The National Carbon Offset Standard (NCOS) is a voluntary policy proposal put forward by the Australian government's Department of Climate Change on November 24, 2009. It came into effect on July 1st 2010.

Purpose

NCOS is intended to ensure that consumers have confidence in the voluntary carbon offset market and the integrity of the carbon offset and carbon neutral products they purchase. It provides guidance to businesses who wish to make their organisation carbon neutral or develop carbon neutral products in Australia. The purchase and retirement of carbon offsets that NCOS advises are beyond or additional to those committed to by Australia’s national emissions reduction targets under the Kyoto Protocol.

Qualifying Offset Schemes

International Standard units of abatement that comply with NCOS currently include:

UNFCCC’s CDMClean Development Mechanism is a Kyoto Protocol mechanism under which projects set up in developing countries to reduce GHGs generate tradeable credits called CERs. The credits can be used by industrialised nations to help meet their Kyoto reduction targets. Find out more here. accreditations:

• Certified Emissions Reductions (CERs) (except long term (lCERs) and temporary (tCERs));
• Emission Reduction Units (ERUs);
• and Removal Units (RMUs).

Other:

• Voluntary Emissions Reductions (VERs) issued by the Gold Standard;  
• and Voluntary Carbon Units (VCUs) issued by the Voluntary Carbon Standard.  Note: where VCU credits are issued for reduced emissions from deforestation and degradation (REDD) and other agriculture forestry and land use (AFOLU) projects, they must apply methodologies approved under NCOS.

Not currently compliant with NCOS (generally this refers to offsets that would have been covered by the proposed Carbon Pollution Reduction SchemeAustralia's cap and trade scheme which will come in to effect in 2010. The CPRS will place a limit, or cap, on the amount of carbon pollution industry can emit and allow trading of carbon credits. It will concentrate on the biggest polluters, by placing obligations on around 1000 Australian companies in total. However it will effect all Australians through indirect price increases. (CPRS)):

• GreenPower and other renewable energy purchases (i.e. Renewable Energy Certificates (RECsRenewable Energy Certificates in Australia are issued by the Australian Government's Office of Renewable Energy Regulator. They are equivalent to one-megawatt hour of renewable electricity. RECs can be bought and sold both by electricity retailers and by other businesses in order to meet the legal requirements of MRET. ))
• The Greenhouse FriendlyGreenhouse Friendly 'The Greenhouse Friendly™ initiative has been operating since 2001 to certify carbon neutral products and services and approve abatement credits for sale on the voluntary market, including to Greenhouse Friendly™ certified product and service providers. Introduction of the Carbon Pollution Reduction Scheme (the Scheme) has implications for Greenhouse Friendly™. The Scheme will have broad sectoral coverage, which means there will be less scope to pursue offset activities with offsets limited to emissions sources uncovered by the Scheme. This means the Scheme will impact on the types of abatement that can be provided, because abatement in sectors covered by the Scheme will no longer be additional to “business as usual”. For these reasons Greenhouse Friendly™ will wind up on 1 July 2010. Greenhouse Friendly™ certification of carbon neutral products and services will continue to operate until 1 July 2010. Applications for new abatement projects have closed. Abatement may be generated by current Greenhouse Friendly™ abatement providers up to 1 July 2010, and may still be sold and purchased after that date. scheme
• NSW GGASNew South Wales Greenhouse Gas Abatement Scheme commenced on 1 January 2003 and targets are set until 2012. It is one of the first mandatory greenhouse gas emissions trading schemes in the world. GGAS aims to reduce greenhouse gas emissions associated with the production and use of electricity. For more information see here. scheme (i.e. NGACsNew 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.)

Carbon Neutrality

Ending the Greenhouse Friendly scheme also has implications for organisations wishing to be accredited as carbon neutral by Government. NCOS sets out a number of conditions an organisation will have to meet to be considered for carbon neutral accreditation under NCOS, including:

• Measure emissions: Preparation of a greenhouse gas inventory following guidance including AS ISO 14064A global GHG accounting, reporting and verification standard. The goal of the standard is to 'provide a set of unambiguous and verifiable requirements or specifications to support organisations and proponents of GHG emissions reductions projects.'.1, the National Greenhouse and Energy Reporting Act and the Greenhouse Gas Protocol.
• Report emissions: Preparation of a greenhouse gas inventory report including all Scope 1 and 2 emissions sources as well as several scope 3 emissions sources (including, as a minimum, business travel, disposal of waste and paper use).
• Reduce all emissions where possible: Development of an emissions management plan, including a strategy for the reduction of greenhouse gas emissions.
• Offset total residual emissions: Retirement of an appropriate number of carbon offsets on a registry.

Where an organisation wishes to have a product recognised as carbon neutral, a life-cycle assessment will need to be undertaken consistent with processes outlined in the NCOS. The 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. calculation would need to be based on the existing National Greenhouse and Energy Reporting (NGER) methodology, with the extra inclusion of selected Scope 3 (indirect) emissions.

Entities that complete an audited carbon footprint calculation and develop an emissions management plan can apply to use the NCOS carbon neutral logo. Organisations wanting to use the logo must make information publicly available about their carbon footprint, their emissions reduction activities, and the offsets they have bought.

For more information about issues and changes that the National Carbon Offset Standard may have on the voluntary carbon offset market, please read Implications of the National Carbon Offset Standard – The changing landscape for carbon offsets and carbon neutrality

Other Useful NCOS resources

Check out the NCOS policy document

NCOS Carbon Neutral Program

NCOS Q&A for Businesses

NCOS Q&A for Consumers

Address by the Hon. Greg Combet to the Voluntary Carbon Markets Association: Voluntary action and the National Carbon Offset Standard