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Climate Partner

Background information on climate protection and climate neutrality

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What is climate neutrality?

Companies, processes and products are climate neutral if their carbon emissions have been calculated and offset by supporting internationally recognized carbon offset projects. In addition to avoidance and reduction, offsetting carbon emissions is an important step in holistic climate protection.

Greenhouse gases such as CO2 are distributed evenly in the atmosphere, so the concentration of greenhouse gases is roughly the same all over the world. Therefore, it is irrelevant for global greenhouse gas concentration and the greenhouse effect where on Earth emissions are generated or avoided. Emissions that cannot be avoided locally can therefore be offset by carbon offset projects at another location.

What is a carbon offset project?

Carbon offset projects make a decisive contribution to combating global warming by demonstrably saving greenhouse gases. These projects can take the form of forest conservation, reforestation or the development of renewable energy. In addition, carbon offset projects promote sustainable development in the project countries, for example by improving access to clean drinking water, expanding local infrastructure, creating jobs or preserving biodiversity.

The UN's 17 Sustainable Development Goals (SDGs) are a globally recognized benchmark for measuring such positive effects. They range from promoting education, fighting poverty and hunger, and creating jobs to implementing clean and affordable energy. Each ClimatePartner carbon offset project contributes to several of these goals, which we depict individually in the project description. Sometimes the additional effect is so great that the core projects are actually development projects that fight global warming as a supplemental effect - and not vice versa.

What criteria must a project meet in order to be certified as a carbon offset project?

Carbon offset projects must satisfy internationally recognized criteria. To prove compliance with these criteria, projects are certified and audited according to strict standards, such as the so-called "Gold Standard" or the "Verified Carbon Standard"

(VCS). This ensures and regularly confirms the climate protection effect of the projects. One of the most important requirements is that the projects are additional climate protection measures and that the contribution to carbon reduction in the atmosphere is clearly measurable. It is guaranteed that the carbon emissions saved will only be used once to offset carbon emissions since the corresponding emission certificates are retired. This is done via official registers.

The following criteria must be met by projects for them to be recognized as carbon offset projects:

Additionality

Only projects that depend on additional financial resources can be certified as carbon offset projects. This means that the project must be dependent on revenue from emissions trading to finance itself and must be able to prove this need. Projects that are economically viable anyway and would also be realized without the certificate revenue do not fulfil this criterion and cannot be used to offset carbon emissions.

Exclusion of double counting

Carbon savings can only be counted once. This must be proven by the project developer. For example, in Germany a solar plant developer cannot declare this measure as a carbon offset project because electricity from renewable energy is already attributed to the national emission reduction targets.

Permanence

Emission savings must be permanent. This criterion is particularly important for afforestation and forest conservation projects: in these projects, the project developer must ensure that the forested areas will be conserved for several decades, for example for at least 30 years or more. Forests that will become pastures again in the foreseeable future due to slash-and-burn cannot be recognized as carbon offset projects.

Regular review by independent third parties

Carbon offset projects must be reviewed at regular intervals according to the above criteria by independent third parties such as TÜV, PwC or SGS. They monitor compliance with the relevant standards and determine the carbon savings retroactively. For this reason, regular progress reports are prepared for the projects.

Where can I find carbon offset projects?

A selection of high-quality carbon offset projects can be found at www.climate-

project.com, where you can choose between different countries, technologies, standards and SDGs. From there you can access the respective project websites, which provide background information as well as pictures and videos in which the projects are presented. For more information on ClimatePartner’s work and its role in carbon offset projects, please read the following background article:

https://www.climatepartner.com/en/news/what-carbon-offset-projects-are

What standards exist for the certification of carbon offset projects?

Gold Standard (GS)

The Gold Standard for carbon offset projects was developed with the participation of the WWF and 40 other NGOs. The standard sets particularly demanding requirements regarding additionality, sustainable development and involvement of the local population and is currently only applicable to projects involving renewable energy, energy efficiency and waste management. In 2013 the Gold Standard methodology was extended through the adoption of the CarbonFix Standard, allowing certification of land use and forestry projects. Further information on the Gold Standard: https://www.goldstandard.org/

Plan Vivo Standard

The Plan Vivo Standard is a framework that supports rural communities and small farmers in using resources sustainably, securing their livelihoods and conserving the local ecosystem. This PES (Payment for Ecosystem Service) standard follows strict social and biodiversity protection guidelines and is administered by the Plan Vivo Foundation, a non-profit organisation based in Edinburgh. The standard has its roots in a ground-breaking Mexican research project conducted in 1994 by ECCM (Edinburgh Centre of Carbon Management) and the UK Department for International Development. The first carbon credits were issued two years later.

The latest version of the standard (2013) contains clear guidelines for the early involvement of the local population and their participation in the proceeds from emissions trading. Revenue from the sale of certificates is distributed directly among the participating communities with the aim of reducing rural poverty and improving livelihoods. Further information on the Plan Vivo Standard: http://www.planvivo.org/

VCS – Verified Carbon Standard

More than half of all voluntary emission reductions worldwide are validated and verified according to the Verified Carbon Standard (VCS). The standard contains clear guidelines for determining carbon savings for various project types such as afforestation, wind power or cook stoves. In addition, projects must be audited by independent third parties and carbon savings calculated transparently and conservatively. The certificates generated from these projects are known as Verified Carbon Units (VCU).

