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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

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…

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