Report identifies various opportunities for avoiding double claiming in voluntary compensation
The study shows that there are different ways to avoid double claiming in the voluntary compensation of emissions. However, according to the study, the current EU legislation does not enable its Member States to make corresponding adjustments to their greenhouse gas accounting to avoid double claiming.
A project on avoiding double claiming of emission reductions or removals in voluntary carbon compensation has been completed. The focus was on the conceptual, technical and legal aspects related to avoiding double claiming of emission reductions ore removals between national climate targets and the voluntary use of carbon credits for compensation.
In recent years, several businesses have started offering carbon compensation schemes in Finland. The criteria for good carbon compensation have been published on the website of the Ministry of the Environment, and one of these is that double counting must be avoided. The study focuses on one particular type of double counting, i.e. double claiming. This means a situation where the company makes an offsetting claim based on the same mitigation outcomes that the host country counts towards its national climate target. The need to avoid double claiming has caused confusion in the voluntary carbon compensation market.
Focus on contribution claims and means to mitigate emissions
Based on the study, the simplest way for non-state actors to avoid double claiming at the moment is to make contribution claims when using domestic mitigation outcomes. For example, companies and other organisations that support mitigation outcomes in Finland can make a claim about contributing to Finland’s carbon neutrality target. A project funded by the Government is under way to develope ground rules for voluntary compensation and related claims.
Another way for companies to avoid double claiming is to make offsetting claims only based on mitigation outcomes that are not included in the achievement of Finland’s national target. For example, the direct air capture and storage of carbon dioxide and the use of biochar as a soil conditioner are not within the scope of the current climate targets or accounting in the EU or in Finland. Companies also have the option to purchase carbon credits that are not double claimed from international markets if they do not wish to contribute to Finland’s climate targets.
EU legislation does not enable Member States to make corresponding adjustments in their greenhouse gas accounting
States that are committed to the Paris Agreement are obliged to report their emissions and carbon sinks to the UN. In addition, Finland and other EU Member States report this information to the European Commission and are bound by EU legislation.
According to the report, EU legislation does not enable Member States to make corresponding adjustments. By adjusting their emissions balance, a state could exclude a certain amount of mitigation outcomes from being counted towards its target under the Paris Agreement. They could achieve a similar effect by committing to exceed their national target by an equivalent amount. These adjusted mitigation outcomes could then be exclusively available for a company for voluntary offsetting.
“Our study shows that even today double claiming can be avoided by contributing to Finland’s climate targets through contribution claims or by supporting projects that are not yet included in Finland’s targets and counting. With regard to corresponding adjustments, it will take some time before the situation is clear,” says Hanna-Mari Ahonen, Senior Consultant at the Perspectives Climate Group.
From the perspective of Finland and other EU Member States, the opportunities for applying corresponding adjustments differ from other parties to the Paris Agreement. Under the Paris Agreement, the EU and its Member State have a collective target. For Finland, the EU legislation concerning reporting and accounting overrides the provisions of the Paris Agreement.
Carbon compensation should be reliable
The report points out that, in the longer term and as the EU legislation keeps evolving, corresponding adjustments should only be made to truly additional and accurately quantified mitigation outcomes. Otherwise, there is a risk that corresponding adjustments undermine the host country’s ability to meet its national target and may require additional mitigation measures.
“In any case, the mitigation outcomes generated by domestic projects at the moment are not considered sufficiently reliable so that national adjustments could be made with respect to these.
Based on preliminary data, Finland’s carbon sinks are also turning into a source of emissions, which means that the state has even fewer opportunities for applying adjustments because of the risk that voluntary compensation by companies could compete with national measures in the land use sector,” says Ville Laasonen, Senior Specialist at the Ministry of the Environment.
The Ministry of the Environment is preparing ground rules for carbon compensation. This project will develop definitions for the companies’ climate targets and elaborate criteria for carbon compensation and related claims. The ground rules can be used to improve trust in the sector and avoid double counting. The results of the project will be published in February 2023.
The study on special issues related to voluntary carbon compensation was carried out by Laininen Law together with Perspectives Climate Group, Gaia Consulting and Sun Innovations. The project has been funded by the Ministry of the Environment, Ministry of Agriculture and Forestry and Ministry of Economic Affairs and Employment.
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