec. Instead, validation is done as part of verification (see section 6.2 for a discussion of verification). Completeness/Consistency Check refers to a review to ensure that the project application, including the validation report (where relevant), is complete and consistent with program rules and that all legal requirements have been fulfilled. This step is usually done by program administrators. In the 11 programs examined, only CCER has the completeness check done by the auditor.  In the context of carbon offset programs, the “M” in “MRV” is used for the more specific term monitoring rather 13 than the more vague term measurement. 14 PMR Technical Note 6 (January 2015) Figure 6. General Sequence of Project Registration Project design (project developer) Stakeholder consultaƟon (project developer) ValidaƟon (third-party auditor) Completeness/ consistency check (program administrator) Review (program administrator/ executive body) Final approval (program administrator/ execuƟve body) Project are eligible to generate offsets with the program they were approved under Note: Dashed lines indicate steps that are skipped by some of the examined offset programs. Review14 refers to an assessment of all project documents, including the validation report. A review is more in-depth than a completeness check and is commonly done by the program administrator and/or the decision-making body. The extent of the review varies by program. Voluntary programs such as VCS, GS, and CAR rely on the third-party auditor to conduct the validation and/or verification (and have no or only limited reviews). Furthermore, top-down programs with a more limited scope, such as CA COP, Québec, and CAR, have a more limited review process than broad-scope programs (i.e., CDM and JI). Final Project Approval refers to the acceptance of a project based on a positive determination of each of the preceding process steps. Final decision-making power lies with the program decision-making body; in practice, however, it is often the program administrator or the auditor that determines if a project can 14  Under the CDM, review refers specifically to a request by the CDM Executive Board for further review if it has doubts about the validity of (certain aspects of) a project. The term is used in this Technical Note more generally to refer to an in-depth examination. 15 PMR Technical Note 6 (January 2015) be approved. After final approval, projects are registered15 with the program’s registry or database. This means that the project has been deemed eligible to generate offset credits from the program under which it was approved. Observations from Offset Program Comparisons Differences in project approval processes are correlated to the type of methodologies employed by the programs. More in-depth reviews are required by programs with a wider scope and project-by-project additionality and baseline determination approaches (e.g., CDM, JI, CH OP, VCS, and GS). These programs tend to rely on the CDM additionality tool, which involves assessing additionality based on the particular barriers (financial, investment, institutional, or other) faced by individual projects in comparison to other alternative investments or activities. The CA COP, Québec’s offset program, and CAR, on the other hand, use standardized additionality determination: all eligible project types are considered additional. Initial project approval under programs with more standardized methodologies therefore generally requires less in-depth project information because projects do not have to prove additionality and/or baseline scenarios on an individual basis. This reduces the administrative burden during the project approval process. The types of activities recognized as “additional” and eligible to earn credits are determined upfront in a kind of positive list by the program authority. The project approval stage is therefore more streamlined for individual project developers. This is also reflected in the length of the project documents. In the CDM, for example, they are usually 40–60 pages; in CA COP, they average six pages. A regular project submitted to CAR usually requires about one to two hours for a staff person to review (three staff members review the same project to ensure consistency and accuracy). Under the CDM, on the other hand, a project review— once the third-party validation has been completed—may require one to two days depending on the complexity of the project. 6.2. Project Verification and Issuance Procedures Once a project has been registered and implemented, it can submit claims for emissions reductions or removals and request the issuance of credits. Verification is the step that seeks to ensure that the credits that are issued correspond to the actual emissions reductions achieved. The emissions reductions have to be achieved in accordance with requirements of the applicable offset protocol for monitoring, quantification, and reporting. Verification is typically conducted by a third-party auditor at regular intervals after project implementation, as specified by the protocol and project type. Once the verification report has been accepted by the program authority, offset credits are then issued and placed in the project proponent’s account on the program’s registry. Figure 7 lays out the general sequence of the verification and credit issuance process. Table A.7 summarizes the MRV and credit issuance procedures. Observations from Offset Program Comparison Unlike the project registration process, all of the reviewed offset programs use the same sequence during the credit issuance process. All of the programs require that emissions reductions are verified  Under CAR, projects are first listed—and only registered after the first verification. 15 16 PMR Technical Note 6 (January 2015) Figure 7. General Sequence of Project Verification and Issuance Procedure Monitoring (project developer) VerificaƟon (third-party auditor) Review of verification (program administrator/ executive body) Final approval/rejecƟon (program administrator/ execuƟve body) Credit issuance by ­third-party auditors. The verification report is submitted to the program administrator, where it is evaluated and, if approved, credits are issued. AU CFI, CA COP, CAR, VCS, and GS A/R have combined the validation and verification steps. Both validation and verification are conducted at the same point in time by the same auditor the first time a project submits documentation to receive offset credits. The programs that use a top-down approach limited to a few eligible project types (AU CFI, CA COP, Québec, and CAR) have most likely minimized validation requirements because the approved project types have been deemed additional ex ante. As a result, the level of scrutiny required at the project or activity registration stage is reduced. The sequence of credit issuance may be similar in all programs because confirmation of the actual emissions reductions achieved requires careful MRV for almost all types of projects. Differences exist in terms of the depth of information provided at verification. Project types that are based on methodologies that use standardized baseline scenarios and default values (such as grid emissions factors) require in general less detailed monitoring and verification information than programs and project types that require more project-specific information. Scope for Streamlining in Verification At the verification and credit issuance stages, offset programs aim to ensure the conservative and accurate accounting of emissions reductions while minimizing transaction costs for programs and project developers. 17 PMR Technical Note 6 (January 2015) Offering standardized forms and tools can streamline and simplify the review as well as the application process for offset projects. Examples include look-up tables, default emissions factors, and standardized validation and verification forms, as well as “how to” manuals such as the GS Toolkit, the CDM Validation and Verification manual, and the CAR Program and Verification manuals. Such standardized approaches may not be suitable in cases where emissions vary greatly from project to project. The following are other approaches to keep transaction costs low: • Defining materiality thresholds (i.e., to provide for simple approaches in case of minor errors or deviations) • Balancing frequency of credit issuance (as higher frequency increases issuance costs) • Allowing aggregation of projects to make use of up-scaling, including programmatic approaches • Standardizing and streamlining procedures • Providing clear and unambiguous rules • Providing guidance tools • Ensuring consistency of evaluations • Maximizing transparency Programs are evolving and seem to increasingly use these streamlining tools. Coping with a heterogeneous range of activities under one program, however, poses challenges to streamlining processes. 7. Sustainable Development Aspects While the key role of GHG offset programs is to recognize the emissions reductions (or emissions sequestration) of project activities compared with a baseline, offset activities can also contribute to other co-benefits, such as addressing local air or water pollution, enhancing access to energy services, and creating employment opportunities. These benefits are typically seen as the overall sustainable development benefits associated with individual offset project activities. All programs require that projects comply with sustainable development requirements in the jurisdiction where they are located. But the importance and or recognition that offset programs give to sustainable development aspects varies significantly among the programs considered in this note. Eight of the considered offset programs mention the contribution to sustainable development in their program principles. The CDM, JI, AU CFI, CCER, JCM, CAR, VCS, and GS all mention sustainable development at as a goal for at least some project types. While such mention is common, the rules and procedures to require or enhance sustainable benefit aspects of offset projects vary significantly. Table A.9 summarizes the differing approaches, including stakeholder consultation requirements, sustainability benefit requirements, and do-no-harm safeguards. Among the offset programs examined for this update, the GS has the most stringent and detailed requirements with respect to sustainable development contributions of eligible offset projects. A comprehensive sustainability assessment has to be performed for each GS project both before project registration and after project implementation, and the assessment is part of the verification process by 18 PMR Technical Note 6 (January 2015) an independent third party. The GS includes an appeals body and a grievance mechanism to remediate issues during the crediting periods. The MRV of sustainability benefits in the GS leads to additional costs compared with other offset programs. On the other hand, GS projects on average fetch premium prices16 as some voluntary offset buyers are ready to pay more for GS offsets17 because they wish to support projects with independently verified sustainability co-benefits (e.g.,  because the offset program’s requirements may mitigate reputational risks). Under the CDM, eligible project activities should contribute both to meeting emissions reductions objectives and to the sustainable development of the host country. Each project has to list, in the project design document, what sustainability benefits it aims to deliver. The determination of what contributes to sustainable development is the prerogative of each individual CDM host country. Sustainable development requirements and benefits associated with CDM projects are therefore defined and evaluated by the relevant host country authority. There are significant differences in terms of what is required by host countries. The CDM does not have requirements to check ex-post if sustainability benefits have been achieved. As a result, the sustainability contributions of CDM project vary from project to project and are not easy to evaluate.18 CA COP, CAR, and VCS have specific sustainability requirements for land-use/forestry projects but not for other project types. CCER and JCM are still in the process of developing their sustainability requirements and procedures. AU CFI and CH OP have negative lists that exclude project types that may potentially be harmful to the environment or to communities. Sustainable development benefits are rarely considered by host countries in JI. A stakeholder process is an important means to minimize the potential negative impacts of offset projects and to ensure potential sustainable development benefits when developing and approving offset projects. Such a process gives the affected population an opportunity to voice concerns and support and potential preferences. The requirements are considerably different among the programs; for example, the GS has extensive stakeholder requirements, the CDM has some (but not detailed) requirements, and other programs have limited or no such requirements (e.g., JI Track 1, AU CFI, CA COP, CH OP, VCS, CAR, and Québec). Sustainable development as a distinct objective for offsets may be less relevant in some jurisdictions than in others. For example, in Australia, Switzerland, California, and Québec, the political and economic context for domestic offsets is very different from that of the CDM and GS (which are internationally focused and often hosted in less developed countries). It may be for this reason that CA COP, Québec, and CH OP do not include specific sustainability criteria. 16  Information based on communications with GS. 17  VERs are around $6, CERs and ERUs around $0.4 or less. 18  It should also be mentioned that several buyers of offsets, including multilateral institutions, apply internal bank safeguards that may include similar sustainable development assessments. Sovereign buyers may also take these sustainability issues into account, typically in their due diligence of potential offset projects and in Emissions Reduction Purchase Agreements. 19 PMR Technical Note 6 (January 2015) 8. Conclusions This Technical Note presents a comparison of 11 offset programs and provides an overview of the range of approaches used to design and administer offset programs (see tables in annex A). The considered offset programs build on many common elements in terms of governance structure, methodologies, and processes. The offset programs can broadly be put into two groups: Offset programs with broad scope Offset programs with selective scope •  Few eligibility restrictions •  Eligibility restricted to a few project types •  International scope •  Limited geographic scope •  Bottom-up •  Top-down •  Limited standardization • Increased standardization, especially for • Additionality determination is mostly project based additionality determinations Examples: CDM, JI Track 1, CCER, JCM, GS, and VCS Examples: AU CFI, CA COP, Québec, and CAR In this categorization, the Swiss CH OP is a kind of hybrid: while the program is restricted in scope to entities and installations that are not covered by other carbon market instruments (such as the Swiss ETS), it is rather broad in terms of the scope of eligible project types. Offset programs continue to evolve, and a wealth of experience has been gained over the last decade. Newer programs tend to learn from existing ones. In particular, the CDM has served as an important model and reference for all other offsets programs. Many of its procedural, methodological, and institutional elements have been copied and adapted. For example, the CDM has developed over 180 project methodologies. All of the other examined standards are using or have modified CDM methodologies and processes for their own programs. Building on established international standards and infrastructure can reduce set-up costs and may bring credibility and compatibility, but local innovation in offset programs can address national priorities and also drive international progress on mitigation. In addition to the CDM, other offset programs have brought innovations to the field as well: • The GS developed a comprehensive framework to document, monitor, and verify sustainability benefits • VCS has advanced the development of new project types (e.g., forestry) and standardization approaches • CAR has pioneered a selective, top-down approach, standardizing approaches and simplifying the project cycle • To manage risks of reversal or potential double counting Californian offsets can be invalidated up to eight years after the end of the reporting period (or after issuance for early action projects). • Québec has an “environmental integrity” account that is filled with 3 percent of the credits of each project, taken at the point of issuance. In the event that a credit is found to be illegitimate, the 20 PMR Technical Note 6 (January 2015) project developer is expected to replace it. If not, the credit can be replaced with a credit from the environmental integrity account and the project developer will face legal proceedings. There is therefore no liability on the buyer. • CA COP, VCS, and CAR use buffers to address the risk of reversal for sequestration activities. These buffers can be tapped into for credit replacement. While there are important similarities among the various offset programs, the variability of approaches confirms that there is no absolute one-size-fits-all. Offset program design depends on many factors, including: • Targeted Market Segment: Offset programs have to target a certain market and then cater to the needs of buyers in that market. These needs may include a requirement for the program to be able to issue units recognized for compliance with the buyer’s emissions trading system or a specific demand for units with specific characteristics (e.g., sustainability). The scope of the program will impact the amount of offsets supplied; thus, the scope should also be defined in light of the potential demand. • Regulatory Framework: Offset programs need to take into account the regulatory framework In both the host and targeted buyers’ countries (e.g., what is possible in host countries and what are the opportunities or restrictions for offsets to be eligible in potential buyer countries’ systems). • Design: The overall approach to standard design (top-down vs. bottom-up) in offset programs has to address whether a program encourages project developers to submit new methodologies for different project types in a broad scope of project types for the consideration and approval of the standard’s regulatory body or whether a standard’s regulatory body defines upfront the  eligibility/additionality of a selective number of project types along with associated baseline and monitoring methodologies for project participants to be used when submitting new projects. • Technical and Institutional Capacities and Resources: Offset programs have to consider available capacities and resources (e.g., different designs of offset programs have different implications in terms of the technical and institutional resources needed to run them). All offset programs aim to balance the goal of quality assurance (i.e., safeguarding environmental integrity) with the need to keep costs and risks for programs and project developers minimal and to provide clear and predictable rules and guidance. Existing bottom-up programs, such as the CDM, VCS, and GS, are increasingly adding top-down procedure and standardization of approaches—and yet they remain, in principle, bottom-up, broad-scope programs. Standardization of approaches tends to reduce transaction costs for project developers but may lead to higher burdens for the development of standards for program administrators. Learning from existing programs may be beneficial for emerging offset programs to avoid reinventing the wheel, as well as to ensure optimum program design and attractiveness to the market. Aiming for a certain level of consistency and comparability in the design between the different programs may also be beneficial to enable potential future linking between systems. 21 PMR Technical Note 6 (January 2015) Annex A: Overview Tables of Evaluated Offset Programs Text in italic indicates quoted text from program documents 22 Table A.1. Overview of Programs (as of July 2014) Name of Type of program Regional scope Start of Projects registered Tradable Units issued Primary users of program program as of July 2014 or unit name as of July 2014 credits as indicated or as indicated Clean Offset mechanism International General rules 7,554 as of Sept Certified Over 1.4 billion annex A countries Development under the Kyoto host countries established 2014 Emission as of Sept 2014 that have a reduction Mechanism Protocol (Article 12) have to be in 2001; first Reductions commitment under (CDM) Primarily project- developing offset issued (CERs) the Kyoto Protocol based (non-annex A) in 2005 Private buyers that countries that are covered under Also recognizes have ratified the an ETS (e.g., EU-ETS) program-based 23 Kyoto Protocol mitigation Voluntary buyers Joint Offset mechanism International General rules 532 as of Aug 2014 Emission Over 830 annex A countries Implementation under the Kyoto host countries established Reduction million as of that have a reduction (JI) Track 1 Protocol (Article 6) have to be in 2001; Units (ERUs) Aug 2014 commitment under Primarily project- developed national rules the Kyoto Protocol based (annex B) established Private buyers that countries that individually in are covered under Also recognizes have a reduction each country; an ETS (e.g., EU-ETS) program-based target under the first offset mitigation Voluntary buyers Kyoto Protocol issued in 2008 table continues next page Table A.1. Overview of Programs (as of July 2014) (continued) Name of Type of program Regional scope Start of Projects registered Tradable Units issued Primary users of program program as of July 2014 or unit name as of July 2014 credits as indicated or as indicated Australia’s Project-based offset Australia December 153 Australian Over 7.6 The primary users of Carbon Farming mechanism 2011 carbon million as of ACCUs were entities Initiative (AU The Clean Energy credit units August 2014 that were required CFI) Act 2011 under (ACCUs) to meet the liabilities which ACCUs were prescribed under primarily used was the Clean Energy repealed on July 17, Act 2011 which 2014. established a carbon pricing mechanism. The Australian Government has Voluntary buyers committed to The Australian expand the scope Government may 24 of the CFI and become the primary to establish the purchaser of ACCUs Emissions Reduction under the Emissions Fund under which Reduction Fund it would be the primary purchaser of ACCUs. California Project-based offset Currently limited Rules adopted 90 (plus 90 early ARB offset 4.8 million Entities covered by Compliance mechanism to United States in October action projects) credits (12 million California’s and the Offset Program as defined in 2011; first including early Quebec’s Cap-and- (CA COP) the eligible offset credits action) Trade Programs methodologies issued in Voluntary buyers as well as to September Quebec through 2013 the linking of the two ETSs table continues next page Table A.1. Overview of Programs (as of July 2014) (continued) Name of Type of program Regional scope Start of Projects registered Tradable Units issued Primary users of program program as of July 2014 or unit name as of July 2014 credits as indicated or as indicated Chinese CER Project-based offset China General rules 49 Chinese 0 Voluntary buyers (CCER) mechanism established in Certified (both Chinese and 2012; project Emission international) registration Reductions Compliance buyers started in (CCERs) from Chinese pilot 2013 ETSs Québec’s Project-based offset Québec (Canada January 2013 0 Offsets 0 Entities covered by Regulation mechanism under for 1 project the Québec ETS and respecting a the Québec ETS type) the California ETS Cap-and-Trade Voluntary buyers System for GHG Allowances 25 (Québec) Switzerland’s National offset National 2008 26 Attestations 16,000 Attestations are Offset Program mechanism typically used for (CH OP) Primarily project- compensation of based CO2 emissions by producers and Also recognizes importers of motor program-based fuels (since 2013) mitigation and potentially by fossil-thermal power plant operators (since 2008). Attestations are not eligible for compliance in the Swiss ETS. table continues next page Table A.1. Overview of Programs (as of July 2014) (continued) Name of Type of program Regional scope Start of Projects registered Tradable Units issued Primary users of program program as of July 2014 or unit name as of July 2014 credits as indicated or as indicated Japan’s Joint Bilateral project- International First signing 0 Units 0 Both government Crediting based offset JCM partner in January currently and private sector Mechanism mechanism countries 2013 (with not traded can be financing (JCM)a include (as Mongolia) (non- entities of Oct 2014) tradable Both government Bangladesh, credit type and private sector Cambodia, Costa mechanism); entities can be Rica, Ethiopia, allocated units may become Indonesia, trading Kenya, Lao mechanism PDR, Maldives, at a later Mexico, date Mongolia, Palau, and Vietnam. 26 The Climate Project-based, U.S. and Mexico 2008 (the 221 as of Climate 53 million as of Voluntary buyers in Action Reserve voluntary offset California August 13, 2014 Reserve Tons August 13, the U.S. (CAR) mechanism Climate Action (CRT) 2014 As an approved Nonprofit Registry Offset Project organization started in Registry under 2002) the CA ETS, CAR Approved as a compliance offset can issue offsets project registry for for certain project CA cap-and-trade types under ARB regulation Compliance Offset Protocols. These offsets then have to be transitioned into ARB Offset Credits to be used for compliance under CA ETS. table continues next page Table A.1. Overview of Programs (as of July 2014) (continued) Name of Type of program Regional scope Start of Projects registered Tradable Units issued Primary users of program program as of July 2014 or unit name as of July 2014 credits as indicated or as indicated Gold Standard Project-based International 2003 VER: 285 Gold VER: 32 million Mostly voluntary (GS) voluntary offset CER: 183 Standard CER GS label: buyers mechanism Voluntary 4.5 million GS CERs and LUF: 8 Nonprofit Emission ERUs—a few annex A organization Reductions countries that (GS VERs) have a reduction Project-based, voluntary offset GS CERs commitment under mechanism that can for CDM the Kyoto Protocol be used as add-on projects (e.g., Switzerland). certification to CDM GS ERUs for Private buyers that and JI projects or for JI projects are covered under voluntary projects an ETS (e.g., EU-ETS) Verified Carbon Project-based International Launched 1188 Verified 153 million Voluntary buyers 27 Standard (VCS) voluntary offset in 2007 Carbon mainly in the U.S. mechanism (version 1 in Units (VCUs) and Europe Nonprofit 2006) As an approved organization Offset Project Jurisdictional-level Registry under the REDD+ programs CA ETS, the VCS can issue offsets Approved as a for certain project compliance offset types under ARB project registry for Compliance Offset CA cap-and-trade Protocols. These regulation offsets then have to be transitioned into ARB Offset Credits to be used for compliance under CA ETS. a Please note that all technical details provided for the JCM are subject to further consideration and discussion with host countries. Table A.2. Principles and Goals of Programs Name of Stated purpose Environmental Conservativeness Transparency Sustainability Avoidance of double counting program integrity CDM To assist Parties not 5. Emission Decision 3/CMP.1 Decision 3/CMP.1 One of the Projects can be hosted only included in annex I reductions resulting mentions mentionstransparency two main by countries that have ratified to the Convention in from each project conservativeness as a requirement, objectives of the the Kyoto Protocol and do achieving sustainable activity shall be as a requirement inter alia, for mechanism (see not have emissions reduction development and in certified […] on the when establishing establishing Stated Purpose) targets under the Kyoto contributing to the basis of: baselines and baselines, Protocol ultimate objective of (b) Real, standardization monitoring and CERs are issued into the CDM the Convention, and to measurable, verification, and Registry assist Parties included and long-term conduct of CDM Each CER has a unique serial in annex I in achieving benefits related Executive Board number, which includes a compliance with their (EB) and other 28 to the mitigation project identifier, party of quantified emission of climate bodies. origin and commitment period limitation and reduction change; and The Registry that commitments under Transactions are tracked via (c) Reductions in tracks credits is Article 3 of the Kyoto the international transaction emissions that open and can be Protocol. (Article 12, log (ITL) and national registries. are additional followed by the Kyoto Protocol) public. to any that would occur Most documents in the absence are publically of the certified available; EB project activity. meetings partially (Article 12, Kyoto streamed Protocol) table continues next page Table A.2. Principles and Goals of Programs (continued) Name of Stated purpose Environmental Conservativeness Transparency Sustainability Avoidance of double counting program integrity JI Track 1 JI was established for Any such project Varies by Varies by host Party Requirements Projects can be hosted only by the purpose of meeting provides a reduction host Party Host Parties are set by the annex I Parties with emissions [...] commitments of in emissions by Under Track 1, are required to host Party: reduction targets under the Parties included in sources, or an requirements are publish their JI It is the Kyoto Protocol and established annex I (Article 6 Kyoto enhancement of set by the host rules, information host Party’s assigned amount units Protocol) removals by sinks, Party on projects, and prerogative ERUs are issued through the that is additional In practice, JI ERU transactions to confirm conversion of assigned amount to any that would Track 2 rules are (Decisions 9/CMP.1 whether an units (AAUs) or removal units otherwise occur usually applied, and 13/CMP.1) Article 6 project (RMUs) (Article 6 Kyoto which require There have activity assists Each ERU has a unique serial Protocol) that baselines been issues with it in achieving number, which includes a Varies by host Party are established transparency, sustainable project identifier, party of taking account however, and this development origin, and