A Review of Offset Programs: Trading Systems, Funds, Protocols, Standards and Retailers

The report analyzes the landscape of carbon offsets, contrasting mandatory compliance mechanisms like the Clean Development Mechanism (CDM) and Joint Implementation (JI) with voluntary standards and retail providers. It evaluates key design elements including project eligibility, additionality testing, and quantification protocols, while highlighting risks to environmental integrity such as leakage and non-permanence.

• The global market for primary project-based emission reductions grew by 34% in 2007 over 2006 levels, reaching a value of USD 8.2 billion.
• The Clean Development Mechanism (CDM) and Joint Implementation (JI) continue to dominate the global offset market, with the CDM accounting for 87% of project-based transaction volumes in 2007.
• Offset prices vary significantly by market type; compliance market offsets, such as those from the CDM, command considerably higher prices than voluntary offsets.
• The CDM's project portfolio is heavily concentrated in China, which accounted for over 73% of offset project transactions in 2007, largely due to low-cost industrial gas projects.
• The Gold Standard is identified as the voluntary standard with the most stringent quality criteria, being the only one to combine clearly defined additionality rules, third-party auditing, and a project approval body similar to the CDM Executive Board.
• The Voluntary Carbon Standard (VCS) 2007 aims to unify the voluntary market and is expected to be a dominant standard, though it has been criticized for lacking a separate board to review projects and give final approval, as auditors often approve the projects they are paid to verify.
• The New South Wales Greenhouse Gas Abatement Scheme (NSW GGAS) has generated over 68 million metric tons of CO2e in offset credits as of May 2008, though critics argue it lacks required additionality assessments.
• The Regional Greenhouse Gas Initiative (RGGI) uses a unique 'trigger price' mechanism where the limit on offset use increases as allowance prices rise.
• The World Bank's Carbon Finance Unit manages over USD 2 billion in assets across 10 funds, focusing on reducing transaction costs and supporting sustainable development in developing countries.
• The Chicago Climate Exchange (CCX) has been criticized for issuing credits to no-till agriculture projects that may not be additional, potentially increasing actual emissions if buyers continue to emit based on these credits.
• The conversion of Renewable Energy Credits (RECs) into carbon offsets is controversial due to concerns that many such projects are 'business-as-usual' and not truly additional.
• The Clean Development Mechanism faces several systemic issues, including high transaction costs that hinder small-scale projects and a 'race to the bottom' in validation quality due to competition among auditors.

APA

Kollmuss, A., Lazarus, M., Lee, C., & Polycarp, C. (2008). A Review of Offset Programs: Trading Systems, Funds, Protocols, Standards and Retailers. Stockholm Environment Institute. https://www.sei.org/mediamanager/documents/Publications/SEI-ResearchReport-Kollmuss-AReviewOfOffsetPrograms-2008.pdf

Chicago

Kollmuss, Anja, Michael Lazarus, Carrie Lee, and Clifford Polycarp. A Review of Offset Programs: Trading Systems, Funds, Protocols, Standards and Retailers. Stockholm Environment Institute, 2008. https://www.sei.org/mediamanager/documents/Publications/SEI-ResearchReport-Kollmuss-AReviewOfOffsetPrograms-2008.pdf.

Wikipedia

{{cite report |last1=Kollmuss |first1=Anja |last2=Lazarus |first2=Michael |last3=Lee |first3=Carrie |last4=Polycarp |first4=Clifford |title=A Review of Offset Programs: Trading Systems, Funds, Protocols, Standards and Retailers |publisher=Stockholm Environment Institute |date=October 2008 |url=https://www.sei.org/mediamanager/documents/Publications/SEI-ResearchReport-Kollmuss-AReviewOfOffsetPrograms-2008.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{kollmuss2008review, author = {Kollmuss, Anja and Lazarus, Michael and Lee, Carrie and Polycarp, Clifford}, title = {{A Review of Offset Programs: Trading Systems, Funds, Protocols, Standards and Retailers}}, institution = {Stockholm Environment Institute}, year = {2008}, month = oct, url = {https://www.sei.org/mediamanager/documents/Publications/SEI-ResearchReport-Kollmuss-AReviewOfOffsetPrograms-2008.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }