Types of Carbon Offset Projects
Renewable Energy
Renewable energy projects typically include wind, solar electric, solar thermal, geothermal, biomass and some types of hydro-electricity generation. Also often included in this category are landfill gas to electricity generation projects.
The energy generated by renewable energy projects replaces energy from traditional fossil fuel energy generation. Carbon offsets from renewable projects are created through either avoiding or reducing the amount of greenhouse gases emitted into the atmosphere in the supply of energy. Renewable energy projects are typically long-lived and while operating reduce society’s reliance on energy from fossil fuels.
The credits generated from renewable energy projects represent an actual reduction in the emissions entering the atmosphere as opposed to removing an emission that is already in the atmosphere. Purchasing carbon offsets from a renewable energy project also directly supports the renewable energy industry in its development and helps increase the penetration of renewable energy into the electricity market.
Energy Efficiency
Energy efficiency projects aim to reduce energy usage by using more efficient technologies, including upgrading a building or factory, using better energy management technology, or installing energy saving appliances/ products in the home or business. Projects that involve switching to less greenhouse intensive fuels are also often included in this category (they are typically described as fuel switching projects).
Carbon offsets are created by reducing the amount of GHG emitted into the atmosphere due to a reduction in the energy consumed to operate equipment; this avoided energy consumption does not create emissions which is then credited.
These types of projects have some risks relating to the accuracy and reliability of baseline measurement and changes over time in energy use. Questions can also arise as to whether the energy would have been saved even without the financial contribution of the offset purchase (the additionality issue).
Forestry (Afforestation/ Reforestation)
Forestry projects include reforestation and afforestation that has occurred on land that was cleared prior to 1990 and meets specific criteria for the accreditation process.
Unlike renewable energy and energy efficiency projects, forestry projects do not avoid the emission of GHG into the atmosphere; instead, they act as a carbon sink, sequestering (extracting and holding) carbon that is already present in the atmosphere. For this reason, the crediting scheme typically requires an equivalent amount of carbon to that credited be held for periods of 70 to 100 years or longer.
They also typically require risk management plans to avoid the loss of stored carbon, the setting aside of some of the total carbon sequestered by the project in a buffer as a risk management strategy and often encourage the pooling of projects to spread risk spatially.
Carbon offsets are created by the actual sequestration of carbon in the project which has occurred since 1990, not sequestration which will occur into the future.
Avoided Deforestation (aka REDD)
Avoided deforestation is a similar concept to REDD (Reduced Emissions from Deforestation and Degradation) which typically has a focus on developing countries as this is where the majority of deforestation is occurring. “Deforestation” occurs for a range of purposes including timber supplies, the establishment of agriculture (e.g. soy, maize, sugar cane), palm oil plantations or pasture for livestock, and infrastructure development (roads, urban areas etc).
Carbon offsets from these projects are created through the avoidance/reduction of GHG emissions into the atmosphere as a result of the clearing or degradation of forests. The credits generated from these projects represent an actual avoidance of emissions being released into the atmosphere. Accredited projects need to meet criteria typical of other land based projects such as additionality, permanence, being measurable and verified as well as utilising risk management practices such as buffers and pooling to manage the risk of loss of credited carbon from the project.
Purchasing recognised credits from these projects reduces emissions while providing funds for social equity, community and infrastructure development. The projects also protect biodiversity, enable traditional customs and lifestyles to be maintained and establish a value for the standing forest that is more than the timber value of the trees.
The area of accrediting REDD is under development at the moment with it featuring strongly in discussions leading up to the Copenhagen Conference of the Parties at the end of the year. Verified REDD and Avoided Deforestation credits are available through the Voluntary Carbon Standard, the CCB Standards (Climate, Community and Biodiversity Alliance) and in Australia, through Greenhouse FriendlyTM.