Regardless of whether companies opt for offsetting under the new framework conditions of the Paris Agreement or for the contribution claim model as an alternative to offsetting, their commitment to climate protection only makes sense if they support high-quality projects.
Additionality and Vulnerability
Additionality and vulnerability
Climate protection measures must be of an additional nature! Emission savings for offsetting but also for contribution claims must therefore come from projects that would not have been launched without the support via offsetting and contribution claims. Financially worthwhile projects that companies in the host country or foreign investors would have implemented anyway do not meet this criterion.
There are a large number of low-cost certificates on the voluntary market. With these cheap certificates, the risk is high that they come from projects that would be implemented even without the additional income from the sale of the certificates. These certificates only increase the profit of the project and do not help to reduce emissions. They therefore do not offset emissions either.
Whether a project is additional can be measured by what part of the project costs the funding covers through offsetting and contribution claims. Unfortunately, very few project providers currently provide comprehensible information on this. Currently, the demand for certificates for offsetting is increasing strongly. The supply, especially of certificates that meet the requirements of the Paris Climate Agreement, is scarce. Therefore, there is a risk that increasingly low-quality old certificates will come onto the market that were previously not in circulation due to their low value.
This raises the question for companies interested in offsetting which projects that are already running are dependent on the income from the sale of certificates. Such climate protection projects are also referred to as vulnerable. Vulnerable climate protection projects run the risk of not being able to continue emission reductions if the income from the certificates ceases.
Permanence (duration of emission reductions)
Emission reductions from climate protection projects must be permanent. The greenhouse gases saved must not be released back into the atmosphere.
Project standards sometimes require risk analyses, exclude certain high-risk project types, for example sink projects that mitigate CO₂ through forest protection/afforestation or peatland protection/rewetting, and/or specify buffer measures to limit the damage if emissions that have been saved are released again, for example through a forest fire.
If the minimum requirements are met, a high-quality project is characterised above all by the fact that it triggers a change (transformation) in the project region towards more sustainable development.
Transformation I: Compatibility with the development goals of the host country
Projects should strengthen a country’s development goals as much as possible, or at least not run counter to them. Projects should take into account where the host country or project region is in terms of development goals – such as a clean, affordable energy supply – and support local people to take the next step. Projects should focus on sustainable technologies. Under no circumstances should they promote discontinued models for which better and cheaper alternatives are foreseeable in the current state of the project region. This means, for example, that where it is technically possible, it makes more sense to provide households with an energy supply via solar minigrids instead of promoting isolated solar stand-alone systems. Unfortunately, this criterion is not observed by all project operators.
Transformation II: Coordination with and involvement of the project environment
Project developers should consider the project environment in the planning and develop it with the project. Project activities should be tailored to local conditions, such as resource availability and existing technical frameworks. For example, crop waste can be pressed into pellets and used as fuel in efficient stoves, or fermentation sludge from biogas plants can be sold as fertile biofertiliser. It is also important to involve local partners, businesses and the local population in project development.