Voluntary Emission Reduction
Voluntary Emissions Reductions or Verified Emissions Reductions (VER), both refer to the carbon credits outside the Kyoto Protocol. Demand for VERs was gradual and intermittent, but since the beginning of the year 2008 there has been a shift in this market to more structured growth.
VERs are derived from project-based emission reductions from a wide range of technologies and project types. Following are some sources of VERs:
- Pre-registration CDM projects under operation but waiting for registration.
- Projects with a start date that do not confirm with the CDM-EB requirements.
- Special situations – includes technologies, which are not accepted under compliance regime.
- Projects which have insufficient resources to satisfy the CDM requirements.
- Projects which face issues during CDM-validation could sometimes qualify for VER projects as validation for VER is not very stringent as compared to CER from CDM projects.
- Some new types of projects which usually can qualify under CDM-POA but somehow face difficulties can also qualify under VER scheme.
The range of technologies used in the compliance regime are eligible in the voluntary market, as well as others not currently accepted, such as certain forestry, land use and transport methodologies. VER projects also have no geographical limitation and can be generated from projects globally.
The general market requirement as a minimum standard is the Voluntary Carbon Standard (VCS) which ensures additionality, and uses as a basis, several of the additionality tests required in the compliance regime. This is typically supplemented by internal criteria designed by buyers, which will vary based on their individual focus on community involvement, technology transfer, host country impact etc.
The Gold Standard is a premium quality label which ensures the successful integration of stakeholder feedback and integrity of environmental impact assessments. Similar to its compliance counterpart, the Gold Standard represents the highest in sustainability attributes, for projects which it may be applied to. The Climate Change and Biodiversity Standards (CCBS) is a stringent standard customised for forestry projects, and focuses on the contribution to local economies and integration with local communities.
In the United States of America, standards have come up in many of the states. One among them is Chicago Climate Exchange. It is a member based exchange for voluntary GHG emission reduction. The emission reductions which are termed as Carbon Financial Instruments (CFI) are registered under Chicago Climate Exchange (CCX). Several millions of tons were traded in this exchange.
Another notable standard being developed in the US is the California Climate Action Registry. The main objective is to establish GHG emission baselines upon which future projects can be based. This registry included protocols for forestry sequestration and agricultural methane digesters. At present they do not have any accounting procedures.
Unlike CER which is registered under a single registry, VERs are registered in various registries such as, Bank of New York, Gold Standard Registry, Chicago Climate Exchange Registry, TUV SUV Blue Registry, California Climate Action Registry, etc.
Verified Emission Reductions (VER) are non compliant reductions being taken up by a rising number of companies, mainly as a part of the corporate social responsibility or for the marketing and promotional value to their business, or purely out of a desire to establish more sustainable practices in the face of global warming.
Carbon offsetting through VERs is a quicker and a relatively inexpensive process of project approval and verification than the CDM. It has to be however noted that the prices that VERs can command in the market is far below those of CERs. Typically a unit of VER is priced only about 25-30% of the CER price the same project can command for CDM project. But it has to be noted that VER prices changes considerably based on origin of VERs. For services related to VER projects contact us.