Carbon offsetting: Specification with guidance
Standardized approach for offsetting
Carbon offsetting has become a important element in mitigating climate change. However a standardized approach is much awaited. The Icelandic Climate Council's (ICCs) statement on October 26, 2020, emphasized the need to implement internationally recognized methodologies for offsetting. The statement is as follows:
“Business with carbon credits is still relatively small in the Icelandic economy, but rapid growth is expected in this market. It is therefore necessary to ensure that Icelandic carbon credits meet international quality standards and are based on recognized methods of issuing carbon credits based on measurements. Trading in such credits also needs to be transparent and traceable. It is also important to assess the carbon footprint of the activity that is being offset using recognized methods. It is also necessary to clarify whether the carbon footprint is limited to direct emissions from the relevant activity or whether the share of carbon footprint in other parts of the value chain has also been assessed. An evaluation conducted by the Climate Council earlier this year revealed a significant need for improvement. The Council called on key stakeholders to consult in the hope that such consultations would lead to necessary improvements. Although there are positive aspects to the situation, the Council considers progress to be slow and urgent improvements are needed. The Climate Council believes that urgent action is needed to address the following weaknesses: There is a severe lack of internationally recognized methodology in measuring and issuing carbon credits, resulting in units in the market being incomparable and some may not meet minimum quality requirements. There is a lack of centralized recording of carbon credit issuance, trading, and retirement when they are used for carbon offsetting. Standards for responsible declarations in the competitive market and from public authorities need to be established when goods or services are carbon neutral. Such standards must address information about carbon footprints and the characteristics of the carbon credits that can be used for offsetting. Improvements require a joint effort by market players, professional organizations, certification bodies, and public regulators. The Climate Council urges the Government to actively promote the compliance of carbon credit trading in Iceland with international standards for quality, transparency, and traceability. Competition authorities also need to monitor declarations of carbon neutrality for goods and services to ensure that such declarations comply with competition laws and other standards for fair trade. Responsible carbon offsetting is an important part of comprehensive climate policy and the path to carbon neutrality. However, it is also complex, and it is important to promptly address the weaknesses highlighted here.”_ To address these challenges and call for improvement, a technical committee was formed under the leadership of Icelandic Standards Organization with participation from all interested parties mentioned in the statement. Technical Specification (TS) to establish a useful framework for carbon offsetting at the organizational level in Iceland. The work took 1,5 years in making a standardized approach for offsetting relying on ISO standards with the aim to address the call for improvement by the ICC, overcome obstacles and establish a credible carbon market in Iceland that meets international standards, benefiting the country as a whole.
Carbon offsetting is an important part of mitigating climate change, and as such, there are certain criteria that organizations must follow to ensure they are adhering to high integrity standards. These requirements are outlined in ISO 14064-1 and 14064-2 and further expanded upon in the ÍST 92.
To achieve and maintain a credible carbon offsetting claim, organizations must establish a climate policy, calculate GHG emissions according to set baselines, develop and implement objectives to reduce emissions, purchase carbon credits to compensate for remaining emissions, and have their claims verified according to ÍST EN ISO 14064-3.
One of the critical elements of adhering to ÍST 92 criteria is for organizations to prioritize reducing GHG emissions within their organizational boundaries before turning to offsetting. By doing so, they can help ensure that their offsetting claims are based on credible, verifiable reductions in emissions, rather than merely using offsets as a "get out of jail free" card.
Another essential aspect of adhering to the ÍST 92 is for organizations to establish, implement, and maintain a climate policy that aligns with the organization's broader sustainability policy, considering environmental, social, and governance (ESG) factors, and complying with sustainability reporting standards. The climate policy must be approved by top management, communicated within the organization, and publicly available to demonstrate transparency and accountability.
Furthermore, organizations must define their carbon accounting boundaries, address significant emissions they contribute and quantify their GHG emissions according to set guidelines.
Organizations must also plan and implement GHG reduction initiatives to reduce or prevent GHG emissions within and beyond their organizational boundaries. Reduction objectives must be consistent with the climate policy, measurable, monitored, and updated as appropriate. Organizations must document and report the quantification of GHG emissions and removal differences attributable to the implementation of GHG reduction initiatives.
Adhering to the ÍST 92 is crucial to ensuring the transparency and reliability of offsetting claims and establishing high integrity in offsetting practices. By following the ÍST 92, organizations can help mitigate the impact of climate change and create a more sustainable future.
In addition to requirements for offsetting claims the ÍST also serves as a framework for climate projects to adhere to for the purpose of issuing carbon credits credits for organizations to buy. The primary objective is to create a framework that both supports project origination and rewards early actions through compensation and offsetting.
ÍST 92 structure
The TS (Technical Specification) can be used as a framework for carbon offsetting not only in Iceland but also internationally. The TS sets out clear principles, requirements, and guidance for the issuance of carbon credits in voluntary carbon markets (VCMs) that meet international standards. Therefore, it can be a useful tool for organizations looking to develop credible offsetting claims that meet international standards, to the benefit of the global community as a whole. The TS is strongly aligned with the United Nations Sustainable Development Goals (SDGs), especially Goal 13, which calls for urgent action to mitigate climate change. Therefore, the TS can help support signatories to the UNFCCC (United Nations Framework Convention on Climate Change) in achieving the goals of the Paris Agreement or go beyond NDCs. To ensure the reliable issuance of carbon credits, the TS specifies that the credits need to represent additional mitigation efforts that can be demonstrated to have genuinely taken place, applying recognized measurement tools against a credible emissions baseline. The emission mitigations must be verified by an independent, third-party validation and verification body. By implementing the TS, organizations can offset their unavoidable GHG emissions in addition to internal reductions by retiring carbon credits generated by GHG projects. This can help them take responsibility for their share towards climate change and support climate actions outside their organizational or national boundaries. However, it is crucial that organizations and countries prioritize reducing and preventing their own emissions first before relying on offsetting their remaining unavoidable emissions.