Going beyond reducing your emissions

Businesses have an important role in limiting climate change through reducing their emissions in line with science. Those businesses that have wanted to go further have purchased offsets through the voluntary carbon market to balance their remaining emissions and claimed ‘carbon neutrality’. This voluntary mitigation helps to accelerate decarbonisation globally and in New Zealand.

Under Kyoto, to be considered genuine these voluntary carbon market offsets were: 1) additional to business as usual; 2) permanent; 3) not double-counted (only one party could claim them); and 4) didn’t cause leakage (cause greater effects somewhere else).

The Paris agreement has different rules than what we’ve been operating under until now

The Paris agreement comes into effect at the end of this year. Under this new framework it is no longer clear how the ‘not double-counted’ component will work.

The Paris Agreement is quite different from its predecessor – the Kyoto Protocol. Under the Paris Agreement countries take a voluntary, ‘bottom-up’ approach to emissions goals. Rather than setting targets centrally, and mandating emissions reductions, countries make Nationally Determined Contributions (NDCs) towards the overall goals of holding the average global temperature rise to “well below” 2°C. Effectively all countries have a ‘target’ (NDC) covering all emissions within a country whereas under Kyoto only industrialised countries had a target.

The Paris agreement allows for international carbon offset trading under Article 6, but any of the details of how this would work have yet to be agreed upon. In December 2019, at COP25, negotiators tried without success for days to agree an accord. The issue is on the agenda for the next COP meeting in Glasgow, Scotland which is currently scheduled for November 2021. A top priority is ensuring that emissions are not ‘double counted’. Specifically, if a country allows an emission reduction to be claimed by another party (either another country or some other entity) it should no longer be able to count towards its own GHG target.

The New Zealand policy frameworks will make it difficult to avoid double-counting offsets

In the New Zealand context we also have the Zero Carbon Act 2019 and the Emissions Trading Reform Act 2020. Post-2020 these new policy frameworks will make it difficult to avoid double-counting of mitigation between: 1) the New Zealand government and other entities; and 2) funders and hosts of mitigation projects in New Zealand. The current guidelines from the Ministry for the Environment on voluntary offsetting address how to avoid double-counting under the current policy framework and have been extended to apply through 2021. Further policy development is underway but it is not clear what shape this will take.

Is this the end of voluntary offsetting?

Many experts believe that there is a future for the voluntary carbon market to help meet global goals, and in fact, that the voluntary market is necessary. So much so, that an international ‘Task Force on Scaling Voluntary Carbon Markets’ has been developed to support growth in voluntary actions to meet net zero goals.

There is still a strong desire by businesses and individuals to take action to reduce/remove emissions beyond government requirements:

  • To accelerate movement to a low carbon future;
  • To demonstrate responsibility;
  • To manage climate risk;
  • To create new opportunities (consumers, supply chains, products and services)

What does this mean?

What this future looks like is still under development both internationally and in New Zealand. For businesses that purchase offsets they can continue to do so for any emissions that occur in the 2020 calendar year. In New Zealand we are waiting for guidance from MFE, or internationally for COP in November, for clarity on how to voluntarily offset for any emissions in 2021 and beyond.  In the interim we are encouraging the businesses we work with to focus on emissions reduction strategies.

There are several programmes in New Zealand that provide voluntary carbon offsets. Depending upon what comes out of MFE or COP these programmes may have to pivot. We anticipate these programmes will provide notice of any changes. This is also an opportunity for companies to review there carbon offsetting strategies.


Judy Ryan – BraveGen