The National Carbon Offset StandardThe Commonwealth Government’s National Carbon Offset Standard (NCOS) came into effect on 1 July 2010 coinciding with the cessation of the Government’s Greenhouse Friendly™ program. It is intended to ensure that consumers have confidence in the voluntary carbon offset market and the integrity of the carbon offset and carbon neutral products they purchase. It provides guidance to businesses who wish to make their organisation carbon neutral or develop carbon neutral products in a way that achieves emissions reductions, through the purchase and cancellation of eligible carbon offsets. More Information (NCOS) is a voluntary standard prepared by the Australian Government through the Department of Climate Change and Energy EfficiencyEnergy efficiency improvements refer to a reduction in the energy used for a given service (heating, lighting, etc.) or level of activity. Such savings are generally achieved by substituting technologically more advanced equipment to produce the same level of end-use services (e.g. lighting, heating, motor drive) with less electricity. . It came into effect on July 1st 2010.

Purpose

NCOS is intended to ensure that consumers have confidence in the voluntary carbon offset market and the integrity of the carbon offset and carbon neutral products they purchase. It provides guidance to businesses who wish to make their organisation carbon neutral or develop carbon neutral products in Australia. The purchase and cancellation of carbon offsets that NCOS advises are beyond or additional to those committed to by Australia’s national emissions reduction targets under the Kyoto Protocol.

Qualifying Offset Schemes

International Standard units of abatement that are eligible under the NCOS currently include:

• Certified Emissions Reductions (CERs) (except long term (lCERs) and temporary (tCERs)) through the Kyoto Clean Development MechanismClean Development Mechanism is a Kyoto Protocol mechanism under which projects set up in developing countries to reduce GHGs generate tradeable credits called CERs. The credits can be used by industrialised nations to help meet their Kyoto reduction targets. Find out more here. (CDM);
• Emission Reduction Units (ERUs) through the Kyoto Joint Implementation mechanism (JIThe Kyoto Protocol Joint Implementation mechanism allows developed countries to earn credits in the form of Emission Reduction Units (ERUs) when they finance projects that reduce net greenhouse gas emissions in another developed country. For more information see here.);
• Removal Units (RMUs);
• Voluntary Emissions Reductions (VERs) issued by the Gold Standard; and
• Verified Carbon Units (VCUs) issued by the Verified Carbon Standard. 

Note: under the current version of the NCOS, where VCU credits are issued for reduced emissions from deforestation and degradation (REDD) and other agriculture forestry and land use (AFOLU) projects, they must apply methodologies approved under NCOS. 

NCOS is being reviewed and a Discussion Paper and draft revised standard were released by the Parliamentary Secretary, the Hon Mark Dreyfus QC MP at the end of August 2011.  The closing date for submissions was 12th October 2011.

As part of this review the Government is proposing to make some key changes to the list of eligible offsets:

• Australian Carbon Credit Units (ACCUs), which will be issued under the Carbon Farming InitiativeThe Carbon Credits (Carbon Farming Initiative) Bill 2011 provides legislation that gives landholders, farmers and forest growers incentives to undertake land sector abatement projects. The scheme will credit the greenhouse gas abatement achieved by either: - Reducing or avoiding emissions, for example, through capture and destruction of methane emissions from landfill or livestock manure; or - Removing carbon from the atmosphere and storing it in soil or trees, for example, by growing a forest, or farming in a way that increases soil carbon. The CFI will create credits called Australian Carbon Credit Units (ACCUs). One ACCU will equal one tonne of CO₂-e will be recognised as eligible offsets under NCOS.
• The Government will cancel Kyoto units for Greenhouse FriendlyThe Greenhouse Friendly™ initiative operated between 2001 and 30 June 2010. It certified carbon neutral products and services and approved abatement credits for sale on the voluntary market. Applications for new abatement projects have closed. These were not considered eligible offsets under NCOS and could not be retired for the purpose of becoming carbon neutral under the NCOS from 1 July 2010. This situation may change in future as a result of reviews of the NCOS by DCCEE. credits generated during the Kyoto Commitment Period and cancelled prior to the end of the Kyoto true up period. This ensures that Greenhouse Friendly credits are not counted towards Australia’s Kyoto target.
• The current caveat requiring approval of Gold Standard and Voluntary Carbon Standard land sector based projects will be lifted for projects that occur in developed countries.
• Carbon priceAn economic value placed on the emission of greenhouse gases into the atmosphere from human activity. This price is designed to create an incentive to avoid emitting. A carbon price is usually derived from either a carbon tax or a price under an ETS. permits will be eligible units under the NCOS once the carbon price mechanism transitions to the floating price on 1
  July 2015.

