Government to boost demand for CDM Gold Standard offsets

The government yesterday announced it was to tighten further the already controversial criteria it uses to buy carbon offset credits in a move designed to ensure it only uses the most robust offsets on the global market.

Following Tony Blair's pledge in 2005 to ensure that all the government's air travel was offset, Whitehall departments have only bought carbon offset credits that adhere to its code of conduct and meet standards set out by the UN's Clean Development Mechanism (CDM) scheme.

Providers of offset credits certified against voluntary standards have criticised the code, arguing that compliance with the CDM's standards are too costly and onerous for many of the smaller-scale carbon reduction projects that deliver the greatest development benefits.

However, now the government has gone a step further and signalled that from now on it is only interested in buying offsets that are not only CDM approved, but also carry the Gold Standard certification awarded to those projects that deliver sustainable development for local communities as well as emission reductions.

The Gold Standard is managed by a Switzerland-based non-profit organisation, which aims to provide the most environmentally beneficial CDM projects with a means to differentiate themselves from those projects with limited sustainability benefits.

The CDM has been repeatedly criticised for approving emission reduction projects, such as clean coal plants, that still result in significant carbon emissions. However, the Gold Standard Label can only be carried by projects that use approved renewable energy or energy efficiency technologies and meet sustainable development criteria, such as job creation for local communities.

The Department of Energy and Climate Change (DECC) has now launched a " market sounding exercise" to assess whether or not there are enough CDM Gold Standard credits, or credits offering equivalent benefits, available to meet the government's requirements of its second contract, which runs from this month through to March 2012.

"Our understanding is that Gold Standard credits are not a massive portion of the current CDM market, so we want to give the industry time to generate them," explained a spokesman for DECC. "We are creating demand for a product that isn't necessarily out there at the moment."

DECC said it was seeking feedback on how to structure the new contract and inviting organisations interested in supplying Gold Standard CDM credits to contact the department.

It is likely to require large numbers of credits over the next three years. Since the government's offsetting policy was launched in 2005, 305,000 CDM-approved Certified Emissions Reduction credits have been bought from EEA Fund Management Ltd to cover unavoidable government air travel.