Further information on the Verified Carbon Standard: http://verra.org/project/vcs-program/

VCS is a certification standard for carbon offset projects and certificates. VCS does not supervise the end customer markets, nor does it certify or endorse any VCU trader or broker.

CCBS – Climate, Community and Biodiversity Standard

The Climate, Community and Biodiversity Alliance (CCBA) was founded in 2003 as a partnership of international NGOs and research institutions. The aim is to support land use and forestry projects that meet other social and ecological criteria in addition to carbon reduction. For certification, a project must meet a total of fourteen criteria, whereby the certification can only be awarded to projects in addition to already awarded certifications such as VCS. The CCB "Gold Level" status is awarded to projects that achieve exceptionally positive effects in adapting to climate change, promoting local communities and preserving biodiversity.

Further information on the Climate, Community and Biodiversity Standard: http://verra.org/project/ccb-program/

The CCB Standards are additional standards designed to support and promote land management activities that sustainably combat global climate change, improve the well-being and reduce the poverty of local communities, and conserve biodiversity. The CCB Standards alone do not result in the issuance of carbon credits. VCS does not oversee retail markets, nor does it certify traders or brokers of VCUs, including VCUs that are validated and verified according to the CCB Standards.

Social Carbon Standard

Another additional standard is the Social Carbon Standard, which analyses the social, ecological and economic impacts of a carbon offset project in detail in order to ensure sustainable development with the participation of the local population. The standard determines and documents the concrete progress of a project over time by means of transparent indices.

Further information on the Social Carbon Standard: http://www.socialcarbon.org/

Fairtrade Climate Standard

The Fairtrade Climate Standard can only be used to certify projects that promote renewable energy or energy efficiency and that have already been certified according to the Gold Standard. They then generate so-called Fairtrade Carbon Credits.

The Fairtrade Climate Standard supports small farmers and rural communities in the Southern Hemisphere. The communities also receive a Fairtrade premium to enable them to adapt to climate change.

Fairtrade Carbon Credits are only available for certain companies and products: only Fairtrade-certified products can be rendered climate neutral through those projects, and companies must meet certain sustainability requirements.

Why are there hardly any internationally recognized carbon offset projects in the European Union?

The certification of a project as a carbon offset project requires that the four criteria described for carbon offset projects (additionality, no double counting of savings, permanent savings, and independent review) are met.

For projects in the EU, the criteria of additionality and double counting in particular represent a high hurdle for projects:

The criterion of additionality is not fulfilled by many projects in the EU because various support programs for the expansion of renewable energy or the improvement of energy efficiency already exist to ensure that these projects are economically viable.

The criterion of double counting can only be met if it is ensured that the savings achieved by a project are not already taken into account elsewhere. Savings achieved in the EU usually have a direct positive impact on a country's national greenhouse gas balance and thus contribute to the achievement of its and the EU's climate targets. Therefore they cannot be certified as additional savings for carbon offsetting as part of voluntary climate protection.

Why are carbon offset projects particularly powerful in developing and emerging countries?

Overall, there are various reasons why projects in developing countries are particularly effective:

• Since greenhouse gas emissions are distributed evenly in the atmosphere and carbon dioxide, for example, has a residence time of over 120 years, in the context of climate change it is irrelevant where emissions are caused or saved.
• Carbon avoidance costs are comparatively low in developing countries. This means that CO2 savings are economically more efficient than in industrialized nations.
• In addition to saving carbon emissions, carbon offset projects in emerging and developing countries make further positive contributions to development, for example better health, new jobs or educational opportunities for the population in the project regions.
• Technology transfer enables clean development, allowing project regions to "skip" technologies that are climate killers.

What is a carbon footprint?

A carbon footprint indicates the amount of carbon emissions generated by a company over the course of a year or caused by a product during its lifetime.

How is the carbon footprint of a company determined?

For the calculation of a carbon footprint, there are international standards that set clear requirements for the procedure, documentation and communication of companies' carbon footprints. The most widespread is the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard from the World Resources Institute and the World Business Council for Sustainable Development.

A carbon footprint is determined in five steps:

  1. Definition of goals
  2. Definition of system boundaries
  3. Data collection
  4. Calculation of the carbon footprint
  5. Documentation of methodology, data and results

The carbon footprint of a company is always calculated retrospectively for a fixed period, usually for a calendar or fiscal year. The result is the sum of the carbon emissions caused directly by the company as well as by upstream and downstream processes. Direct emissions include emissions from the combustion of gasoline and diesel, for example. Indirect emissions from upstream and downstream processes include the generation of purchased electricity by an electricity supplier or the production and transport of raw materials, for example.

How is the carbon footprint of a product or service determined?

The Greenhouse Gas Protocol Product Life Cycle Accounting and Reporting Standard is an internationally recognized standard that specifies clear criteria for the calculation of a Product Carbon Footprint.

