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UK: July 2, 2007
LONDON - A murky industry which sells carbon offsets to brand-conscious corporates and guilty consumers may soon face an unfamiliar problem: a glut of rules.
Three new voluntary codes have suddenly arrived at once, joining an established "Gold Standard", prompting a squabble among the new competing sponsors who are all businesses involved in the market.
They all want to clean up perceived sharp practice.
"You need some credibility in the market, so things don't get out of control," said Andrei Marcu, president of the carbon market's trade body, the International Emissions Trading Association (IETA), which announces details of its code next month after an 18-month consultation.
The spate of guidelines runs the risk of overload, however.
"I'd rather the business community had come up with just one, but it's up to them," said Marcu, referring to the others.
The point of carbon offsetting is for people who can't avoid making emissions of the gases blamed for global warming to pay for savings elsewhere, and so not add to the global output.
But it's an unregulated market, so anything goes. For example, developers can sell as offsets to air passengers emissions cuts which won't happen for 50 years or more, by planting a tree.
The fear is that such debateable, but perfectly legal, practices will harm the reputation of a much bigger, mandatory, regulated market under the Kyoto Protocol, into which investment banks are pouring billions of dollars.
A lobby group including such banks, called European Carbon Investors and Services (ECIS), launched a new voluntary code this week, after losing patience with the IETA scheme.
"ECIS thought it was important to act quickly after allegations of abuse in the voluntary market," said a spokesman.
Munich-based German accreditation company TUV SUD, next week launches its benchmark, also citing concerns about delays and the quality of the IETA initiative, said head of carbon management services, Werner Betzenbichler.
A fourth code, called the Gold Standard, is now one year old and is backed by environmental groups. It sets a very high standard for local community participation, which brokers say has limited its uptake so far.
"I'm a bit worried about the multitude of standards, we have a bit of a mess," said Michael Schlup, director of the Gold Standard Foundation, referring to the three new ones.
They also posed potential conflicts of interest, because they were backed by participants in the carbon market, he said.
"It's like putting the fox in charge of the hen house, I don't see an independent regulator in any of these."
US SEEN DRIVING MARKET
For all the talk of benchmarks, as a voluntary market people will still be able to buy whatever offset they want. Europeans corporates with half an eye on their company brochure were the most selective, said MAN Financial's Grattan MacGiffin.
"They want to be involved in picture postcard projects that deliver community-level benefits."
Meanwhile US demand for voluntary emissions reductions (VERs) was soaring, regardless of the new schemes. Google last week followed fellow internet giant Yahoo Inc. with plans to go carbon neutral, which means offsetting all your emissions.
"The main market driver will be the Americans," said VER broker MacGiffin.
The possibility of a future, mandatory US carbon market, widely expected when President George W. Bush steps down, was driving their interest, he said.
The European Union's carbon trading scheme allows industry to meet emissions targets by buying carbon offsets from developing countries, using detailed, transparent rules devised by the UN under the Kyoto Protocol on global warming.
TUV SUD and ECIS have adopted these established Kyoto guidelines as their codes for the voluntary market.
The IETA voluntary carbon standard was just as tough, only simpler, said Mark Kenber, policy director at co-sponsor The Climate Group, a non-profit organisation whose members include businesses and city authorities.
"We're developing rules which have the same rigour but don't use the same process. We want to be as inclusive as possible."
Both IETA and TUV SUD would launch tracking systems to check that VERs were not double-counted.
Story by Gerard Wynn
REUTERS NEWS SERVICE
