THE VOLUNTARY CARBON STANDARD

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THE VOLUNTARY CARBON STANDARD
Rupert Posner, Australia Director The Climate
Group
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MISSION
To catalyse business government leadership on
climate change in order to put the world on track
towards a low carbon economy
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ABOUT US

• NGO/nonprofit, founded 2004, offices in UK, USA,
  Australia, China, India
• WORK WITH LEADERS convene working groups on
  sectors/issues (finance, IT, retail, world cities
  etc), brief companies and governments on policy,
  science etc
• RESEARCH Identify and document best practice in
  policy and strategy
• COMMUNICATIONS Profile successful
• efforts to reduce emissions and
• promote low-carbon technologies
• EXPAND SOLUTIONS MARKET e.g.
• standard for voluntary carbon offsets

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THE VOLUNTARY CARBON MARKET

• Companies are entering voluntary carbon markets
  to
• to differentiate their strategic positioning on
  markets
• to increase flexibility of pricing
  products/services
• to learn about the carbon markets
• to influence policy makers
• to increase response options to enhance public
  relations
• to generate goodwill by entering the carbon
  markets
• to cement strategic interest in specific offset
  projects
• to manage corporate social responsibility
  obligations

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CHALLENGES FOR THE VCM

• Three key voluntary carbon market needs
• Customer awareness what is offsetting and where
  it does it fit into broader climate strategies?
• Delivery mechanisms how to create an attractive
  sales proposition
• Standardisation developing trust, confidence
  and fungibility
• hence the VOLUNTARY CARBON STANDARD

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THE VOLUNTARY CARBON STANDARD

• Vision
• Investment in offset projects offers a
  significant low-cost opportunity for
  organisations and individuals to reduce their
  carbon footprint.
• Offsets can be an important part of a credible
  GHG management and reduction strategy.
• Increased investment in offset projects can
  increase the uptake of and flow of funds to low
  carbon solutions.
• Consumer-focussed offsets and offset products can
  raise awareness and accelerate public action.
• The VCS will help expansion of the voluntary
  carbon offset market and drive major emissions
  reductions.

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THE VOLUNTARY CARBON STANDARD

• Vision
• Standardisation is necessary to promote
  confidence, investment and trading.
• The VCS will certify that offset projects
  credits are additional and represent real,
  quantifiable and permanent GHG reductions.
• The VCM is global so the VCS aims to be a global
  standard with a global carbon unit the VCU.
• The VCS will not compete with existing standards
  it seeks to underpin and support credible
  standards, drawing on current best practice.

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MARKET POSITIONING
Specific Buyer requirements
Sustainability and other attributes
State and other sub-national programmes
Other Standards
Carbon quality guarantee
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TYPES OF STANDARS USED, OTC 2007 (ACTUAL
RESPONSES)
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UPTAKE OF STANDARDS IN THE OTC MARKET, 2007 USAGE
COMPARED TO 2006
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THE VOLUNTARY CARBON STANDARD

• Process
• 1st version launched by TCG, IETA and WEF, March
  2006.
• 85 comments received
• 2nd draft released October 2006, consultation, 60
  comments received
• 19 member global Independent Steering Committee
  produced final version
• Launched in Nov 2007
• New independent VCS Association also established
  HQ in Washington
• VCS Registries selected APX Inc., Bank of New
  York Mellon, Caisse des Depots and TZ1 - go live
  shortly

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THE VOLUNTARY CARBON STANDARD

• Criteria
• The VCS seeks to build on existing approaches
• All project types are eligible
• Baselines CDM other approaches
• Additionality CDM other approaches
• Compatibility of project program-based
  approaches
• Leakage and secondary effects
• Quantification GHG Protocol/ISO
• Multiple registry system

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THE VOLUNTARY CARBON STANDARD

• Verification and certification

PROJECT OWNER
VCU CERTIFICATION
PROJECT VERIFICATION
PROJECT DESIGN DOCUMENT, PROOF OF TITLE
VCU CERTIFICATION STATEMENT
VERIFICATION REPORT
VCU TITLE AND TRANSFER FORM
VCU REGISTRATION
VCU Registry
- VCU ACCOUNT CREDITED - TRANSFER TO REIREMENT
ACCOUNT
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THE VOLUNTARY CARBON STANDARD

• Verification and certification
• All projects and credits must be verified by an
  independent third-party CDM ISO 14064
  accredited
• Only existing reductions can be verified
• Verifier approval process developed first
  accredited
• VCS has developed the first ever international
  gap analysis program for recognizing other GHG
  offset programs.
• Verification reports publicly available

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THE VOLUNTARY CARBON STANDARD

• The VCS relates to VER projects and credits from
  them.
• It does not seek to certify
• - the emissions footprint being offset
• - The goodness of buyers / users / suppliers
  of VERs
• - Other attributes of projects other than
  additional and real greenhouse gas reductions
• VERs certified as meeting the VCS have to enter
  into an approved registry and become Voluntary
  Carbon Units (VCUs).

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ACCREDITED PROGRAMS

• First approved by VCS Californias Climate
  Action Reserve
• CRTs can also be converted to VCUs and traded
  on a global platform.
• What about Australia?
• Now ratified Kyoto voluntary action helps meet
  Australias mandatory target unless taken out -
  to comply with VCS double counting must be
  addressed.

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