commitment period Under Track 1, of uncertainties requirement has (Decision 16/ additionality Transactions are tracked via and using been reiterated by CP.7) requirements are the international transaction 29 conservative the CMP (e.g., COP set by the host log (ITL) and national registries. assumptions and 18 Decision on JI) Party; thus the level In practice, ER calculations of requirements Registered projects sustainability are based on with regard to the are listed on the benefits have conservative environmental UNFCCC website; not been assumptions integrity varies by the information is regarded as host Party Decision 9/CMP.1 provided by host critical by host Typically And Guidance Parties countries environmental on criteria for The UNFCCC is impacts have to be baseline setting not responsible considered and monitoring for completeness Some parties or accuracy of require EIA for all documents or certain project The Registry that types. tracks credits is open and can be followed by the public. table continues next page Table A.2. Principles and Goals of Programs (continued) Name of Stated purpose Environmental Conservativeness Transparency Sustainability Avoidance of double counting program integrity AU CFI To help Australia The scheme only The offsets The Clean Energy The CFI includes ACCUs are created, traded, meet its international credits emissions integrity Regulator keeps a “negative tracked, and retired in the CFL obligations under the reductions that standards require an online public list” to prevent Registry UNFCCC and the Kyoto are genuine—that that emissions registry of Carbon projects that Each ACCU has a unique serial Protocol are both real reductions should Farming Initiative might cause number To create incentives and additional to be estimated projects and credits adverse for certain offsets that business as usual. on the basis of issued. outcomes for are consistent with the To be eligible, conservative the environment protection of Australia’s activities must be assumptions. or the natural environment on the positive community (see list. To be on table A.9). To improve resilience to the effects of climate the positive list, change activities must be assessed to be 30 additional. CA COP To lower compliance An ARB offset credit Standardized Projects must No specific ARB offset credits are created, costs for entities must represent baselines use an approved sustainability traded, tracked, and retired in covered under a GHG emissions built into the Compliance Offset requirement the Western Climate Initiative’s California’s Cap-and- reduction or protocols are set Protocol. (WCI) Compliance Instrument Trade Program GHG removal conservatively Projects must meet Tracking System Service To incentivize emissions enhancement that listing, reporting, (CITSS). reductions in sources is real, additional, and verification Regulated entities are liable for not covered by the quantifiable, requirements. invalidated offsets that they program permanent, have tendered for compliance Listings, Offset verifiable, and Project Data enforceable. Reports, and Offset Verification Statements are publicly available. table continues next page Table A.2. Principles and Goals of Programs (continued) Name of Stated purpose Environmental Conservativeness Transparency Sustainability Avoidance of double counting program integrity CCER To support China’s The GHG emissions Guidelines on National registry Sustainability Offsets are tracked in a 2020 target of 40–45 reductions Validation and is open for public is one of the national registry. percent CO2 emissions should be real, Verification and credits can be requirements Each CCER has a unique serial reductions per domestic measurable, of Voluntary traced in registry in the process number, which includes party GDP by 2020 compared verifiable, and GHG Emission PDD will probably of project of origin and commitment to 2005 level additional Reductions be accessible to the application period To promote voluntary Projects mentions public approval by In pilots, CCERs from projects GHG emissions trading conservativeness NDRC within the boundary of as a requirement covered entities cannot be when establishing used for compliance baselines and standardization. 31 Québec To lower compliance The reductions in Standardized The Ministry of No requirements The project developer has to costs GHG emissions baselines the Environment for sustainability declare that will not apply for To incentivize emissions must be real, built into the of Québec will benefits credits for the GHG emissions reductions in sectors permanent, and protocols are set keep a registry reductions under another GHG not covered by the irreversible, as well conservatively including contact emissions reduction program Qc-ETS Source as additional and information of verifiable Source project developers, registration information listing project reports, project reports, validation and verification reports, and information on project status table continues next page Table A.2. Principles and Goals of Programs (continued) Name of Stated purpose Environmental Conservativeness Transparency Sustainability Avoidance of double counting program integrity CH OP To assist Switzerland in The GHG emissions Guidelines for Many documents No requirements Certificates (vouchers) from achieving compliance reductions have to validation and (e.g., project for sustainability national projects can only with its mitigation be verifiable and verification fact sheets, benefits be sold to restricted national commitments under the quantifiable. of the offset methodological A negative buyers (e.g., fuel importers) Kyoto Protocol The project has program mention guidance, workshop list excludes and are tracked To achieve prescribed to show that it conservativeness material) are potentially Certificates cannot be used for emissions reductions would not be as a requirement publically available harmful project international compliance from emissions feasible without when establishing on a website types There is specific guidance on by producers and the revenue baselines and avoiding double counting on importers of motor from the sale of standardization a national level (e.g., with the fuels and by fossil- certificates and is use of biofuels) thermal power plant not economically operators as required viable. by the Swiss CO2 law JCM Fostering low-carbon Environmental A crediting Transparency Contributing Double counting is excluded: 32 growth integrity should be threshold should should be taken to sustainable preventing uses of any Facilitating diffusion taken into account be established into account development mitigation projects registered of leading low carbon in the design and conservatively in in design and of developing under the JCM for the purpose technologies and implementation of order to calculate implementation countries is part of any other international services JCM reference of the JCM’s climate mitigation mechanisms JCM is seeking a net emissions below Basic Concept to avoid double counting of To achieve Japan’s decrease of GHG BAU emissions GHG emissions reductions or emissions reduction target emissions (in line Default values removals with the Framework to calculate Depending on the agreement Contributing to the for Various project emissions between countries, emissions ultimate objective Approaches) (instead of reductions are shared between of the UNFCCC by JCM aims to measuring) the host country and Japan so facilitating global implement this are derived there is no double counting actions for GHG by assuring that conservatively emissions reductions If a project is registered or removals, reference emissions under the JCM, it may not be complementing scenarios are registered in another program the CDM below business as (Rules of Procedures) usual (BAU) table continues next page Table A.2. Principles and Goals of Programs (continued) Name of Stated purpose Environmental Conservativeness Transparency Sustainability Avoidance of double counting program integrity CAR Promote the reduction The Reserve’s ›  Conservative Sufficient Project activities CAR rules are designed to of greenhouse gas program rules assumptions, information should should not cause ensure that: GHG emission emissions by pioneering and procedures, values, and be disclosed to or contribute to reductions certified by the credible market- eligibility criteria, procedures allow reviewers and negative social, Reserve are: based policies and and quantification should be used stakeholders to economic or Owned Unambiguously: solutions. http://www​ and verification to ensure that make decisions environmental No parties other than the .climateactionreserve​ protocols are GHG reductions about the outcomes registered project developer .org/about-us/mission/ designed to ensure are not credibility and and ideally must be able to reasonably that GHG emission overestimated reliability of GHG should result in claim ownership of the GHG reductions certified ›  Reserve reduction claims benefits beyond reductions (Section 1.2 by the Reserve are: protocols with reasonable climate change Program Manual) ›  Real […] employ confidence (Section mitigation Project developers sign an ›  Additional […] conservative 2.2 Program (Section 1.2 Attestation of Title that ›  Permanent […] estimation Manual) Program protects against double 33 ›  Verified […] methods ›  CAR uses Manual) counting each time CRTs are › Owned whenever an open, issued (Section 3.1.6, Program Unambiguously data and stakeholder- Manual) […] (Section assumptions driven process 1.2 Program are uncertain CRTs tracked in CAR’s registry, for developing Manual) and measures units have individual serial methodologies; to reduce numbers. ›  Methodologies uncertainty are publicly CAR staff cross reference each would be available; project with projects listed on impractical. ›  Documentation publicly available registries (Program for all listed prior to issuing CRTs Manual) projects is publically available on the CAR’s registry table continues next page Table A.2. Principles and Goals of Programs (continued) Name of Stated purpose Environmental Conservativeness Transparency Sustainability Avoidance of double counting program integrity GS […] to ensure that [GS To be eligible for Conservativeness […] a commitment Sustainability For CDM and JI projects carbon offset projects] GS certification, is stated as one of to verifiable is a core certified by GS, respective demonstrate real and projects must: the fundamental information and requirement CDM and JI registries are used permanent greenhouse ›  Adhere to principles of the transparency is Sustainability The GS maintains a registry of gas (GHG) reductions the strictest GS: listed among the aspects of projects and VER credits, which and sustainable standards on […] The Gold key principles the projects have unique serial numbers development benefits in additionality Standard relies of the GS (The are examined A project participant shall local communities that Positively ›  on conservative Gold Standard before and after provide […] a clear and are measured, reported impact the choices that Requirements) implementation convincing demonstration and verified (NGOs and economy, are well- Project through a that no double counting and/ 34 The Gold Standard) health, documented and participants have sustainability or claiming would arise from […] the purpose of The welfare and traceable (The to transparently assessment, the issuance of Gold Standard Gold Standard is to environment Gold Standard demonstrate in addition carbon credits. (The Gold encourage innovation, of the local Requirements) their compliance to emissions Standard Requirements) provide legitimacy, and community with the GS reduction hosting the Projects not allowed in annex B enable pragmatism requirements reporting project countries in the compliance Documentation Sustainable and voluntary market for all registered development for the technologies projects is publicly indicators are within scope (The Gold available on the GS monitored, Standard Requirements) Project Registry reported, and verified table continues next page Table A.2. Principles and Goals of Programs (continued) Name of Stated purpose Environmental Conservativeness Transparency Sustainability Avoidance of double counting program integrity VCS To provide a trusted, VCS Program Conservativeness Transparency is AFOLU projects There must be no double robust and user-friendly Criteria for GHG is defined as use defined as disclose must identify counting of the environmental program that brings Projects conservative sufficient and negative benefit, in respect of the quality assurance GHG emissions assumptions, appropriate GHG- environmental GHG emission reductions to voluntary carbon reductions and values and related information and or removals (VCS Program markets removals verified procedures to to allow intended socioeconomic Guide 3.4) To pioneer innovative and issued as VCUs ensure that net users to make impacts and take A secure registry system rules and tools that must be: GHG emission decisions with steps to mitigate that offers assurance against open new avenues for ›  Real reductions or reasonable them double counting and provides carbon crediting and Measurable ›  removals are not confidence All projects transparency to the public allow businesses, non- ›  Permanent overestimated Documentation are required Project proponents must profits and government Additional ›  When highly for all registered to report on demonstrate, and VCS registry entities to engage in Independently ›  uncertain data projects and VCUs environmental administrators check, that on-the-ground climate Audited and information is publicly available impact GHG emissions reductions action Unique ›  are relied upon, on the VCS Project assessments or removals presented for 35 To share knowledge and Transparent ›  conservative Database and stakeholder VCU issuance have not encourage the uptake of Conservative ›  values shall be consultations also been issued under any best practice in carbon (VCS Program selected that All projects are other GHG program or been markets so that markets Guide 3.4) ensure that the encouraged to recognized as another form of develop along coherent quantification demonstrate GHG-related environmental and compatible lines does not social and credit (such as RECs) even as top-down lead to an environmental Projects are not allowed in regulations take shape overestimation of benefits countries with a reduction http://v-c-s.org/who- net GHG emission beyond carbon, target under the Kyoto we-are/mission-history reductions or especially Protocol, unless cancellation removals VCS through of AAUs occurs (VCS Double Standard 3.3 certification Counting: Clarification of with standards Rules) such as CCBS and Social Carbon (VCUs can be tagged with these certifications) Table A.3. Operationalized Principles (as of July 2014) Name of Projects types Methodology development Number of Methodologies Leakage Indirect emissions program Code used for type of methodologies approval process (increase in (refer to the energy methodologies used as of July 2014 emissions outside use in end-use sectors in other programs: or as indicated the project and account for the A= CDM, B= CDM-based boundary caused by emissions associated with and amended or simplified the offset activity) the upstream production