Frequently Asked Questions
What does ’additionality‘ mean?
In order to be considered as a bona fide offset, a project must only have gone ahead because of the funding provided by the sale of carbon creidts. If the project is vaible in its own right, say through the sale of electricity, then it cannot be used as an offset project as it would have been built regardless of your investment. So 'additionality' means the concept that the project is additional to the 'business as usual' scenario; it has only happened because of carbon funding.
Why do you invest in energy efficiency projects in the developing world?
In order for our energy efficiency projects to be considered additional, we must identify communities to receive our energy efficient equipment that would not otherwise be able to afford it. There has been some criticism of such projects along the lines that it would be better to fund other aspects of life in the developing world such as education and healthcare. This completely misses the point. There are plenty of organisations seeking to provide funding and expertise to address these areas and we have no intention of competing with them. co2balance exists solely to help people address their carbon emissions. If, at the same time, we can provide energy efficient equipment to the developing world that through its use, saves the user money and stops the user having to pay for the equipment in the first place, then that can only be of benefit.
How do you audit your projects?
Our projects are externally audited by a range of third party accreditation bodies. In addition, all co2balance projects are accredited the Gold Standard, which is leading carbon offset standard for voluntary projects.
Are offsets from the regulated or voluntary market?
Our offsets are predominantly from the voluntary market. However for some time, co2balance has offered its clients the opportunity to offset via Certified Emission Reductions (CERs). Almost without exception, our commercial clients are not interested in CER projects, even those who are already active in this market by virtue of the fact that they have obligations under the EU Emissions Trading Schemes (ETS). This is because of recognition that CER generating projects do not generate the range of co-benefits that typically accrue from voluntary offset projects. CER-generating projects tend to be industrial in scale and nature and clients are not interested in helping, for example, an Indian steelworks reduce its emissions or a Cambodian landfill site to flare-off its gas. Instead our clients are normally keen to invest in projects that improve the living standards of some of the poorest people on earth, in addition to offsetting emissions, and these benefits are not generally found in CER projects.
Do your offsets result from specific projects?
Yes, we have a number of CarbonZero projects including energy efficient stoves, replacing incandescent bulbs with low energy versions and projects that convert manure to gas for cooking in Kenyan villages. As well as saving on carbon emissions, these projects all have great spin-off benefits; the stoves project saves the user money and removes exposure to respiratory illness; the biogas project gives villagers a clean source of fuel, reducing exposure to respiratory illness and removes the requirement to fell trees for fire wood. You can choose which project on which to spend your offset balance.
Please also note that the vast majority of projects we invest in have been initiated and are managed by co2balance so we can ensure that the promised carbon savings actually occur.
Do you use an objective standard to ensure the additionality and quality of the offsets you sell?
All projects are accredited under the Gold Standard or VCS, which are subvject to independent project verification. However, it is important ot note that our own in-house standards go way beyond the requirements of the VCS and GS including the highest financial additionality test in the world. As well as the usual criteria, we also have a rule that at least 50% of the total project capital must come from carbon funding. Credits from the regulated market often come from projects where a tiny percentage of the overall project capital has been generated by carbon funding using the pump-priming argument that without that funding, the project would not have occurred. We do not find this a credible approach, hence the 50% rule.
All projects are backed by a Project Design Document (PDD) which sets out the project boundary, baseline, purpose, benefits, and projected savings. Verification of the projects' goals is undertaken by the accrediting body.
How do you demonstrate that the projects in your portfolio would not have happened without the Green House Gas (GHG) offset market?
See above. In addition to the funding test, we also undertake research to ensure that the type of project that we are proposing is not likely to be funded through any other method, i.e. state intervention or private finance.
Have your offsets been validated against a third-party standard by a credible source?
Our carbon offset projects are validated and verified by the accrediting bodies (VCS or Gold Standard).
Do you sell offsets that will actually accrue in the future? If so, how long into the future, and can you explain why you need to forward sell the offsets?
In our view, it is better to invest in a project whose carbon saving occurs directly (i.e. after) the investment of funds. rather than in a project that is already in place. It is much more difficult to demonstrate additionality where the project has already occurred. It is much better that the clients’ funding is used, after it is received in new project activity. A clear link between the receipt of funds and additional (new) project activity can therefore be drawn. Combined with the 50% rule this represents a very high additionality test. The typical carbon payback period for our energy efficiency and renewable energy projects is 4 years. Given that 100% of the funding for our projects is currently realised through the sale of carbon credits, there is no way the projects can proceed without receiving the funding up-front.
Can you demonstrate that your offsets are not sold to multiple buyers?
We operate the CarbonZero Registry. This is a register organised on the basis of each offset project and the tonnes of CO2 saving that it generates. Each client is allocated the appropriate tonnage in the register, which is available to all clients.
What are you doing to educate your buyers about climate change and the need for climate change policy?
We provide consultancy services to clients advising where carbon savings can be made. We also write climate change strategies for clients, often helping to implement those strategies through techniques such as the establishment of green teams.
Can you provide a breakdown of allocation of offset funding? For example, what percentage goes to the project, admin, regulation etc?
Typically, the projects will receive about 70% of the offset funds. The rest is split between operating costs and a small margin.
Is your company run as a charitable entity or a business?
The company was initially set up by people would had a genuine concern about the impact of climate change. What started out as a hobby grew and to increase the amount of good carried out they had to set a company up and run it as a company.
We are a limited company but it is important to note that the majority of our profitable work comprises consultancy services, not the offsetting part of what we do.
