Guidance for Carbon Offsets Purchasers

Preface

During 2006, interest in carbon offsets has grown dramatically in the U.S. The New Oxford American Dictionary even chose "carbon neutral" as its "Word of the Year" -- clear evidence, if more was needed, that this is the wave of the present -- and that understanding offsets and the role they play in attaining "carbon neutrality" is increasingly important. Clean Air-Cool Planet commissioned this report as a contribution to the discussion about what makes a good retail carbon offset provider, and to help provide guidance to those that are considering purchasing offsets to help reduce their "carbon footprints."

Since our founding, Clean Air-Cool Planet has worked with businesses, universities and municipalities to help them set and achieve greenhouse gas reduction goals. We always focus on achieving emissions reductions first - through means such as energy efficiency and conservation, technology, process reengineering, green building and other "best practices" -- and only then do we recommend that institutions offset what they can't reduce. All the offsets in the world won't help us if we in the U.S. don't make huge reductions in our overall greenhouse gas emissions and effect a transition away from wasteful use of fossil fuels. Nevertheless, offsets can play a significant part in a comprehensive climate protection strategy, not only for the offsets themselves, but for the role the market can play in informing the public about climate change and in demonstrating to policy makers that this issue is ripe for public policy. As a result, it is exciting to see the demand growing and the market expanding.

Individuals and our institutional partners frequently ask us about carbon offsets, and how confident they should feel in purchasing them as a contribution to solving global warming. With dozens of providers of carbon offsets in the retail market, and more entering it all the time, it is quite difficult for potential purchasers to understand what they are buying and what they should look for. To try to address this problem, we commissioned Trexler Climate + Energy Services, Inc. (TC+ES) to conduct an independent survey and evaluation of retail offset providers. TC+ES has been involved in the voluntary carbon market since 1991 and works with many leading firms in the climate change mitigation arena. TC+ES has a sterling reputation as a provider of consulting services in this area, possesses an unparalleled knowledge of the field of carbon offsets and for many years has been a leading advocate of environmental integrity in the development of voluntary offset markets.

In the interest of maintaining the independence of this report, we offer full disclosure here. Since 2001, CA-CP has worked in partnership with one of the carbon offset providers reviewed in this report (NativeEnergy). For this reason, we asked TC+ES to undertake a fully independent assessment. Funding for this report was provided by three corporate sponsors, Stonyfield Farm, Interface, Inc., and Clif Bar. Neither they nor Clean Air-Cool Planet had any input into the design of the methodology and the scoring system used to assess the offset offerings and had no influence over the rankings.

We hope that this report will provide a useful service to potential consumers of retail offsets. By providing a clear description of the key issues underpinning carbon offset quality and using a transparent methodology to assess retail providers, our aim is to help educate consumers on the questions to ask when considering a retail offset purchase.

This report focuses solely on providers specifically offering organizations or individuals carbon neutrality through their websites. It does not include organizations developing and selling carbon offsets on a larger scale to utilities and others, nor does it profile renewable energy credit providers and brokers active in the field of renewable energy credits (RECs) who do not sell into the retail market for climate neutrality.

The report is intended to identify providers that perform best against the report's methodology, thus offering direction, based on the key attributes identified, to potential purchasers on what makes a "good" retail carbon offset provider. Thirty providers were reviewed for the study; companies were asked to respond to a detailed questionnaire. Unfortunately, less than half the companies reviewed chose to complete and return the questionnaire. Where the questionnaire was not completed, the report's authors relied mainly on publicly available information from websites and annual reports.

This is the first time that this kind of independent review of retail offset providers has been undertaken. Because the companies have not previously been exposed to or evaluated against the methodology used in this report, and because the goal of the report is to encourage more transparency and quality across retail offset providers as a whole, the report does not try to identify one single "best" retail offset provider. Instead, it identifies the top eight providers; these providers received a cumulative score of more than 5 out of 10. However, the report does not specifically rank providers by their score. Now that the methodology is publicly available, we would anticipate that future versions of this report might raise the bar for inclusion in the top tier and might provide the actual scores received by individual retail offset providers. For now, we're content to simply point consumers to the top 25 percent of providers as measured by the methodology used in the report.

The information provided in this report should be viewed as a snapshot of the situation today. This is a market that is changing quickly and one in which providers are innovating and developing all the time. Many of the offset companies that did not make it into the top tier this time around are well within reach of doing so. As the market evolves, and consumers demand both quality and transparency, these companies can do much better by the time we repeat this exercise.

I want to thank TC+ES for its work in compiling this report, our four independent peer-reviewers for their invaluable time and expertise, and our three corporate sponsors for their generous support. If this report provides information consumers can use in making offset choices, and has clarified why this information is important, then it has succeeded. We at Clean Air-Cool Planet welcome your feedback on the report and invite suggestions for how to provide even more value to consumers in this field in the future.

Adam Markham is Executive Director of Clean Air - Cool Planet, which is based in New Canaan, Connecticut.