Cheat sheet: Carbon offsetting quality mark

Oh good, I love a good quality mark. They make me feel all reassured and warm inside.

That's the idea.

So what's the thinking with this one?

Well, as you probably know a lot of people have been very concerned about the trade in carbon offset credits, raising concerns that they do not always deliver advertised carbon reductions, are in some cases are even sold twice over to different customers. So the government has decided to intervene and this week published a code of conduct for offsetting firms and promised to launch a kite mark for those firms that adhere to the code of conduct.

And now everyone's happy?

Sadly no. The problem is that the government has said that the only credits that can carry the quality label have to be officially approved through UN or EU backed processes. That means the huge voluntary market for carbon offsets cannot carry the label and face the risk of being shunned by customers concerned about the provenance of their credits.

But surely that is a good thing?

It's not that simple. There is definitely a case for distinguishing between those credits that have gone through robust third party verification processes, such as the UN's clean development mechanism (CDM), and those that have only been approved by the companies selling you the credit. However, there are those that argue the CDM excludes many perfectly respectable carbon offset projects that deliver verified and quantifiable emission reductions. These projects, many of which are located in the developing world, are now in danger of being undermined.

What types of projects are we talking about?

They tend to be the smaller scale rural projects, which may not be able to afford to go through the CDM certification process. The CDM is seeking to tackle this problem by making itself more accessible, but some commentators maintain that it is not going far enough. Certain types of projects, such as attempts to provide rural communities with more efficient stoves that allow them to stop cooking on open fires, also tend to be rejected by the CDM regardless of whether or not they are delivering verifiable reductions in emissions.

How big a problem is the quality label likely to be for these types of projects?

Some involved in the voluntary market reckon it could be a major issue. Paul Monaghan, head of ethics at the Co-op, told The Guardian that the company would continue to buy credits that will not qualify for the label, adding that he was convinced the government's approach "will lead to a withdrawal of money from the developing world and suck it back into large industrial companies in eastern Europe which are covered by the emissions trading scheme. That feels wrong to me and will be disastrous for the developing world".

So what can the voluntary offset sector do to ensure that offsets that don't carry the government's quality label will continue to find a market?

There is the possibility that they won't have to do anything. Partly because of the higher administration costs and partly because of the fact they form a massive global market where large industrial firms often demand millions of credits at a time the CDM-approved credits, or Certified Emission Reductions (CERs) as they are officially known, cost significantly more than credits in the voluntary market. Currently CERs cost around £12 a tonne, compared to £8 a tonne in the voluntary market, meaning you'd need to pay a 50 per cent premium to get a credit boasting the government's label – something some people will not be willing to do.

But what happens where customers insist that they want the label?

If you believe Mike Mason, chairman of offset provider Climate Care, it should not be a problem for too long. The government said it has "left the door open" to providers of voluntary offsets and has promised to extend the quality mark to apply to them if they can develop an industry standard that addresses concerns around verification and accountancy procedures. Mason reckons that with much of this work already done through the CDM standards and various voluntary best practice codes an acceptable standard could be in place within a matter of months. Assuming this meets the government's approval and operates effectively for six months there is every chance the quality mark could be extended to include voluntary credits by early next year.