Transaction Model

Purchasing carbon offsets can be a complicated process. We have drafted a carbon offset transaction model to help people understand this process.

To get an idea of issues to be aware of throughout the process of buying carbon offsets please download the Tips for purchasing carbon offsets PDF.

MEASURE

Decide what you want to offset, and calculate your carbon footprintA measure of the greenhouse gas emissions attributable to an activity; it is commonly used at an individual, household or business level. It calculates the direct and indirect amount of CO2-e emissions produced. in tonnes of carbon dioxide equivalentCarbon dioxide equivalent. In order to compare emissions between the six Kyoto Protocol greenhouse gases they have been assigned a global warming potential (GWP) measured in carbon dioxide equivalents to reflect their influence on warming the atmosphere. GWP is a relative scale, where CO2 = 1. The other gases are given a number based on their effect on the atmosphere relative to CO2. For example, methane has a GWP of 21, meaning it has 21 times the amount of heating capacity of CO2. (CO2e).

1

Example

The Fast Feet logistics company planned to offset their entire car fleet with accredited offsets sourced from Victoria, Australia.

 

SEARCH

Use the Carbon Offset Guide.

2

Example

Fast Feet went to the Carbon Offset Guide (http://www.carbonoffsetguide.com.au/providers), an online resource which provides a summary of carbon offset providers to the Australian market. This enabled them to search for ideal carbon offsets by Accreditation, Project Location, Type of Project and Price. An online glossary enabled them to investigate terms that were confusing. They decided on a project that offset carbon using renewable energy in Victoria, Australia and was accredited to a robust standard.

 

CHECK

Verify your information by following the link on to the Provider's website from the Carbon Offset Guide and/or speaking to the provider directly.

3

Example

Fast Feet further investigated questions about the quality of offsets by contacting various providers directly. A particular issue they found needed to be investigated was whether the project was additional to business as usual. (links on the Provider Page of the Carbon Offset Guide will help you to discover more about the types of questions you should be considering with regard all product types). Fast Feet contacted 2 organisations to make their final decision.

 

PURCHASE

Purchase Carbon Offsets from a provider.

4

Example

Provider A directed them to follow the online prompts into a secure field that would enable debit of a credit card and the issuing of an electronic receipt. The responsibility for offsetting their request was to be undertaken by the provider. Next they could expect to download a certificate of purchase for the amount of carbon offset that would be registered in Fast Feet's name.
Provider B was a brokerA broker is an intermediary, who buys and sells carbon offsets on behalf of clients. that primarily sold larger transactions of carbon offsets. Their procedure was like any market agreement, and involved a sales / purchase agreement form to be completed. Two options were available:
1. By entering a 'sales / purchase agreement' the agreed offsets could be purchased on the Fast Feet's behalf. These are then given to Fast Feet (in their name) to retireIn the context of carbon offsets, this means to remove a carbon credit or permit from the market. As a result of retirement those offsets cannot be traded any further. Retiring offsets is a means of regulating offsetting and preventing companies and individuals from selling or buying offsets that have already been used. themselves. Depending on the type of offset, different ways of retiring offsets will be required (see Step 5 below). Or
2. Fast Feet could enter a 'retirementIn the context of carbon offsets, this is the act of removing a carbon credit or permit from the market so that abatement cannot be traded any further. Retiring offsets helps to prevent the resale or reuse of offsets that have already been used. agreement' where the negotiated amount of carbon offset is bought and retired by the provider on behalf of the organisation. The provider would then pass on proof of retirement of the offsets bought to Fast Feet.

Both the above transactions involve the voluntary retiring of carbon offsets from circulation to stop them being double-counted and enable them to be checked by third-parties wishing to verify Fast Feet's carbon reduction claims.

 

RETIRE

Various methods of retirement of carbon credits exist. In the voluntary market, a paper trail is often used (e.g. certificate or receipts), however increasingly, online registries are used to retire credits from the market.

5

Example

After deciding to purchase through the broker, Fast Feet found that the broker offered two options to retire their renewable energy offsets.
NGAC'sNew South Wales Greenhouse Gas Abatement Certificate is a tradeable commodity used in the NSW GGAS. One NGAC represents the abatement of one tonne of CO2e associated with the consumption of electricity in NSW. NGACs are transferable certificates that may only be created by accredited abatement certificate providers. are registered, transferred, surrendered or forfeited via the online facility on the GGAS website.
REC's are similarly retired via a registry with their unique serial number on the RECs website.

Fast Feet were advised that other types of certification standards had other methods of retiring credits.

 

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