A voluntary emission reduction purchase agreement, commonly referred to as VERPA, is a legally binding contract between two parties. The parties involved are typically a company or a business and a non-governmental organization (NGO) or a governmental institution. The primary objective of a VERPA is to help reduce air pollution by setting limits on the amount of greenhouse gases that a business can emit.
The agreement involves the company pledging to reduce its greenhouse gas emissions to a specific level by a set date. The business may use various methods to achieve this, such as investing in renewable energy sources or reducing waste. The NGO or the governmental institution, on the other hand, agrees to purchase the emission reductions from the company, effectively offsetting its own emissions in the process.
VERPAs are especially popular among companies that are looking to improve their corporate social responsibility (CSR) and environmental sustainability. By committing to reducing their carbon footprint, businesses can demonstrate their dedication to fighting climate change. Moreover, VERPAs can help organizations meet regulatory requirements, especially in jurisdictions where emissions trading schemes are in place.
NGOs and governmental institutions typically purchase the emission reductions to help them achieve their emission reduction targets. For instance, a government might purchase VERPAs to offset the carbon footprint of its operations, such as travel and building maintenance. NGOs, on the other hand, may purchase emission reductions to offset the carbon footprint of their events, projects, or programs.
VERPAs have received criticism in some quarters, primarily from those who argue that they do not fundamentally reduce emissions. Critics argue that the purchase of offsets can give businesses a false sense of security, allowing them to continue emitting greenhouse gases without necessarily changing their business practices. However, supporters argue that VERPAs can be a useful tool for stimulating action on climate change.
In conclusion, a voluntary emission reduction purchase agreement is a contractual arrangement in which a business agrees to reduce its greenhouse gas emissions, and an NGO or a governmental institution agrees to purchase the corresponding emission reductions. It can be a useful tool for businesses looking to improve their CSR and meet regulatory requirements. While critics have raised concerns about the effectiveness of VERPAs, they remain a popular approach to addressing climate change.