A Product Carbon Footprint is determined in the following steps:

• Definition of a functional unit
• Definition of system boundaries
• Data collection and research of emission factors
• Calculation of Product Carbon Footprints
• Documentation of methodology, data and results

A Product Carbon Footprint always refers to the lifecycle of a product. The functional unit describes exactly what is considered. Particularly in the case of services, it is sometimes challenging to determine the functional unit.

The system boundaries indicate which lifecycle phases and processes are considered in the Product Carbon Footprint. In the cradle-to-customer approach, all emissions from the extraction of raw materials through transport, production processes, and packaging to delivery to the customer are considered. As a rule, these are the processes that can be influenced by a company and for which a company also has information on energy and material consumption.

If the goal is to optimize a Product Carbon Footprint, then it is advisable to also include the use phase and disposal of a product (cradle-to-grave). This usually requires working with assumptions or statistical data for the use phase and disposal. Since these emissions depend on end customer behavior, no real data can be collected.

What is the Kyoto Protocol?

On December 11, 1997 in Kyoto, Japan, the United Nations adopted an Additional Protocol to the United Nations Framework Convention on Climate Change (UNFCCC). The agreement was signed by 193 states and set binding target values for greenhouse gas emissions in industrialized countries for the first time. The participating industrialized nations committed themselves to reducing their annual greenhouse gas emissions by fixed values, for example by an average of 5.2 percent compared to 1990 in the first commitment period from 2008 to 2012. In addition, the agreement aims to enable developing and emerging countries to achieve sustainable development.

What is the Paris Convention on Climate Change?

In 2015, 196 nations committed themselves to curbing global warming by 2020. Since then, all the nations of the world have joined forces for the first time to combat global warming - industrialized, emerging and developing countries. This is a major breakthrough because previously only industrialized countries had committed themselves to binding reduction targets. We consider three goals of the agreement of particular importance:

Limiting global warming to a maximum of 1.5 degrees Celsius

Until 2015, global warming of 2 degrees above pre-industrial levels was considered to be the maximum value still bearable for the planet. New findings and political initiatives by many developing and emerging countries (including existentially threatened island states) led to a global warming target of a maximum of 1.5 degrees Celsius.

Climate neutral world economy as of 2050

Net emissions of greenhouse gases - the difference between emissions and absorption - should be zero in the second half of this century. The aim is in fact to achieve a climate neutral world economy.

Binding reduction targets every five years

National plans for the implementation of climate targets are part of the agreement. These plans must be submitted every five years and successively tightened and adapted to technological progress. By the end of the conference, 186 countries had already submitted initial reduction plans, but these are far from sufficient.

What is the Greenhouse Gas Protocol?

The GHG Protocol supplies internationally recognized standards for accounting greenhouse gas emissions, including specific standards among other things for emissions at the corporate, product, and city level. It was developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD).

As set out in the Corporate Standard of the Greenhouse Gas Protocol, five basic principles must be observed when preparing a Corporate Carbon Footprint and corresponding reporting:

Relevance
The principle of relevance stipulates that all significant emission sources must be taken into account when determining a carbon footprint for a company and that the report should be useful for internal and external decision-making.

Completeness
The principle of completeness means that all relevant emission sources within the system boundaries must be accounted for.

Consistency
In order to allow comparison of results over time, the accounting methods and system boundaries are to be recorded and retained in subsequent years. Potential changes in methodology and system boundaries must be identified and justified.

Accuracy
Distortions and uncertainties should be reduced as much as possible so that the results provide a sound basis for decision-making.

Transparency
The results should be presented in a transparent and unambiguous manner.

What is the Clean Development Mechanism (CDM)?

The Clean Development Mechanism (CDM) is one of the flexible mechanisms proposed by the Kyoto Protocol for reducing greenhouse gas emissions.

The CDM mechanism is used to implement carbon offset projects in developing and emerging countries. Certified Emission Reductions (CERs) can be counted towards reduction targets in industrialized countries.

The CDM mechanism is thus a key driver for the transfer of clean technologies and the associated sustainable economic development in these countries.

Where did the idea of voluntary emission offsetting come from?

The idea of voluntary offsetting comes from the compliance market defined in the Kyoto Protocol. In addition to emission-intensive industries, other companies or private individuals also want to get involved in climate protection. The voluntary market was created for this purpose. The voluntary market is based on the requirements of the compliance market (ETS, Emissions Trading System).

Carbon offset projects that ClimatePartner offers for offsetting emissions are largely derived from the voluntary market.

Where can I find good information about climate change?

The following institutions are relevant sources for further information on the causes and impacts of climate change:

• Potsdam Institute for Climate Impact Research (PIK): https://www.pik-potsdam.de/
• Federal Environmental Agency: https://www.umweltbundesamt.de/en/topics/climate-energy
• Intergovernmental Panel on Climate Change (IPCC): https://www.ipcc.ch/
• United Nations Framework Convention on Climate Change (UNFCCC): https://unfccc.int/

In addition, we publish regular assessments of background information and current developments in our ClimatePartner blog at https://www.climatepartner.com/news.