C= new methodologies of the end-use energy) CDM All except Bottom-up, project-by- 184 total (89 › The project In an operational Considered nuclear facilities project, as well as top- large scale, participant develops context, the terms Specific rules vary by Forestry down 92 small scale, and proposes a “measurable” and methodology projects are 4 LULUCF), as new methodology “attributable” in limited to of Sept 2014 through a DOE paragraph 51 of the 36 afforestation › The secretariat CDM modalities and and makes it available procedures should reforestation for public comments be read as “which (e.g. no and prepares a draft can be measured” protection of recommendation and “directly existing forests) › The relevant Meth attributable”, Panel or working respectively (EB 5, group makes its draft annex 3, paragraph recommendation to 10(d)). the EB Considered: precise › EB makes the final rules depend on approval decision methodology table continues next page Table A.3. Operationalized Principles (as of July 2014) (continued) Name of Projects types Methodology development Number of Methodologies Leakage Indirect emissions program Code used for type of methodologies approval process (increase in (refer to the energy methodologies used as of July 2014 emissions outside use in end-use sectors in other programs: or as indicated the project and account for the A= CDM, B= CDM-based boundary caused by emissions associated with and amended or simplified the offset activity) the upstream production C= new methodologies of the end-use energy) JI Track 1 All except Bottom-up, project-by- Not No formal Under track 1, Under track 1, nuclear facilities project determined, methodology approval requirements are set requirements are set by Requirements set by host as projects process by the host Party. the host Party. Party. can develop The description of Typically, the rules Typically indirect project-specific the methodology is are based on track 2: emissions are considered, In practice, rules are approaches included in the PDD Project participants as it is required in track 2 usually based on JI track 2 (or use CDM and assessed by an must undertake an which allows (A) CDM methodologies) AIE as part of the assessment of the methodologies; or 37 determination process potential leakage (B) elements thereof; or of the proposed JI (C) project-specific project and explain approaches which sources of leakage are to be calculated, and which can be neglected. Leakage to be included shall be quantified and a procedure provided for an ex ante estimate (Guidance on criteria for baseline setting and monitoring.) table continues next page Table A.3. Operationalized Principles (as of July 2014) (continued) Name of Projects types Methodology development Number of Methodologies Leakage Indirect emissions program Code used for type of methodologies approval process (increase in (refer to the energy methodologies used as of July 2014 emissions outside use in end-use sectors in other programs: or as indicated the project and account for the A= CDM, B= CDM-based boundary caused by emissions associated with and amended or simplified the offset activity) the upstream production C= new methodologies of the end-use energy) AU CFI Emissions Methods are assessed 25 (as of Methods are reviewed Methods must Considered in avoidance and by the Domestic Offsets August 2014) by the Domestic account for methodology sequestration Integrity Committee Offsets Integrity increases in development and projects in the Both bottom-up and top Committee (an emissions as a result approval land sector down approaches have independent expert of the project Legacy waste been used committee) and projects are also then approved by eligible the Minister for the Environment 38 CA COP Currently Based on the most 5 ARB staff periodically Compliance Offset GHG emissions reductions approved: updated science and review voluntary Protocols must must be a direct reduction ›  Livestock information, including offset protocols and account for activity- within a confined project › Mine quantification methods in coordinate with WCI shifting leakage boundary methane existing voluntary program partners to assess the and market-shifting capture protocols protocols leakage for the › Ozone- B and C Protocols proposed by offset project type, depleting ARB staff go through unless the protocol Developed top-down substances a public stakeholder stipulates eligibility › U.S. forest development process conditions that ›  Urban and must be approved eliminate the risk of forest Scope in a formal rulemaking activity-shifting and/ may be process or market-shifting broadened leakage Source via new protocols table continues next page Table A.3. Operationalized Principles (as of July 2014) (continued) Name of Projects types Methodology development Number of Methodologies Leakage Indirect emissions program Code used for type of methodologies approval process (increase in (refer to the energy methodologies used as of July 2014 emissions outside use in end-use sectors in other programs: or as indicated the project and account for the A= CDM, B= CDM-based boundary caused by emissions associated with and amended or simplified the offset activity) the upstream production C= new methodologies of the end-use energy) CCER The regulation NDRC organizes experts Currently For non-CDM-based Considered Same rules as under the is applied to evaluate CDM 178 CCER methodologies, project Precise rules depend CDM to trading methodologies methodologies participant develops on methodology activities of the Criteria: CDM approved by and submits to NDRC. following six methodologies are NDRC (96 NDRC assigns 2–3 GHG emissions: translated into Chinese and large scale, independent experts CO2, CH4, N2O, should be simplified and 78 small scale, to do technical HFCs, PFCs, adapted for China 4 forest and evaluations (60 and SF6 (i.e. no agriculture), working days) NDRC evaluates new explicit exclusion 173 of methodologies submitted NDRC takes into of REDD or which CDM 39 by project developers or account the experts’ nuclear activities methodologies research institutions opinions and approves but there are or rejects them within currently no 30 working days methodologies for these sectors) Québec Livestock Top-down 3 ›  All current protocols Considered Considered manure Developed by the developed by the Precise rules depend Precise rules depend on management government of Quebec government on methodology methodology Landfill gas (Sustainable Development, Western Climate ›  Environment, and the Fight Initiative will serve Ozone-depleting against Climate Change) as a forum for the substances from based on existing protocols development of appliance foams and the Western Climate more methodologies and refrigerants Initiative’s rules Each new protocol ›  More protocols added to the are being regulation is developed subject to a 60-day consultation period table continues next page Table A.3. Operationalized Principles (as of July 2014) (continued) Name of Projects types Methodology development Number of Methodologies Leakage Indirect emissions program Code used for type of methodologies approval process (increase in (refer to the energy methodologies used as of July 2014 emissions outside use in end-use sectors in other programs: or as indicated the project and account for the A= CDM, B= CDM-based boundary caused by emissions associated with and amended or simplified the offset activity) the upstream production C= new methodologies of the end-use energy) CH OP All types allowed Bottom-up, project-by- Each project/ ›  The project Considered Considered except for: project, as well as top- program participant develops Precise rules depend Specific rules vary by › Nuclear down development applies and proposes a on methodology methodology energy B and C individual new methodology ›  CCS methodology. in the context › R&D See the list of the project activities of approved documentation › Biofuels that projects here. A validator evaluates ›  do not fulfill the methodology Currently three prescribed and drafts standardized ecological recommendations methodologies standards The governmental ›  40 under › Fuel agency in charge top-down switch to makes the final development natural gas approval decision in transport and building sector JCM No restrictions Bottom-up, and top-down, Three › Bottom-up All major emissions There are no explicit project-by-project methodologies methodologies are sources have to be procedures to include have been submitted by project included upstream emissions and standardized baselines approved participants (private Precise rules depend Precise rules depend on as threshold will be (Mongolia and sector) on methodology methodology determined for each Indonesia) › Completeness sector/technology for each check by secretariat country (7 days) Requirements set by the › Public inputs (15 days) Joint Committee. › Assessment B, and C (60–90 days) ›  Approval by JC table continues next page Table A.3. Operationalized Principles (as of July 2014) (continued) Name of Projects types Methodology development Number of Methodologies Leakage Indirect emissions program Code used for type of methodologies approval process (increase in (refer to the energy methodologies used as of July 2014 emissions outside use in end-use sectors in other programs: or as indicated the project and account for the A= CDM, B= CDM-based boundary caused by emissions associated with and amended or simplified the offset activity) the upstream production C= new methodologies of the end-use energy) CAR Coal mine Top-down developed 15 Methodologies The effects of a Preference is to focus methane by CAR developed in project on GHG on project types that Forestry* B, C*: Quantification consultation with emissions must be yield direct emissions often based on CDM multi-stakeholder comprehensively reductions (Section 4.1, Landfill gas (U.S. methodologies but tailored workgroup accounted for, Program Manual) and Mexico) for U.S. circumstances Draft methodologies including If there are significant Livestock unintended effects More standardized posted on website sources of indirect manure (often referred additionality and baseline throughout emissions affected by management to as “leakage”). criteria than under CDM development and for the project, indirect (U.S. and (Program Manual) final 30-day public emissions are included in Mexico)* 41 comment period Considered and quantification Nitrogen addressed in each Technical reviewers Indirect emissions may management protocol are asked to submit also be excluded if it is N2O abatement comments conservative to do so at nitric acid (Section 2.5, Program Public workshop is held plants Manual) during public comment Organic waste period to solicit composting additional comments Organic waste Final approval by Board digestion (at meetings, which O3-depleting are open for public substances* comment) Rice cultivation Urban forest* * Project types eligible under CA (only located in the U.S.) table continues next page Table A.3. Operationalized Principles (as of July 2014) (continued) Name of Projects types Methodology development Number of Methodologies Leakage Indirect emissions program Code used for type of methodologies approval process (increase in (refer to the energy methodologies used as of July 2014 emissions outside use in end-use sectors in other programs: or as indicated the project and account for the A= CDM, B= CDM-based boundary caused by emissions associated with and amended or simplified the offset activity) the upstream production C= new methodologies of the end-use energy) GS Renewable Bottom-up, project-by- 14 GS VER The project participant Considered Considered energy project. methodologies develops and proposes Precise rules depend Precise rules depend on Energy A, B, C and applicable a methodology to the on methodology methodology efficiency— CDM GS Secretariat Applicable CDM industrial methodologies GS involves two methodologies Waste handling external experts Eight GS approved and disposal to review the 42 methodologies methodology Land use and forests The GS independent Technical Advisory Committee (TAC) makes the approval decision The process is different for projects developed under the GS micro- scale scheme, where methodologies can be proposed along with projects applying for registration table continues next page Table A.3. Operationalized Principles (as of July 2014) (continued) Name of Projects types Methodology development Number of Methodologies Leakage Indirect emissions program Code used for type of methodologies approval process (increase in (refer to the energy methodologies used as of July 2014 emissions outside use in end-use sectors in other programs: or as indicated the project and account for the A= CDM, B= CDM-based boundary caused by emissions associated with and amended or simplified the offset activity) the upstream production C= new methodologies of the end-use energy) VCS All CDM sectoral Bottom-up, project-by- 30 VCS The project participant Considered Considered scopes project methodologies develops and proposes Specific rules vary by Specific rules vary by ODS Focus on standardization plus CAR a methodology to the methodology methodology (see here) and CDM VCS Secretariat AFOLU In particular, methodologies Draft methodologies (afforestation, A, B, C* All CAR (except CAR AFOLU projects reforestation, forest protocols) and CDM are posted on the must account for revegetation, methodologies website for a 30-day relevant market, forest public comment period activity shifting, and 43 To incentivize new, broadly management, applicable methodologies, Two approved ecological leakage REDD, VCS rebates 20 percent of validation/verification agriculture, the levy on VCU issued to bodies (VVBs) avoided methodology developers independently assess grassland/ when a project uses the methodology and shrubland the methodology they must provide a positive conversion, developed assessment wetland The VCSA conducts restoration/ an in-depth review of conservation) the methodology and Projects that assessment reports reduce HFC-23 Final approval by emissions are the VCSA (VCS not eligible Methodology Approval Process Section 3.3.2, 3.4.5, 3.6.2) Table A.4. Operationalized Principles: Additionality and Baselines Name of program Rules on additionality determination Rules on baseline setting CDM Usually determined project-by-project Usually determined project-by-project Some small-scale positive lists have been developed, and Standardized approaches are currently being developed for some technologies on a positive list are automatically considered project types additional The baseline for a CDM project activity is the scenario that A CDM project activity is additional if anthropogenic emissions reasonably represents the anthropogenic emissions by sources of greenhouse gases by sources are reduced below those that of greenhouse gases that would occur in the absence of the would have occurred in the absence of the registered CDM project proposed project activity (Decision 3/CMP.1) activity (Decision 3/CMP.1) Rules on setting baselines defined in combined Additionality and Rules on demonstrating additionality defined in Additionality Baseline Setting Tool and the relevant methodologies Tool: ›  Step 1: Identification of alternatives to the project activity › Step 2: Investment analysis to determine that the proposed