Questions you should be asking your carbon offset vendor

I mentioned in last night’s post that a lot of the qualitative issues raised in the recent survey of the voluntary carbon market were quite good, and this morning I wanted to focus on some of the positive aspects. The study ends with a list of questions to ask a provider, and they are very good starting point for trying to sort out the quality of an offset vendor. So let’s ask the questions of ourselves:

Do your offsets result from specific projects?

Yes, absolutely. All of our projects are listed clearly on our web site at http://www.terrapass.com/projects.

In fact, we go further than most others in our industry in engaging with project developers. Specifically, our purchases with project developers are arranged as bilateral contracts that are then taken to the CCX to be executed. We are the first to use the bilateral contract mechanism built into the CCX, and we do so because it allows us greater level of engagement with project developers.

Do you use an objective standard to ensure the additionality and quality of the offsets you sell?

It’s a bit hard to answer this question affirmatively, as the author of the study was himself yesterday quoted as saying, “Efforts to develop the new standards are admirable. People have been trying to do this for a decade. It’s very different difficult to do…it’s almost impossible to write an objective, easily interpreted way to address additionality.”

But in the spirit of honest self-appraisal, I will say that I think TerraPass should do a better job of explaining the measures we take to ensure additionality. Right now, the process is rigorous but subjective: we review the environmental project reports, we assess the finances of the project, we interview the project developers, and we apply certain strict tests to the offsets we buy, such as criteria around the timeframe in which the offsets are created. As I said, I think the process is rigorous, but I also think we could do a much better job of explaining it, systematizing it, and publishing the information we gather. Right now, we’re taking the right steps, but we’re not explaining those steps as well as we could be.

How do you demonstrate that the projects in your portfolio would not have happened without the GHG offset market?

This question is basically the same as the question above. Actually, this is a better question, because it drops the “objective standard” language and instead just focuses on actions taken. As I’ve said, we engage in a variety activities designed to gauge project quality before we ever make a purchase. We then arrange a bilateral purchase contract specifically with that project developer and execute those transactions on the CCX.

Have your offsets been validated against a third-party standard by a credible source?

Yes, absolutely. All of our carbon offsets are validated against the protocols developed by the Chicago Climate Exchange. All of our RECs are certified in accordance with the Green-e 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?

No, we do not forward sell our offsets. As the study correctly notes, the practice of forward selling injects risk into an offset portfolio, and we do not want to impose that risk on our customers. Another reason that we do not forward sell is that global warming is a problem that requires action now, not decades in the future. The window for achieving meaningful reductions in greenhouse gas emissions is closing.

Not only does TerraPass not forward sell its offsets, but we are required by our third-party auditor to match the maturity of the offsets to the time period in which our customers make their purchases. I don’t know whether anyone else in the industry can make this claim. We may be unique on this score.

Can you demonstrate that your offsets are not sold to multiple buyers?

Yes, absolutely. The CCX and the Green-e standard both provide registries and safeguards to prevent double-selling.

What are you doing to educate your buyers about global warming and the need for global warming policy?

The study praised TerraPass as a “particularly good example” of an effort made by a carbon offset vendor to educate consumers. Our blog and newsletter are read by tens of thousands of individuals. Content on our web site ranges from practical tips that anyone can use to reduce their carbon footprint to extremely in-depth analysis of technical topics related to carbon policy and carbon market design. I can say with confidence that we are unique in the industry in this regard.

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There are some other questions I might add to this list. For example:

Are you audited by an independent third party, and if so, what does the audit cover?

TerraPass is audited by the Center for Resource Solutions. The audit covers the following topics, among others:

  • Sales-supply balance. This is a fancy way of indicating that we actually buy the offsets on our customers’ behalf that we say we’re going to.
  • Offset quality. Basic quality checks are put in place, such as the requirement that the maturity of our offsets match the time period in which our customers purchased them. In other words, we can’t sell stale offsets or future offsets.
  • Disclosure requirements. Every TerraPass we sell comes with a product content label specifying exactly what the carbon content of the product is and where the reductions are derived from.
  • Marketing language. Our web site and promotion materials are checked to make sure that we don’t make any untrue claims.

Do you subscribe to basic standards of behavior for a quality ecommerce merchant?

Of course. We never sell or give out email addresses; we have strong security mechanisms in place to protect your data; we have clear refund and return policies; we prominently publish our phone number and contact email; Etc.

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More on these topics coming soon…

Author Bio

adam

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  1. Tim Haines - December 6, 2006

    Hi Adam. I’m a little confused about some information I’ve just seen on your website. On your project page you say “TerraPass has reduced over 150 million pounds of CO2 pollution by funding clean energy projects”. This is 68, 038 tonnes right? The equivalent of 68,038 Carbon Credits? The CRS letter said you sold about 1000 tonnes in 2004, and 13,620 in 2005. Are you funding clean energy projects apart from selling offsets, or have you had a bonanza year this year, and have managed to sell approx 54,000 credits worth of offsets?

  2. Ian Turvill - December 6, 2006

    Love the blog, love the entry. I’ve added details of your service and this post to my blog.

  3. Tom Arnold - December 7, 2006

    Tim: the latter is the case. We started the year with 2,000 people carrying TerraPasses — now 25,000 do. We also launched big partnerships with Expedia and Ford and enlisted quite a few other smaller partners along the way.

    But don’t take our word for it — you’ll see this all in the 2006 verification report. Coming soon to a theatre new you (or at the very least our website).

  4. LochDhu - December 7, 2006

    Another question:
    Are you a publicly traded company, a privately held for-profit company or a non-profit company? Why did you choose that status and how has it benefitted you?

  5. Adam Stein - December 7, 2006

    We’re a for-profit start-up company. We chose that model for a variety of reasons, but mainly because we’re big believers in social entrepreneurship. Our vision is to develop a service that benefits the environment and is self-sustaining. We feel that this is the best way to ensure we’ll be around for the long-haul, and also keeps us closer to our customers, who are the source of our funding. The better our company does, the more the environment benefits, and that seems like a good thing to us.

  6. Ingrid - January 10, 2007

    Can you confirm that you have no “offsets” that come from CCX farm element from not-tilling farming?

    I think these are really bogus for alot of reasons,not just for Iowans but for the planet,and if you get stuff from CCx you are supporting that.
    -
    IL

  7. Tom Arnold - January 10, 2007

    Confirmed. No no-till here.

  8. Anonymous - May 21, 2007

    Interesting…

  9. Natasha - September 18, 2008

    Its a bit off the topic here.. but do you happen to know..What is the approximate time a voluntary Industrial energy efficiency CCX project takes to get registered with the CCX?