Elisa de Wit is a partner in the Environment and Planning Group of Norton Rose Australia and leads its climate change practice. With Rebecca Hoare and Felicity Rourke.

Carbon offset calculations are all very well, but without standards, how on earth do we know if we’re really achieving carbon neutrality?

Many organisations now seek to voluntarily offset their carbon emissions in an effort to become more ‘carbon neutral’ and, in recent years, there has been a proliferation of carbon neutral claims and carbon footprint calculation methodologies. However, the lack of a standardised approach to carbon offset calculations has meant that the veracity of ‘carbon neutral’ claims is difficult to gauge.

In December 2008, the Department of Climate Change released its draft National Carbon Offset Standard for public consultation. The draft standard specified the types of domestic and international carbon credits that should be used to legitimately and genuinely ‘offset’ carbon footprints. It aimed to provide a national standardised approach to the management and calculation of voluntary carbon offsets and carbon footprints.

The standard, which relates solely to voluntary emission reductions, will supplement the mandatory Carbon Pollution Reduction Scheme (CPRS) if and when it is introduced.

More than 100 submissions were lodged in respect of the draft standard. Following public consultation, the Federal Government released its revised Final Standard in January 2010, with operation to commence on July 1.

A number of significant changes were made compared to the Draft Standard.

While the draft specified the only international carbon credits that could be used to offset an organisation’s carbon emissions were certain international Kyoto emission units, the Final Standard has increased the type of international carbon credit units that can be used.

International emission units that are issued by either the ‘Gold Standard’ or the ‘Voluntary Carbon Standard’ will now be included as eligible emission units, in addition to the units specified initially.

The Draft Standard provided that a range of domestic carbon credits could be used to offset carbon footprints. These included Australian Emissions Units (issued pursuant to CPRS) and also carbon offset units generated from emissions sources in Australia that complied with the Draft Standard’s methodology and eligibility criteria.

The Final Standard has limited the types of domestic emission sources that are eligible for the generation of domestic offsets. Eligible emission sources are now limited to emission units generated from forest management practices (in forests established before 1990), revegetation through the establishment of woody biomass that does not meet Kyoto forest criteria and cropland and grazing land management.

Unlike the Draft Standard, the Final Standard provides detailed methodologies and calculating requirements in respect of carbon footprints.

It also requires that a Greenhouse Gas Emissions Inventory Report be prepared and that the organisation’s boundary (for the purpose of its carbon footprint calculations) be transparently documented.

The Final Standard also requires that in calculating carbon emissions, an organisation must take into account its ‘scope 3 emissions’, which include business travel of its employees, waste generated by the organisation and also the organisation’s use of paper.

In order to be entitled to use the Carbon Offset Standard logo, an organisation must develop an Emissions Management Plan that must include an emissions reduction strategy. Following an independent audit of an organisation’s carbon footprint calculations, and the Emissions Management Plan, an organisation may then complete an agreement to use the National Carbon Offset Standard logo.

The logo will confirm that the organisation or its product has achieved ‘carbon neutrality’. Following the achievement of ‘carbon neutrality’, an organisation will need to continue to report and audit its emissions reductions and offset activities on a regular basis (although the Final Standard does not specify how frequently). The Audit progress reports should be made publicly available.

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