project activity is either (a) not the most economically or financially attractive or (b) not economically or financially feasible 44 › Step 3: Barrier analysis ›  Step 4: Common practice analysis JI Track 1 Under track 1, requirements are set by the host Party and Under track 1, requirements are set by the host Party and determined on a project-by-project basis determined on a project-by-project basis [...] a host Party may verify reductions in anthropogenic emissions The baseline for an Article 6 project is the scenario that by sources or enhancements of anthropogenic removals by sinks reasonably represents the anthropogenic emissions by sources or from an Article 6 project as being additional to any that would anthropogenic removals by sinks of greenhouse gases that would otherwise occur [...] (Decision 9/CMP.1) occur in the absence of the proposed project (Decision 9/CMP.1) In practice, verification of additionality varies significantly by host In practice, Track 2 Guidance on Criteria for Baseline Setting and Party, and JI track 2 rules are often applied, which allow for use of Monitoring is often used the CDM Additionality Tool AU CFI Additionality test requires: Baseline must represent what would likely occur in the absence ›  the project must go beyond common practice of the project ›  must not be required by another law Baselines must be set according to the provisions of an approved method table continues next page Table A.4. Operationalized Principles: Additionality and Baselines (continued) Name of program Rules on additionality determination Rules on baseline setting CA COP GHG emissions reductions and GHG removal enhancements must Protocols incorporate standardized baselines set in accord with be beyond what would otherwise be required by law, regulation, regulations and common practice or legally binding mandate, and exceed what would otherwise Before protocols are adopted, ARB staff undertakes a public occur in a conservative business-as-usual scenario process consulting with stakeholders through workshops and/or Offset credits can only be generated in sectors not covered by the technical working groups before proposing a protocol CA Cap-and-Trade Program After proposing a protocol, ARB staff takes its proposed protocol through a full stakeholder process consistent with California’s Administrative Procedures Act CCER Same as in CDM 178 methodologies as of Feb. 2014, of which 173 originated from CDM Quebec The reductions in GHG emissions: Standardized baselines are developed considering other (a) must result from a project that is voluntary, that is that it regulations and common practice is not being carried out, at the time or registration of renewal, Before the regulation is adopted, including its offsets in response to a legislative or regulatory provision, a permit methodologies, a consultation period allows for comments from 45 or other type of authorization, an order made under an Act or industry and other interested parties regulation, or a court decision (b) must result from a project that goes beyond the current practices described in the applicable protocol for the project CH OP Usually determined on a project-by-project basis Usually determined on a project-by-project basis Rules on demonstrating additionality: The approach is very similar to CDM ›  Step 1: Identification of alternatives to the project activity › Step 2: Investment analysis to determine that the proposed project activity is either (a) not the most economically or financially attractive or (b) not economically or financially feasible › Step 3: Barrier analysis › Step 4: Common practice analysis In programs, additionality can be determined for single activities on the basis of additionality criteria, similarly to the approach in the programmatic CDM table continues next page Table A.4. Operationalized Principles: Additionality and Baselines (continued) Name of program Rules on additionality determination Rules on baseline setting JCM Additionality determination is substituted by eligibility criteria for The methodologies do not require the analysis of different each of the methodologies, similar to a positive list hypothetical scenarios for baseline scenario determination; Both governments (Japan and the host country) determine what rather they prescribe one “reference emissions scenario” and technologies, products, etc., should be included in the eligibility reference emissions are calculated by multiplying a “crediting criteria through the approval process of the JCM methodologies threshold” which is typically expressed as GHG emissions per by the Joint Committee unit of output by total outputs Eligibility criteria for registration can be based on: The crediting threshold is calculated ex ante in the methodology the efficiency of products/technologies ( e.g., tons output/ ›  for a specific project type and country kWh), a benchmark approach, or It is established conservatively in order to calculate reference type of product/technology (i.e., the group of accumulating ›  emissions below BAU emissions methodologies will eventually form a kind of positive list) Only projects that started their operation on or after January ›  46 1, 2013, are eligible for the JCM (Rules of the procedures for the JC—Mongolia) CAR Additional: GHG reductions must be additional to any that would The Reserve uses standardized baselines in its protocols to the have occurred in the absence of the Climate Action Reserve, or extent possible of a market for GHG reductions generally. “Business as usual” Standardized baselines are developed in consultation with reductions—i.e., those that would occur in the absence of a GHG stakeholders by considering broad trends in the industry or reduction market—should not be eligible for registration. (Section sector relevant to a project type and determining what future 1.2 Program Manual) “business-as-usual” alternatives are likely to be. Some project- CAR additionality criteria include: specific calculations and emissions factors may be used to (1) a legal requirement test ensure accuracy, or where standardized methods would result in estimates that are overly conservative. (Section 2.6.1, Program (2) a performance standard test Manual) (Section 2.4 of the Program Manual) table continues next page Table A.4. Operationalized Principles: Additionality and Baselines (continued) Name of program Rules on additionality determination Rules on baseline setting GS › GS relies on the UNFCCC’s decision on additionality for CDM Determined project-by-project or JI projects applying for GS registration, and GS CDM or JI “Baseline” means the amount of greenhouse gas emissions that projects are not required to carry out further demonstration of would be produced in the absence of the carbon credit project, additionality also known as the business-as-usual scenario, which forms the › GS VER projects apply UNFCCC additionality requirements, basis for calculating a project’s emissions reductions and helps including small-scale projects, validated by the DOEs and determine additionality. (The Gold Standard Requirements) further checked by the GS Secretariat Baseline setting in VER projects is similar to that in CDM and JI ›  Positive list approach for GS micro-scale projects 47 VCS All projects approved under the VCS must be additional, and the Usually determined on a project-by-project basis, although additionality requirements are those set out in the methodology standardized approaches are under development for a number that the project uses (e.g., the CDM Additionality Tool) of project types New methodologies can include new approaches for the In developing the baseline scenario, assumptions, values, and demonstration of additionality, either within the methodology procedures shall be selected that help ensure that net GHG or as a separate tool; both are subject to the VCS Methodology emission reductions and removals are not overestimated (VCS Approval Process (see Section 4.6 of the VCS Standard 3.3) Standard 3.3) A number of methodologies under development are applying a positive list for additionality, in line with the VCS framework for standardized methods Table A.5. Governance Structure Name of Executive body Program administrators Advisory boards Auditors and accreditation program as of July 2014 CDM The Conference of the Parties UNFCCC Sustainable ›  CDM Methodology Panel ›  Designated Operational Entities serving as the meeting of the Parties Development Mechanisms (16 members) (DOEs) 45 accredited companies: to the Kyoto Protocol (CMP) includes (SDM); Registration and CDM Afforestation/ ›  ›  conduct validations and all counties who have ratified the Performance Monitoring/ Reforestation Working Group verifications of CDM projects Kyoto Protocol. CMP has authority Issuance and Performance (8 members) DOEs are accredited ›  over and makes rules for the CDM, Monitoring Team (177): CDM Small-Scale Working ›  by CDM EB based on decides on the recommendations ›  Review validation or Group (8 members) analyzes recommendations by the made to the Executive Board, and verification reports and makes recommendations CDM accreditation panel designates auditors (DOEs) that ›  Prepare background related to new and approved ›  DOE performance is spot- are provisionally accredited by the information and analysis methodologies checked. Executive Board. on project activities ›  CDM Accreditation Panel (10 In case of non-compliance, ›  CDM Executive Board (CDM EB, Undertake technical ›  members) analyzes and makes DOEs can be suspended by 10 members plus 10 alternates) assessments of the recommendations related to the CDM EB provides final approval of: compliance of new accrediting DOEs DOEs are paid by project ›  ›  project registrations requests for issuance Carbon Dioxide Capture ›  developers › credit issuance and Storage Working group › methodologies (7 members) prepares 48 › accrediting auditors recommendations proposals for new baseline and monitoring The EB meets bimonthly and reports methodologies to the CMP JI Track 1 The Conference of the Parties National Designated Varies by host Party Accredited Independent serving as the meeting of the Focal Points (DFPs) are in In some cases DFPs may consult Entities (AIEs) Parties to the Kyoto Protocol (CMP) charge of: with in-house or external experts › Under track 1, accreditation shall provide guidance regarding appraisal of project idea ›  requirements are set by the the implementation of Article 6 [...]. and its endorsement host Party Decision 9/CMP.1 (most countries have › In practice, in most countries › National governments establish this initial step) auditors accredited by the JI procedures for: project approval ›  Supervisory Committee (JISC) › project approval project registration ›  for Track 2 are used › accreditation of auditors accrediting auditors (if ›  › AIEs accredited for Track 2 › project registration envisaged, otherwise are not accountable to the › MRV credit issuance Track 2 AIEs are used) JISC for performance under decision on ERU ›  Track 1 issuance › Auditors are paid by project developers table continues next page Table A.5. Governance Structure (continued) Name of Executive body Program administrators Advisory boards Auditors and accreditation program as of July 2014 AU CFI The Australian Government The Clean Energy Regulator Proposed CFI methods are The National Greenhouse and The Department for the Environment is responsible for project assessed by an independent Energy Reporting Act 2007 develops methods which are approval and issuing ACCUs expert committee, the Domestic empowers the Clean Energy approved by the Minister for the for emissions reductions Offsets Integrity Committee Regulator to register individuals as Environment greenhouse and energy auditors and to keep a register of those individuals. CFI and Emissions Reduction Fund auditors must be accredited through this process. › Auditors are paid by project developers CA COP California Air Resources Board ›  ARB staff in Program Stakeholder workgroups Verification Bodies and verifiers members, appointed by the Operations Section, Climate must be accredited by ARB, Governor and confirmed by the Change Program Evaluation meeting requirements in Senate, adopt the California Branch, Industrial Strategies Section 95978 of Cap-and-Trade 49 Cap-and-Trade Regulation, its Division (ARB/ISD/CCPEB/ Regulation and Section 95132 of amendments, and its Compliance POS): Mandatory Reporting Regulation Offset Protocols Oversee entire Compliance › Auditors are paid by project Executive Officer approves Offset ›  Offset Program and issue developers Project Registries and accredits ARB offset credits in CITSS. both verification bodies and Approve Offset Project verifiers Registries list projects, review project reporting documents, review verification documents, and issue registry offset credits CCER National Development and Reform Climate change department Ad hoc selection of experts NDRC accredits 6 auditors ›  Committee is coordinating the in NDRC Requirements are issued and process together with related guideline for validation and ministries (e.g., Ministry of Science verification similar to VVS and Technology, Foreign Affairs, Auditors are paid by project ›  Finance, Environmental Protection) developers table continues next page Table A.5. Governance Structure (continued) Name of Executive body Program administrators Advisory boards Auditors and accreditation program as of July 2014 Québec Ministry of Sustainable Development, MDE staff: In house experts of the MDE and Auditors must be accredited ›  Environment and the fight Review all the ›  other government experts under ISO 14065 by a against climate change (MDE) is documentation member of the International responsible for: requested by the Accreditation Forum (ANSI or › Project approval promoters (registration Standard Council of Canada) › Project registration form, project report) according to an ISO 17011 › Methodologies Review verification ›  program › Approving verification done by reports ›  Auditors are paid by project third parties developers › Approving auditor accreditation › Credit issuance › Approving new protocols › Approving significant revisions to existing protocols Providing strategic guidance to organization and areas of new protocol development 50 CH OP Overall strategic decisions are ›  Governmental agency under Pool of expert validators and ›  Designated Operational Entities taken by a steering committee FOEN: verifiers to assess the projects (DOEs) with representatives from the Pre-evaluate proposed ›  Experts are employed for ›  Nine approved companies: Federal Office for the Environment projects research and consulting conduct validations and ›  (FOEN) and the Swiss Federal Review validation or ›  concerning methodological verifications of projects and Office of Energy verification reports questions monitoring reports ›  A national agency operated of methodology and Regular workshops with ›  DOEs are accredited by ›  by FOEN is in charge of monitoring stakeholders governmental agency based implementation and further Conduct final ›  on their expertise development of the OP assessments of the DOE performance is checked ›  compliance of new through spot-checks and requests for issuance verification procedures by Issue certificates ›  other DOE Prepare background ›  In case of non-compliance ›  information and DOEs can be