Transaction Model

Purchasing carbon offsets can be a complicated process. We have drafted a carbon offset transaction model to help people understand this process.

To get an idea of issues to be aware of throughout the process of buying carbon offsets please refer to the Offset Introduction page or download the Tips for purchasing carbon offsets PDF.

MEASURE

Decide what you want to offset, and calculate your carbon footprintA measure of the greenhouse gas emissions attributable to an activity; it is commonly used at an individual, household or business level. It calculates the direct and indirect amount of CO2-e emissions produced. in tonnes of carbon dioxide equivalentCarbon dioxide equivalent. In order to compare emissions between the six Kyoto Protocol greenhouse gases they have been assigned a global warming potential (GWP) measured in carbon dioxide equivalents to reflect their influence on warming the atmosphere. GWP is a relative scale, where CO2 = 1. The other gases are given a number based on their effect on the atmosphere relative to CO2. For example, methane has a GWP of 21, meaning it has 21 times the amount of heating capacity of CO2. (CO2e).

1

Example

The Fast Feet logistics company planned to offset their entire car fleet with accredited offsets.

 

SEARCH

Use the Carbon Offset Guide.

2

Example

Fast Feet went to the Carbon Offset Guide (http://www.carbonoffsetguide.com.au/providers), an online resource which provides a summary of carbon offset providers to the Australian market. This enabled them to search for ideal carbon offsets by Accreditation, Project Location, Type of Project and Price. The Offset Introduction page and online Glossary enabled them to better understand the offset purchasing process and investigate terms that were confusing. They decided on a project that offset carbon using renewable energy and was accredited to a robust standard.

 

CHECK

Verify your information by following the link on to the Provider's website from the Carbon Offset Guide and/or speaking to the provider directly.

3

Example

Fast Feet further investigated questions about the quality of offsets by contacting various providers directly. They found that one important issue that needed to be investigated was whether the project was additional to business as usual (the Offset Introduction page and links on the Provider Page of the Carbon Offset Guide will help you to discover more about the types of questions you should be considering with regard all product types). Fast Feet contacted two organisations to make their final decision.

 

PURCHASE

Purchase Carbon Offsets from a provider.

4

Example

Provider A directed Fast Fleet to follow the online prompts to a secure field where their credit card details would be processed and they would be issued an electronic receipt. The provider then has full responsibility for offsetting Fast Fleet's request. Next Fast Fleet could expect to download a certificate of purchase for the amount of carbon offsets registered in their name.


Provider B was a brokerA broker is an intermediary, who buys and sells carbon offsets on behalf of clients. that primarily sold larger transactions of carbon offsets. Their procedure was like any market agreement, and involved Fast Fleet completing a sales / purchase agreement form. Two options were available:

 

1. By entering a 'sales / purchase agreement' the broker could purchase agreed offsets on Fast Feet's behalf. These are then given to Fast Feet (in their name) to retireIn the context of carbon offsets, this means to remove a carbon credit or permit from the market. As a result of retirement those offsets cannot be traded any further. Retiring offsets is a means of regulating offsetting and preventing companies and individuals from selling or buying offsets that have already been used. themselves. There are different ways of retiring offsets depending on the type of offset, (see Step 5 below).

 

2. Fast Feet could alternatively enter a 'retirementIn the context of carbon offsets, this is the act of removing a carbon credit or permit from the market so that abatement cannot be traded any further. Retiring offsets helps to prevent the resale or reuse of offsets that have already been used. agreement' where the negotiated amount of carbon offsets are bought and retired by the provider on behalf of Fast Fleet. The provider would then send the proof of retirement of the offsets bought to Fast Feet.

Both the above transactions involve the voluntary retiring of carbon offsets from circulation. This stops the offsets being double-counted and enables third-party verification of Fast Feet's carbon reduction claims.

 

 

RETIRE

Various methods of retirement of carbon credits exist. In the voluntary market, a paper trail is often used (e.g. certificate or receipts), however increasingly, online registries are used to retire credits from the market.

5

Example

After deciding to purchase through the broker, Fast Feet found that the broker offered two options to retire their renewable energy offsets.
NGACNew South Wales Greenhouse Gas Abatement Certificate is a tradeable commodity used in the NSW GGAS. One NGAC represents the abatement of one tonne of CO2e associated with the consumption of electricity in NSW. NGACs are transferable certificates that may only be created by accredited abatement certificate providers.'s are registered, transferred, surrendered or forfeited via the online facility on the GGAS website.
REC's are similarly retired via a registry with their unique serial number on the RECs website.

The broker advised Fast Feet that other types of certification standards had other methods of retiring credits.

 

If you have any comments on this model, please provide comments here.