National Carbon Offset Standard

David Walker

Department of Climate Change and Energy Efficiency

17 June 2010

National Carbon Offset Standard (NCOS) Government commitment to develop:─ “a national standard for carbon offsets to ensure

consumer confidence in the rapidly growing carbon offset market”

Released on 24 November 2009. NCOS administrative framework currently being

finalised. Will replace the Greenhouse Friendly program

on 1 July 2010.

Purpose of the NCOS

To provide guidance for calculating the carbon footprint of an organisation or product for the purpose of achieving ‘carbon neutrality’.

To provide guidance on what constitutes a genuine, additional voluntary offset.

To set minimum requirements for the verification and retirement of voluntary carbon credits.

Carbon neutrality under the NCOS

Enables development of carbon neutral products or organisations.

A logo will be made available for products and organisations certified as carbon neutral.

The carbon neutral program will be administered by a third party on a cost recovery basis.

Steps to achieve carbon neutrality

1. Determine the ‘carbon footprint’ of the product or organisation.

2. Have the carbon footprint independently audited.

3. Reduce and monitor emissions.

4. Purchase and retire NCOS eligible offsets for emissions which can’t be reduced.

5. Publicly report on emissions generated and offsets retired.

In keeping with best practice, reduce emissions attributable to the product or organisation prior to offsetting.

Calculating a carbon footprint Two approaches for calculating a carbon footprint:

1. Organisations: an inventory of all scope 1 and scope 2 emissions (similar to NGERS requirements) as well as selected scope 3 emissions.

2. Products: produce a Life Cycle Assessment.

Carbon neutral periodic reporting

The NCOS requires public reporting of:─ the carbon footprint of the product or organisation;─ a statement of emissions reduction activities

undertaken;─ records to prove that sufficient eligible offsets have

been acquired; and ─ details of the quantity and type of offsets purchased

and the register into which they have been retired.

NCOS eligible offsets Achieve emissions reductions beyond Australia’s

national targets when retired. From sources not counted toward our Kyoto target:

─ Offsets generated from emissions sources in Australia not counted toward Australia’s Kyoto Protocol target, using Government approved methodologies.

─ Gold Standard and the Voluntary Carbon Standard (VCS) units.Units from agriculture, forestry and other land use, and reduced

emissions from deforestation and degradation must use Government approved methodologies.

─ Carbon Pollution Reduction Scheme (CPRS) permits, including those issued for forestry projects and any offsets allowed under the CPRS.

─ CPRS compliance units, including Certified Emissions Reductions (CERs).

NCOS domestic offsets

Eligible domestic emissions sources include:─cropland and grazing land management (net

greenhouse gas emissions from soil, crops and vegetation);

─enhanced forest management; and─revegetation (establishment of woody

biomass that does not meet forest criteria). NCOS domestic offsets will be for sale in the

voluntary market only.

CPRS domestic offsets

24 November 2009 - CPRS offsets program announced.

Subject to the development of robust methodologies, CPRS permits will be issued for emissions reductions from sources not covered by the CPRS but counted towards Australia’s Kyoto target.

Emissions sources include: livestock, manure management, fertiliser, savannah burning, and avoided deforestation, legacy waste, closed landfill emissions.

NCOS offset governance

Methodology development same as for CPRS offsets.─ Facilitates transition of methodologies to the CPRS

should international accounting rules change.

NCOS projects to use approved methodologies. Government is establishing the Domestic Offset

Integrity Committee (DOIC) to assess CPRS and NCOS offset methodologies.

DCCEE will consult on governance arrangements.

GreenPower™ under the NCOS

GreenPower™ is not an eligible offset because it will be covered by the CPRS.

Organisations that purchase GreenPower™ can take it into account to reduce only electricity emissions.─GreenPower™ purchases count as zero electricity

emissions and therefore reduce the number of offsets required.

The Government has committed to tighten future CPRS caps in response to GreenPower™ purchases and achieve emissions reductions beyond our targets.

Auditing of offset projects and carbon neutral claims Carbon footprint calculations, periodic reports and

all documentation associated with NCOS offset projects will need to be verified by a suitably qualified auditor.

Suitable qualifications include:─ registered under the greenhouse and energy audit

framework currently being established for the NGER Act; or

─ demonstrated knowledge, expertise or accreditation in the relevant Australian and international and standards.

Next steps

Over the last months we have been developing and consulting with stakeholders on administrative frameworks and guidelines.

A formal announcement will be made soon on the NCOS Carbon Neutral Program Administrator.

The logo will be unveiled. On 1 July 2010 the NCOS Carbon Neutral

Program commences.