suspended by standardized the agency methodologies DOEs are paid by project ›  developers table continues next page Table A.5. Governance Structure (continued) Name of Executive body Program administrators Advisory boards Auditors and accreditation program as of July 2014 JCM For each host country, a separate The Joint Committees are The JC can establish panels and Third Party Entities, are Joint Committee (JC) is formed, supported by the Secretariat appoint external experts to assist › UNFCCC accredited DOEs, or which consists of representatives The secretariat supports the with part of its work › Certification bodies that are from both governments. Each JC: JC in its tasks accredited under ISO 14065 Develops/revises the rules, ›  › Auditors are paid by project guidelines, and methodologies developers ›  Registers projects Discusses the implementation ›  of JCM Conducts policy consultations ›  CAR Board of Directors (13) Climate Action Reserve Stakeholder workgroups and Accredited Verification Body (10) Approves new protocols Staff (23) outside expert review groups Prepare verification report, Review (and give final (convened ad-hoc) verification opinion, and list of Approves significant revisions to approval) of project Give guidance and findings for review and final 51 existing protocols submittal, verification, recommendations for developing determination by CAR staff Provides strategic guidance to registration new or revised project protocols. Verification bodies must be: organization and areas of new Administer all aspects of ›  Accredited by ANSI under protocol development developing methodologies ISO 14065:2007 for specific Climate Action Reserve Staff (23) project sector groupings Provide training, oversight, Gives final approval of project related to approved protocols and monitoring of third-party submittal, verification, registration Auditors are paid by project ›  verification bodies developers Reserve conducts random ›  audits of verification Reserve maintains rights ›  to rescind or suspend its recognition of a verifier or verification body (Section 2 and 5, Verification Program Manual) table continues next page Table A.5. Governance Structure (continued) Name of Executive body Program administrators Advisory boards Auditors and accreditation program as of July 2014 GS The Gold Standard Foundation See GS secretariat The Gold Standard Technical DOEs or AIEs accredited under Board Advisory Committee (TAC, 13) is UNFCCC for the relevant scope Provides financial oversight and ›  an independent body composed (see CDM and JI) strategic governance of the Gold of market specialists that provide GS recommends selecting a DOE Standard Foundation expertise, guidance, and decisions or AIE who has an affinity with GS Secretariat (30): on methodology approval, rule The Gold Standard values (The ›  Stakeholder consultation changes and appeals Gold Standard Requirements) approval › Comments on specific issues DOEs and AIEs conduct validations ›  Review and approval of during project reviews if and verifications of GS projects registration of projects requested by Gold Standard and submit to Gold Standard ›  Review and approval of issuance Secretariat Secretariat for review and of credits › Conducts a full project approval With some exceptions, ›  Strategic and technical review if requested by NGO the verifying DOE has to be development, including supporters or by project different from the validating DOE new methodology and proponents in case of 52 rejection at registration or GS conducts DOE trainings every tool approvals, operational issuance stages three months performance ›  Registry management › Is the first stage of escalation Auditors are paid by project for GS Appeals and Grievance developers Capacity building for DOEs and Mechanism project developers, marketing and fundraising Land-use & Forests Advisory Panel A specialist advisory group established to support the development of GS LULUCF scheme. Supporting NGOs (85 organizations) › can request clarification/ corrective action at registration and issuance stages can request full review of projects by TAC table continues next page Table A.5. Governance Structure (continued) Name of Executive body Program administrators Advisory boards Auditors and accreditation program as of July 2014 VCS VCS Board VCS management & staff (21) AFOLU Steering Committee VCS validation/verification Is the Governance board The program team at the VCS Oversight of the VCS’ Agriculture, bodies conduct project comprises three functional Forestry and Other Land Use validations and verifications, and Approves all substantive changes areas: (AFOLU) program, including methodology assessments to the standard or the program, › Program management development of new frameworks VCS auditors must have: procedures, new standards, or › Methodologies, (e.g., for Jurisdictional and Nested ›  Approval by the UN Clean guidelines › Program development REDD+) and AFOLU technical Development Mechanism VCS Association (VCSA) manages the issues All substantive changes to (CDM) as a Designated VCS Program day to day: the VCS Program must be AFOLU Expert Assessment Operational Entity (DOE) or 53 Conducts accuracy reviews of Panel reviews qualifications of Approval by the UN Joint ›  approved by the VCS Board projects prior to registration and AFOLU experts and recommends Implementation (JI) as an issuance candidates to VCS Some VCS Accredited Independent Oversees the validation/verification advisory groups are ad-hoc groups Entity (AIE) or bodies operating under the VCS of outside experts, created for Accreditation by the ›  Program specific purposes, and disbanded American National Standards Manages the methodology approval when work is complete Institute (ANSI) for ISO 14065 process AFOLU Technical Working Groups scope VCS or ›  Approval under the Climate Convenes steering committees, Standardized Methods Steering Action Reserve (CAR) as a advisory committees or working Committee Verification Body (VB) groups to support its work Auditors are paid by project ›  developers Table A.6. Project Registration Procedures Name of Project design Third-party Stakeholder Letter of approval Completeness/ Review Final decision program document validation consultation consistency requirements check CDM Project design DOE Local By host party UNFCCC Project participant No review: documents include stakeholders DNA, including Secretariat (PP) or at least three technically the detailed project have to be that the project EB members may EB is responsible, information, informed and a activity assists request a review but in practice additionality meeting has to it in achieving within 28 days final decision is and baseline be held sustainable of receipt of the made by RIT and determination, and PDD must list development registration request secretariat projected emissions stakeholder If applicable, by PP and DOE have 28 reductions comments annex I Party days to respond, and Length typically Guidelines are authorizing both the secretariat 40–60 pages general the buyer’s and two RIT members participation in independently make Global: 30 54 the project the assessment days of public consultation on If the secretariat and website RIT propose the same decision, it becomes CDM EB is final within 20 days currently unless a CDM EB discussing ways member objects— to improve the and such cases are requirements then decided at the next EB meeting Cases where the secretariat and RIT propose different decisions are decided at the next EB meeting table continues next page Table A.6. Project Registration Procedures (continued) Name of Project design Third-party Stakeholder Letter of approval Completeness/ Review Final decision program document validation consultation consistency requirements check JI Track 1 Requirements set Performed by Host party sets 1) By a host Host country Requirements set by DFP host Party an AIE requirements country DFP; DFP host Party JI track 2 template Called “PDD Normally in some cases Typically there are no is usually used, Determination” participants approval is equal review procedures which includes are required to registration, detailed project to inform local which typically information, stakeholders takes from 1–2 additionality months to half Some DFPs and baseline a year publish project determination, and information 2) By an investor projected emissions (including Party DFP reductions PDD) for public (another AI Length typically comment prior Party), which also authorizes buyer’s 55 40–60 pages to approval participation AU CFI Project design Not separately No stakeholder The Clean Energy Performed by Review happens at Made by the must adhere to required consultation Regulator notifies the Clean Energy verification/credit Clean Energy an approved CFI Verification requirement proponents of the Regulator issuance stage Regulator method bodies confirm for project outcome of their Methods set eligibility during registration application in out the rules for first verification writing implementing a If approved, the project Regulator issues To register a CFI a Declaration that project, applicants the project is an must fill out an eligible offsets “Application for project Declaration of an Eligible Offsets Project” table continues next page Table A.6. Project Registration Procedures (continued) Name of Project design Third-party Stakeholder Letter of approval Completeness/ Review Final decision program document validation consultation consistency requirements check CA COP Offset Project Data Not separately No stakeholder Not required Offset Project Review happens at ARB staff makes Reports, which required consultation Registry staff first verification/ recommendation become publicly Verification credit issuance stage. to ARB available after bodies confirm management for registry offset eligibility during issuance credit issuance, first verification must include all information required by Cap-and-Trade 56 Regulation and applicable Compliance Offset Protocol CCER PDD similar to CDM Performed Each project Not required Third-party Before approval there Climate change by third party is subject to auditor does is review process/ department in auditor stakeholder pre-check meeting with other NDRC consultation related ministries as part of validation (same as in CDM) table continues next page Table A.6. Project Registration Procedures (continued) Name of Project design Third-party Stakeholder Letter of approval Completeness/ Review Final decision program document validation consultation consistency requirements check CH OP Project design DOE No stakeholder By governmental DOE and Review happens at Governmental documents include consultation agency governmental first verification/ agency detailed project requirements agency credit issuance stage information, baseline and monitoring methodology, additionality and baseline 57 determination and monitoring procedures Length varies, typically 40–60 pages Québec Detailed project Not separately No stakeholder Not required MDE staff Review happens at Legally the information is required. consultation. first verification/ minister of the found in the Verification credit issuance stage MDE based on request form and bodies confirm evaluation of the the Project Report eligibility during MDDELCC first verification. table continues next page Table A.6. Project Registration Procedures (continued) Name of Project design Third-party Stakeholder Letter of approval Completeness/ Review Final decision program document validation consultation consistency requirements check JCM JCM PDDs include Performed by No guidelines Both host country Secretariat There are no review JC information on Third Party Entity on local and Japan are (7 days) procedures yet. eligibility criteria, Validation stakeholder represented projected emissions consists of consultations in project reductions, eligibility check have been registration; no environmental defined so far separate letter impact assessment, Global: 30 of approval by and stakeholder days of public governments consultation consultation on No information website on additionality and baseline determination 58 due to positive list approach CAR “Project submittal Not required Not required Not required CAR staff Review happens at Climate Action form” based on Verification conduct initial first verification/ Reserve staff standardized body confirms eligibility check credit issuance stage project type eligibility (less involved (see table A.7) specific submission during initial than CDM templates verification, validation) (see here) but there is based on project Typical length: 2 not a separate submittal form pages validation step project is Project submittals “listed” reviewed within 10 business days of submission table continues next page Table A.6. Project Registration Procedures (continued) Name of Project design Third-party Stakeholder Letter of approval Completeness/ Review Final decision program document validation consultation consistency requirements check GS UNFCCC PDD forms DOE A local GS CDM and JI GS Secretariat NGO supporters GS Secretariat and guidelines are Micro-scale stakeholder (see above) Within a few (review) and GS-TAC used for all projects projects consultation GS VER: not days from GS Secretariat and (including VER) (<10,000 tCO2e is conducted required but notification of GS-TAC (review and The Gold Standard per year): GS early in the project developer submission, less final decision) Passport must be Secretariat and/ project cycle; has to notify than a week Total 8 weeks: 6 included, which or Objective listing of the the DNA weeks for GS TAC includes inter Observer project is and NGO Supporters, alia sustainability conditional 2 weeks for GS monitoring plan on approval Secretariat to compile of the local GS PDD length comments stakeholder similar to Issuance stage: 2 consultation UNFCCC PDD weeks for GS TAC report GS Passport Length: and NGO supporters, 59 During a 60- typically 20–30 1 week for GS day period pages Secretariat to compile prior to comments (3 weeks completion of total). the validation process, stakeholders again have the opportunity to comment (stakeholder feedback round) VCS VCS Template Validation may Not required Not required Registries are VCS undertakes VCS staff (9 pages) includes occur before first under contract accuracy reviews detailed project verification or at with VCS, have of projects prior information same time as the been trained, to registration or (Project first verification and are overseen issuance Description, v3.1) by VCSA Table A.7. MRV and Credit Issuance Procedures Name of Monitoring Third-party Review verification Review process Final decision Registry information program verification report CDM Monitoring DOE verifies UNFCCC PP or at least 3 EB No review: RIT CDM Registry is requirements information in Secretariat: members may request a and secretariat administered by the defined in monitoring report certification review within 28 days of Review: EB UNFCCC secretariat methodologies and DOE (must differ report submitted the receipt of request of Once the EB has approved in other guidance from the one that to secretariat by issuance. PP and DOE have CER issuance for a project and standards did the validation) DOE (Certification 28 days to respond activity, the CERs are provided by the EB report: formal Secretariat and two RIT issued into the pending confirmation members independently