It is worth noting that DCCEECommonwealth Governemnt Department of Climate Change and Energy Efficiency. For more information see http://www.climatechange.gov.au/ will recognise credits derived from eligible offsets projects under the Carbon Farming Initiative or projects using the Gold Standard and Verified Carbon Standard where these methodologies have been approved under the NCOS. For example the VCSThe VCS Program includes the standard (VCS 2007) and the Program Guidelines 2007. The VCS Program provides a global standard and criteria for validating, measuring, and monitoring voluntary carbon offset projects. For more information, see here. methodology VM0010: Methodology for Improved Forest Management: Conversion of Logged to Protected Forests has been approved for use under the NCOS.

Carbon Neutrality and the National Carbon Offset Standard

Carbon neutrality commonly refers to the situation where the net emissions associated with the product or an organisation's activities are equal to zero through the reduction of emissions and the acquisition and cancellation of carbon offsets that meet stringent criteria, to offset the remaining emissions.

In line with best practice under the Standard, the following key actions must be undertaken for an organisation or a product to be certified carbon neutral under the NCOS Carbon Neutral ProgramThe Carbon Neutral Program utilising the National Carbon Offset Standard officially commences on 1 July 2010. This Program is the successor to the Australian Government’s Greenhouse Friendly™ initiative (2001 – 2010). The Carbon Neutral Program is a voluntary scheme which certifies products or business operations as carbon neutral. The National Carbon Offset Standard, developed by the Australian government, underpins the integrity of the Program.:

• measure the 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. of your organisation or product;
• Monitor and reduce emissions (to the extent possible); and
• purchase and cancel sufficient eligible offsets to offset the remaining emissions associated with the organisation or product.

There are two main approaches for calculating a carbon footprint: the greenhouse gas (GHGGreenhouse Gases in the earth's atmosphere absorb and re-emit infrared radiation. The Kyoto Protocol lists six major greenhouse gases, which vary in their relative warming effect. The six gases are: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), HFCs (hydrofluorocarbons), PFCs (perfluorocarbons) and sulphur hexafluoride (SF6).) inventory approach or life cycle assessmentLCA is the investigation and valuation of the environmental, economic and social impacts of a product or service. A product’s life cycle starts when the raw materials are extracted from the earth through to processing, transport, use, reuse, recycling or disposal.  For each of these stages, the impact is measured in terms of the resources used and environmental impacts caused. (LCA) approach. The inventory approach is suited to an organisation's carbon footprint, while the LCA approach is suited to a product or service carbon footprint. Organisations may choose which approach they use, to reflect the extent of operations they have chosen to certify.  The LCA approach must be used for product/services.  An organisation has the choice of using either the greenhouse gas inventory method or the LCA method to calculate its carbon footprint.

NCOS Carbon Neutral Program requirements include the preparation of a carbon footprint in accordance with the above as well as an emissions management plan and a public disclosure document that is placed in the public domain. The Program also requires third party independent verification of the carbon footprint, emissions management plan and public disclosure documents.

For more information on the National Carbon Offset Standard, see the DCCEE website at http://www.climatechange.gov.au/government/initiatives/national-carbon-offset-standard.aspx.

For more information on the NCOS Carbon Neutral Program visit the http://www.lowcarbonaustralia.com.au/ website.