Labour & the environment

Background paper • Briefing note

Carbon standards

Photo by Francis Vorhies

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Mandatory markets
Voluntary markets
Carbon standards
Carbon finance
Carbon market critics

A major challenge in the carbon market is the development and adoption of carbon offset standards. In the voluntary carbon market there are at least five/six standards which are in use by various carbon offset brokers. A brief introduction to these standards based on the Overseas Development Institute briefing noted below follows.

For the ILO, it is clear that the standards need to be evaluated from the perspective of the ILO's labour conventions and standards. In particular, the focus of these standards on issues such as just transition, enterprise development and employment creation need to be analysed.

CDM Projects


Though the CDM process is not a strictly speaking a standard, it provides a important benchmark for all of the carbon offset standards.

"Article 12 of the Kyoto Protocol defines the clean development mechanism. 'The purpose of the clean development mechanism shall be to assist Parties not included in Annex I in achieving sustainable development and in contributing to the ultimate objective of the Convention, and to assist Parties included in Annex I in achieving compliance with their quantified emission limitation and reduction commitments under article 3.'”

Objective: Emission reduction & contributing to sustainable development in developing countries.

Scope: CDM projects: renewable energy, energy efficiency & afforestation/reforestation projects.

Assessment process: Not a standard in itself, but the 7 stage project cycle sets out standardised components for any project which are approved by the CDM Executive Board. Requires 2 different 3rd party verifiers to validate & certify projects. For small-scale projects the same entity can be used for both steps.

Carbon Neutral Protocol



This is an example of a framework standard behind the brand of one of the more well know voluntary carbon brokers. They explain:

"We registered the CarbonNeutral® trademark in the 1990s. When you see it applied to a product, service or activity, it signifies that:

  • CO2 emissions have been independently measured
  • 100% of emissions have been reduced to net zero through a mix of internal reductions (change of a manufacturing process for example) and best practice external reductions (carbon offsetting)
  • there will be clear communication around the proposition.

There are a set of rules - known as the CarbonNeutral Protocol - governing what the CarbonNeutral brand mark stands for and how it can be applied. These rules are discussed and agreed with an Independent Advisory Group of NGOs, scientists and business, and they ensure any CarbonNeutral claims have real integrity and follow best practice."

Objective: Effective action on climate change.

Scope: Recognises that the practical and economic feasibility of actions to reduce greenhouse gas emissions are highly variable between different types of organisations.

Assessment process: Includes verification checks on emission assessments, emission reduction actions, certified offsets, EU allowances, non-certified offsets (VERs), and communication.

Climate, Community and Biodiversity Project Design Standards (CCB Standards)


With its emphasis on community, this standard appears to be one that might be receptive to incorporating criteria related to retraining or rural enterprise development.

"The Climate, Community and Biodiversity Project Design Standards (CCB Standards) evaluate land-based carbon mitigation projects in the early stages of development. The CCB Standards foster the integration of best-practice and multiple-benefit approaches into project design and evolution. The Standards:

  • Identify projects that simultaneously address climate change, support local communities and conserve biodiversity.
  • Promote excellence and innovation in project design.
  • Mitigate risk for investors and increase funding opportunities for project developers."

Objective: Minimize climate change, support sustainable development & conserve biodiversity.

Scope: CDM: land-use, land-use change & forestry projects
(LULUCF). Also used as a benchmark for voluntary market projects.

Assessment process: Project documentation assessed against 15 essential & 8 optional indicators. Then ranked as ‘approved’, ‘silver’ or ‘gold’. 3rd party verification required & CDM accredited verifiers are recommended.

GHG Protocol


With its strong support from multinationals, this protocol may be able to incorporate small and medium enterprise development up corporate supply chains.

"The Greenhouse Gas Protocol (GHG Protocol) is the most widely used international accounting tool for government and business leaders to understand, quantify, and manage greenhouse gas emissions. The GHG Protocol Initiative, a decade-long partnership between the World Resources Institute and the World Business Council for Sustainable Development, is working with businesses, governments, and environmental groups around the world to build a new generation of credible and effective programs for tackling climate change."

Objective: Emission reductions.

Scope: Mandatory emission targets, voluntary programs, company targets.

Assessment process: Framework of guidance & standards for reporting & accounting for emissions. Discusses need for
verification of information reporting. Some guidance for 3rd party verification.

Gold Standard for voluntary offsets


Focused on sustainable development and with strong support from NGOs, this standard may be able to include some consideration of fair labour policies related to climate change.

"The Gold Standard Foundation offers a quality label to CDM/JI and voluntary offset projects, fetching premium prices. Renewable energy and energy efficiency projects with sustainable development benefits are eligible. The Gold Standard is endorsed by 37 non-governmental organizations worldwide. Gold Standard projects are preferred by a range of government and private actors."

Objective: Sustainable development & environmental integrity.

Scope: Voluntary market: renewable energy & end use energy efficiency improvement.

Assessment process: Projects scored according to sustainable development. High scores carry a premium. 3rd party verification required & CDM accredited verifiers are recommended. Targeted random sampling and annual independent auditing of sample of projects.

Voluntary Carbon Standard (VCS)


This standard may well become the one to watch.

"Since late 2005, The Climate Group (TCG), the International Emissions Trading Association (IETA) and the World Economic Forum Global Greenhouse Register (WEF) have been working together to develop the Voluntary Carbon Standard (VCS). The VCS is designed to be a global benchmark standard for project-based voluntary emission reductions that provides a degree of standardization to the Voluntary Carbon Market and creates a credible voluntary emission reduction credit, the VCU, that can be trusted, traded and used by VCM participants."

Objective: Emission reductions.

Scope: Voluntary market: energy efficiency projects.

Assessment process: Ten threshold criteria to be met. GHG Protocol & ISO Standards used for auditing, verification & certification. It also sets out a 5 step process for credit registration a registry for tracking credits. 3rd party verification required. Recommends same accredited verifiers as CDM.

More on carbon offset standards ...

Briefing paper: Can standards for voluntary carbon offsets ensure development benefits? (Overseas Development Institute, 2007)
A concise overview of some of the key offset standards in use today and an assessment of their relevance to sustainable development.

Carbon connoisseur (The Economist, 2007)
Short article about "the baffling menu of emissions-offset options."