account of the EB, and by a DOE that make assessment project participants may the emissions then request the UNFCCC If the secretariat and reductions which secretariat to forward RIT propose the same are set out in the the issued CERs to their decision, it becomes final verification report accounts in the CDM within 20 days unless a were achieved) Registry and/or registries CDM EB member objects, and such cases are then of annex I Parties 60 decided at the next EB meeting Cases where the secretariat and RIT propose different decisions are decided at the next EB meeting JI Track 1 Requirements AIE (unlike CDM, Requirements set Requirements set by host Host country DFP National Registries of set by host Party. AIE can be the by host Party Party the host Parties DFP Typically, the same as the one DFP checks the There is no standardized is responsible for ERU rules are similar that performed compliance of the review process issuance decision, which to the Guidance determination) verification reports is implemented by the on criteria for with the national JI Registry administrator: baseline setting rules AAUs or RMUs are and monitoring converted into ERUs and The depth of the of JI Track 2, transferred to a buyer’s revision varies by including rules for account in respective host Party monitoring investor Party’s Registry table continues next page Table A.7. MRV and Credit Issuance Procedures (continued) Name of Monitoring Third-party Review verification Review process Final decision Registry information program verification report AU CFI Proponents must A prescribed Review of Proponent submits an Made by the The Clean Energy monitor and audit report is offsets reports offsets and audit report Clean Energy Regulator manages calculate emissions a mandatory is conducted by which is then reviewed by Regulator. the Australian National reductions requirement for the Clean Energy the Clean Energy Regulator Registry of Emissions according to the proponents who Regulator for each reporting period Units (ANREU) rules set out in an wish to apply for To be eligible for ACCUs, The ANREU is a secure approved method ACCUs the project’s prescribed electronic system 61 Auditors must audit report must provide designed to accurately be registered either a reasonable track the ownership of: greenhouse and assurance conclusion or › Emissions units energy auditors a qualified reasonable issued under the under the National assurance conclusion Kyoto Protocol Greenhouse and for each of the matters › ACCUs issued under Energy Reporting audited the CFI Act 2007 › Carbon units issued under the former carbon price table continues next page Table A.7. MRV and Credit Issuance Procedures (continued) Name of Monitoring Third-party Review verification Review process Final decision Registry information program verification report CA COP Monitoring ARB-accredited Approved Offset Offset Project Registries ARB staff makes ARB offset credits are requirements verification bodies Project Registries have 45 days to review recommendation created, traded, tracked, specified in and verifiers review and ARB staff projects after receiving to ARB and retired in the Western Cap-and-Trade information in an Offset Verification management for Climate Initiative’s (WCI) Regulation and offset project data Statement; ARB has issuance Compliance Instrument Compliance Offset report and other 45 days to review after Tracking System Service Protocols documentation receiving complete and (CITSS) about project accurate information for Offset Project Registries performance a Request for Issuance (OPR) are approved by the 62 and regulatory of ARB compliance offset California Air Resources compliance credits Board (CARB) to help administer the program (currently three are approved—CAR, VCS and the American Carbon Registry): OPRs facilitate registration but have no formal affiliation with CARB, and cannot adopt protocols or issue CARB credits table continues next page Table A.7. MRV and Credit Issuance Procedures (continued) Name of Monitoring Third-party Review verification Review process Final decision Registry information program verification report CCER Monitoring The validation Ad hoc selection of The time of reviewing Climate Change National registry run by requirements organization experts shall not be longer than department of NDRC tracks units defined in each that validates 30 working days NDRC methodology the project with over 60,000 tons of emissions reductions is not allowed to certify the emissions reduction of the 63 same project Québec Monitoring Accredited Review by MDE Verification report The minister of The government registry defined in each Verification Body staff submitted by project the MDE based on the MDDELCC’s methodology (must have verified developer to MDE and on an evaluation website less than seven reviewed for approval of the MDDELCC monitoring reports Upon approval, the project for the same developer is issued credits project and not in their account in the have acted as a registry consultant) Verifies information in project report table continues next page Table A.7. MRV and Credit Issuance Procedures (continued) Name of Monitoring Third-party Review verification Review process Final decision Registry information program verification report CH OP Similar to CDM DOE verifies Governmental No review process in place Governmental The certificate registry Monitoring information in agency: verification agency is administered by the approach monitoring report report submitted governmental agency developed by DOE (must differ to agency by Once the agency has project owner, from the one that DOE (verification approved the issuance assessed by did the validation) report: formal for a project activity, the validator and confirmation certificates are issued into approved by by a DOE that the pending account of governmental the emissions the agency agency reductions which are set out in the Some requirements verification report defined in were achieved) standardized methodologies and in other 64 guidance by the governmental agency JCM Monitoring Performed by Third The secretariat A standardized review Joint Committee Each government (host ›  requirements Party Entity conducts a process has not been country and Japan) can defined in each Validation and completeness developed yet establish and maintain methodology verification can check a registry, (voluntary for The methodologies be conducted host country) seek to use default simultaneously or ›  On the basis of values as much as separately notification for issuance possible to reduce of credits by the JC, Verification report monitoring costs each government issues is submitted by the notified amount of Third-Party to PP, credits to its registry which then forwards the report to the JC (no direct submission from Third Party to JC) table continues next page Table A.7. MRV and Credit Issuance Procedures (continued) Name of Monitoring Third-party Review verification Review process Final decision Registry information program verification report CAR Monitoring Accredited Climate Action Verification report Climate Action The CAR’s registry is defined in each Verification Body: Reserve staff submitted by project Reserve staff operated by APX, a U.S. methodology › Confirms developer to CAR and environmental registry eligibility and reviewed for approval provider conformance determination with Three-person internal methodology teams of Climate Action during initial Reserve staff review verification verification reports and à project is opinions for completeness “registered” and accuracy within 10 › Verifies business days information 65 A manager must sign in monitoring off on the review, and report verification reports may be Verification should sent back for adjustments generally take or corrections. no more than six Verification report review months generally occurs within 10 business days of submittal to CAR (although length of review varies by project and issues identified) Upon approval, the project developer is issued credits in their account in the CAR’s registry table continues next page Table A.7. MRV and Credit Issuance Procedures (continued) Name of Monitoring Third-party Review verification Review process Final decision Registry information program verification report GS Project participants DOE (for large NGO supporters Upon receipt of the GS Secretariat & The GS Registry manages have to monitor scale projects, DOE (review) GS verification report, the GS GS-TAC the full lifecycle of GS GHG reductions must be different Secretariat & initiates a 3-week period VERs and sustainable in verification GS-TAC (review and during which GS TAC The registry also includes development from the one who final decision) and GS NGO Supporters information on GS-labeled aspects performed the may request further CDM and JI projects GHG monitoring is validation) clarification or corrective done in accordance Micro-scale project action with PDD prepared activities: GS GS Secretariat reviews under UNFCCC Secretariat and verification documents 66 standards (see Objective Observer GS labels CERs or ERUs, CDM above) or issues credits in its VER Sustainability registry monitoring has Average time needed for to conform to GS secretariat review: sustainability 0.5–1.5 days monitoring plan in GS Project Passport GS VER monitoring reports usually shorter than for CDM projects table continues next page Table A.7. MRV and Credit Issuance Procedures (continued) Name of Monitoring Third-party Review verification Review process Final decision Registry information program verification report VCS VCS Template: VCS approved VCS approved Emissions reductions are VCS staff VCS has two approved Monitoring auditor auditors verified and approved by independent VCS Registry Report, v3.2 the auditor and submitted Operators: APX Inc., and to a VCS registry Markit The independent VCS VCS Registries are Registry Operators are independent from the responsible for verifying VCS Association and completeness of check project documents documentation and check for completeness 67 that the project has not The VCS registry system been previously registered is able to conduct inter- under the VCS Program registry transfers VCS undertakes accuracy The two VCS Registries reviews of projects prior to are supplemented by registration or issuance the central VCS Project The registry administrator Database, which is the creates the issuance publicly available central record on the VCS project repository of all project database, which in turn and VCU information and issues VCU serial numbers generates unique VCU serial numbers Table A.8. Renewal of Crediting Period Name of Crediting period Rules for renewal of crediting period program CDM 10 years (non-renewable) or 7 years (renewable twice, for 21 years Baseline, estimated emissions reductions and the monitoring plan in total) using the latest approved methodology. New LoA not required. Validity of baseline is to be reassessed (M&P); baseline scenario is not reassessed (EB guidance). JI Track 1 Tied to length of Kyoto commitment period (i.e. 5 years for the 1st The extension of the crediting period of a project to be decided by Kyoto commitment period, 8 years for the 2nd Kyoto commitment respective host Party period) AU CFI The standard crediting period is seven years unless a different Projects can be approved for subsequent crediting periods crediting period is provided for the activity through the CFI provided they continue to pass the additionality test and other Regulations. Reforestation and revegetation projects typically criteria have a 15-year crediting period. The exception is for native forest protection projects which have a crediting period of 20 years. CA COP The crediting period for a non-sequestration offset project must be A crediting period may be renewed if the offset project meets the no less than 7 years and no greater than 10 years, unless specified requirements for additionality 68 otherwise in a Compliance Offset Protocol. The crediting period for The crediting period for non-sequestration offset projects may be a sequestration offset project must be no less than 10 years and renewed twice; sequestration offset projects are not subject to any no greater than 30 years. renewal limits CCER Same as in CDM, defined in the individual methodologies: 10 years Same as in CDM (non-renewable) or 7 years (renewable twice, for 21 years in total). Québec ›  10 years for manure and landfill projects At the expiration of that period, the promoter may request the ›  5 years for ODS projects renewal of the offset credit project, for the same period as the › No limit on how many times a project can renew its initial period crediting period Re-validation is required based on the current version of the methodology CH OP 7 years (renewable for 3 years at a time after re-validation during At the expiration of the 7-year period, the project developer may the project life time) request the renewal of the offset project for three more years. This Renewal is possible until the end of the project lifetime renewal request can be repeated again every three years for the project life time. A re-validation is required each time based on the current version of the methodology, and re-validation includes a reassessment of the baseline scenario and of additionality table continues next page Table A.8. Renewal of Crediting Period (continued) Name of Crediting period Rules for renewal of crediting period program JCM There is no defined crediting period No defined crediting period JCM covers period until the reaching of an international agreement (ca. 2020) CAR Length of a project’s crediting period is defined in each Must meet the requirements of the most recent version of the methodology methodology available at the time of renewal, including any In general: 2 times 10 years for non-AFOLU (Agriculture, Forestry updates to eligibility requirements and Other Land Use) projects Project developer must apply for a renewal during the last six For AFOLU projects, crediting period may be as few as 5 years but months of the project’s expiring crediting period 69 renewable up to three times (agriculture) and up to 100 years but not renewable (forestry) GS Consistent with CDM (either one-off 10 year period or up to 3 Baseline and sustainability assessment has to be renewed by times 7 year periods) project participants and revalidated by DOE after each 7-year period PP have to redo local stakeholder process or justify why it is not needed VCS Two times 10 years for non-AFOLU projects, other than AFOLU A full reassessment of additionality is not required projects reducing N2O, CH4 or fossil-derived CO2, minimum of 20 Regulatory surplus has to be demonstrated years, maximum 100 years for AFOLU projects, with renewal of Validity of the original baseline scenario has to be demonstrated baseline every 10 years or, where invalid, a new baseline scenario has to be determined (VCS Standard 3.3) Table A.9. Sustainable Development Aspects Name of Stakeholder consultation Sustainability requirements Appeals process/grievance Do-no-harm safeguards program requirements mechanism CDM Local stakeholder consultation No UNFCCC rules. Requirements Appeals process has been Nonea is part of the project validation established and enforced by discussed under SBI of the process. The Global Stakeholder each host country. Sustainability COP/MOP; so far