Voluntary emissions offsetting more effective than new law: report

The true climate impacts of voluntary emissions offsetting can be strengthened through public guidance and by creating harmonised criteria for the sector, said a recent study.

Instead, no new legislation is needed to regulate the offsetting services, said the Ministry of the Environment in a press release on Thursday, quoting the study.

So far there has been no clear, common rule for the domestic offsetting market, including definitions for offsetting and carbon neutrality.

According to the study, the quality of offsetting operations could be improved by compiling a guide on best offsetting practices and criteria. Commitment to complying with these would be voluntary for the companies.

A voluntary register of the producers of offsetting services would be another effective means to improve the quality. The register could also be used to avoid the double counting of emission reductions, i.e. that the same reduction would be used several times or counted as a benefit for several different targets.

Based on the study, in the present circumstances creating new mandatory national legislation on voluntary offsetting is not a feasible guidance instrument. The main reasons for this are the freedom of operators to engage in commercial activity and freedom of contract and the strict requirements for Finland’s consumer legislation set by the EU law.

“The use of voluntary offsetting has grown in recent years both in Finland and globally, and significant growth is forecast for the sector in the future. Among the key issues here are the access to and reliability of information: consumers must have reasonably easy access to reliable information on the emission reductions to be achieved through offsetting. Clear rules of the game should be created for the sector,” said Minister of the Environment and Climate Change Krista Mikkonen.

The authors stress that the national solutions must take the international processes into account and allow flexibilities in the future as the rules are being developed. Separate national solutions that soon become outdated should be avoided.

Processes that will influence the decisions to be made in Finland include the negotiations on the future of the Paris Agreement and changes in the EU climate policy, including the Fit of 55 package and new legislation on the certification system for carbon sinks and reservoirs. New legislative proposals from the European Commission are also expected related to misleading marketing of products. According to the study, however, the EU legislation to be adopted in the next few years does not mean that national systems could not be developed at the same time.

“Using offsetting operations in a credible way to achieve carbon neutrality with respect to an organisation or product requires that the operations fulfil the criteria for good offsetting projects. The demand for offsetting is growing strongly, and clear rules of the game are needed to support it,” said Pasi Rinne, Chairman of the Board at Gaia Consulting.

The study was conducted by Gaia Consulting, Perspectives and Bärkraft Legal Services. The purpose of the study was to investigate which elements of the offsetting services should be regulated in Finland. The study also examined the alternative guidance instruments that could be used for this purpose and assessed their suitability and impacts. The study was commissioned by the Ministry of the Environment.