Parties Process is conducted by displaying contributions evaluated ex-ante have not been able to agree the PDD on the UNFCCC or DOE’s before the registration of the on who should be able to website for 30 days, during which project. LoA by host country DNA appeal and if an appeals time Parties, stakeholders and includes host country approval of a process should only apply UNFCCC-accredited observers may project’s sustainable contributions. for rejected requests for make comments. These comments Voluntary tool for describing registration/issuance or are also made publicly available. sustainable development co- also for approved requests benefits was approved in 2012. JI Track 1 Requirements set by host Party. Requirements set by host Party None Noneb Typically, the local stakeholders Sustainability is not usually have to be informed and local regarded as a high priority in JI and stakeholder consultation is part of not required for project approval, 70 the PDD determination process. and yet some projects voluntarily Some DFPs publish project mention sustainability aspects in information for public comments PDD prior to project approval. If appraised, sustainability contributions are evaluated ex- ante before project approval by DFP AU CFI No stakeholder consultation In determining whether to approve The law provides that a The CFI includes a “negative list” requirements for project developers a method, the Domestic Offsets proponent can seek an to prevent projects that might Integrity Committee and the internal review of certain cause adverse outcomes for the Minister consider any adverse statutory decisions made by environment or the community impacts which may arise as a result the Clean Energy Regulator Negative list activities include of the project as well as consider in relation to the CFI before planting of weeds, establishment of whether the method includes going to the Administrative vegetation on illegally or recently activities excluded from the CFI on Appeals Tribunal cleared land, and establishment of the “negative list” vegetation on illegally or recently drained wetlands table continues next page Table A.9. Sustainable Development Aspects (continued) Name of Stakeholder consultation Sustainability requirements Appeals process/grievance Do-no-harm safeguards program requirements mechanism CA COP No stakeholder consultation No specific sustainability In general, disagreements During adoption of the protocol, requirements for project developers requirement, but projects must among offset project ARB does an analysis of any fulfill all local, regional, and operators, verifiers, and the potential harm from a potential national environmental and health Offset Project Registries project under the California and safety laws and regulations may be appealed to ARB Environmental Quality Act that apply based on the offset Some determinations by project location and that directly ARB may be appealed to apply to the offset project ARB for reconsideration CCER Same as in CDM Contributing to the sustainable None None development of the society is one of the requirements in project registration process at NDRC Québec No stakeholder consultation No sustainability requirements None None 71 requirements for project developers CH OP No stakeholder consultation No requirements for sustainability All decisions by BAFU can There is guidance by the agency that requirements for project developers benefits be contested before the validators should evaluate whether Negative list of project Federal Administrative the project technology causes any technologies Court major negative ecologic or social impacts JCM The local stakeholder consultation An environmental impact None at this point in time is part of the project validation assessment is part of the project process and to be documented in validation process and must be the PDD documented in the PDD The global stakeholder process is The EIA follows the requirements conducted by displaying the PDD of the host country on the JCM’s website for 30 days, during which time stakeholders may make comments; these comments are also made publicly available table continues next page Table A.9. Sustainable Development Aspects (continued) Name of Stakeholder consultation Sustainability requirements Appeals process/grievance Do-no-harm safeguards program requirements mechanism CAR No stakeholder consultation No requirements for sustainability Appeals process is provided “Do No Harm” Beyond Legal requirements for project developers benefits for non-forestry projects in the Verification Program Requirementsb For forestry projects, project Manual, Section 5.1.3 proponents must meet The Reserve convenes sustainability and natural forest a Dispute Resolution management requirements, Committee made up of including use of native species and staff, Board Members, and mixed age classes for trees applicable outside agencies to hear the appeal VCS No stakeholder consultation No requirements for sustainability Complaint and appeals For AFOLU, there are various requirements for project developers benefits for non-AFOLU projects procedure is provided in provisions (see VCS AFOLU 72 For AFOLU projects, project the VCS Program Guide, Requirements) proponents must identify potential This is a two-step process, For non-AFOLU, there is currently no negative environmental and whereby complaints are explicit do no harm socioeconomic impacts and take processed by the VCS steps to mitigate them Association and overseen by the CEO. VCS also encourages projects to use an add-on standards If the complainant is which serve as labels and has unsatisfied with the tagging agreements with CCB, response to the complaint, Social Carbon, and the Thai it may appeal. Appeals are Government’s Crown Standard addressed and overseen by programs the VCS Board table continues next page Table A.9. Sustainable Development Aspects (continued) Name of Stakeholder consultation Sustainability requirements Appeals process/grievance Do-no-harm safeguards program requirements mechanism GS The GS provides DOEs with a Sustainability assessment has to Appeals Body: provides The approach is based on the checklist which provides guidance be performed both ex-ante (before project developers with safeguarding principles of the UNDP on how to assess issues from the project registration) and ex-post a provision to appeal and derived from the Millennium Local Stakeholder Consultation (after project implementation) decisions by the GS Development Goals outcomes and which DOEs must Ex-ante includes: with respect to project Assessment (see GS annex H) covers apply Consideration of project’s risks registration and to issuance ›  human rights, resettlement, removal Local Stakeholder Consultation must and benefits for sustainable or labelling of credits of cultural, sustainable development be performed before project start development Grievance Mechanism: and social equity, heritage, freedom date and must include a discussion ›  Do-No-Harm Assessment All projects must have a of association, compulsory labor, on the sustainable development Detailed Sustainability Impact formal continuous input ›  child labor, discrimination, healthy aspects of the project; results of Assessment. mechanism in place to work, environment, precautionary the stakeholder consultation must Preparation of Sustainability ›  remediate issues identified approach in regard to environmental be documented and made publicly Monitoring Plan during the crediting challenges, degradation of critical available, after which a Stakeholder Ex-post assessment includes: period as early as possible natural habitats, and corruption 73 Feedback Round for 60 days is ›  Preparation of the and prior to verification. conducted to inform stakeholders Sustainability Monitoring Unforeseen issues that about any changes made to project Report (to be prepared may arise during the design based on their feedback and together with emissions course of the project that to receive further comments by reduction monitoring report) are not identified in the stakeholders ›  Verification of the Monitoring Plan can also All Gold Standard NGO supporters Sustainability Monitoring be addressed this way have the right to comment on the Report by DOE, including site and local stakeholders can project at regular, defined intervals visit for every verification suggest improvements or in the project cycle modifications based on their understanding of the local situation. a Although CDM and JI do not include “do-no-harm” provisions at the program level (UNFCCC), some buyers, including the World Bank, Asian Development Bank, and other multilateral institutions apply internal bank safeguards, including do-no-harm provisions. Such provisions have also been included in some sovereign buyers’ due diligence of potential CDM projects and Emissions Reduction Purchase Agreements (ERPAs). b In some cases, the Reserve may determine, in consultation with stakeholders, that existing legal requirements are insufficient to guarantee protection against important environmental and social harms. In these cases, the Reserve may include additional criteria in protocols to ensure that projects will not give rise to these harms, or may screen out certain project types or activities from eligibility under a protocol altogether. (Environmental and Social Safeguards Policy Memorandum, 2012.) PMR Technical Note 6 (January 2015) Annex B: Other Offset Programs This update of the technical report has focused on categorizing a selection of offset programs and is not an exhaustive list of all offset programs. The work has deliberately not included offset labels or norms which, unlike offset programs, do not issue their own credits or have their own registry, but rather identify specific qualities of an offset project or activity in comparison to others that do not qualify for the label. The following table includes a list of the offset programs and labels that could not be included in this report. Offset program Summary American In the voluntary market, ACR oversees the registration and independent verification Carbon Registry of projects that meet ACR Standards and follow ACR-approved carbon accounting (ACR) methodologies. ACR brands the premium verified emissions reductions (VERs) issued against ACR standards as emission reduction tons (ERTs). One ERT is equivalent to one metric ton of carbon dioxide. Costa Rican Companies that have agreed to achieve carbon neutrality may achieve this neutrality Offset Standard using offsets from activities to reduce GHG in the renewable, transport, agriculture, waste management, and sustainable construction sectors. The offset standard will draw on existing standards such as CDM, VCS, and ISO 14064-2. EPA Climate Companies participating in the voluntary Climate Leaders program may use offsets to Leaders Offset achieve their emission reduction targets. Valid offset programs must use the methodologies Guidance established by the Climate Leaders Program. Methodologies exist for methane end use, commercial boiler and industrial boiler efficiency improvements, landfill methane projects, manure management, reforestation/afforestation on and transit bus projects. JI Track 2 Under the JI Track 2 process, the determination of the eligibility of the project and the monitoring and verification of emissions reductions are subject to the procedure under the Joint Implementation Supervisory Committee (JISC) as opposed to under the supervision of the national government. To participate in JI Track 2 a country must have assigned amount units (AAUs) under the Kyoto Protocol and have a national registry that meets UNFCCC requirements. J-VER The Ministry of the Environment in Japan launched the offset credit (J-VER) scheme in November 2008 as a voluntary carbon offset scheme to encourage individuals and businesses to mitigation greenhouse gases. The certified emissions reductions under the scheme may be used for voluntary offsetting or for GHG emissions accounting, reporting, and disclosure. The scheme is based on ISO 14064-2 There are approximately 40 methodologies developed. Panda standard- The China Beijing Environment Exchange (CBEEX) and BlueNext founded the Panda Standard. As the first Chinese domestic voluntary carbon standard, it is designed to provide transparency and credibility in the nascent Chinese carbon market. 74 PMR Technical Note 6 (January 2015) Offset label/ Summary norm Brasil Mata Viva The Brail Mata Viva Program is a standardized system and processes to measure the Standard (BMV) sustainable development impacts of a project or activity in rural areas in the form of a ton of CO2e. Each ton of CO2 reduced is recognized with a single sustainability unit referred to as the UCSVTBMV certificate. The program is for sustainable rural production. CarbonFix The CarbonFix Standard applies to afforestation, reforestation, natural regeneration, and agro- Standard forestry projects that demonstrate a commitment to socioeconomic and ecological responsibility. In September 2012, the Gold Standard (GS) acquired CarbonFix in order to support its expansion into land use and forestry. Existing CarbonFix projects are being hosted by GS and will transition into Gold Standard projects if they meet the rules under GS version 3.0. Climate The CCB Standards are project-design criteria for evaluating land-based carbon mitigation Community & projects’ community and biodiversity co-benefits. As a co-benefits-only standard, GHG Biodiversity reductions are generated using an offset program. Standard (CCBS) International Green-e Climate certifies GHG emissions reductions (offsets) sold in the market—not the Green-e Climate projects that generate them. Green-e Climate certified emission reductions must be sourced from projects validated and registered with an endorsed project standard and certification program. The aim is to provide buyers with assurance that the project is from a high-quality project, that reductions are not double counted, and that the buyer receives all information needed when purchasing an offset. ISO 14064-2 The International Organization for Standardization launched ISO 14064 in 2006 as a three- part set of policy-neutral, voluntary GHG accounting standards. ISO 14064-2 is an offset standard protocol that provides definitions and procedures to account for GHG reductions. It is intended for use in conjunction with an established offset program. Plan Vivo Plan Vivo certifies forestry offset programs, ensuring that livelihood needs are considered and standard built into project design and that local income sources are diversified to reduce poverty and tackle the root causes of deforestation and land degradation. The Plan Vivo standard is a label that is applied to offsets generated from an offset program. SOCIALCARBON The SOCIALCARBON Standard is a certification program based on the sustainable livelihoods standard approach that requires project developers to apply standard indicators that correlate with six aspects of the project: social, human, financial, natural, biodiversity, and carbon. SOCIALCARBON is another “stacking” standard to be paired with an offset program. Source: Ecosystems Marketplace State of the Voluntary Carbon Markets 2013 and 2014, offset standards websites. 75 PMR Technical Note 6 (January 2015) PMR | Pricing Carbon to Achieve Climate Mitigation http://www.thepmr.org pmrsecretariat@worldbankgroup.org 76