WHITE PAPER

Choosing the Right Carbon Offsets for Your OrganizationFind the best solution to meet your environmental and organizational goals

In this white paper we explore the distinctions options and benefits of the most common carbon offset types and certification methodologies

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There are two impor-tant issues here one is that all credible projects (and there-fore offsets) must be certified to a re-spected standard and two that there are a variety of standards in the marketplace each unique in its own way

White Paper The Certification of Carbon Offset ProjectsChoosing the Right Project Certification to Meet your Environmental Impact Goals

THE CERTIFICATION OF CARBON OFFSET PROJECTS

1 httpwwwco2offsetresearchorgconsumerAdditionalityhtml

In a previous whitepaper we discussed the different aspects of carbon offsets or veri-fied emission reductions (VERs) including the motivations behind organizationsrsquo use of offsets as well as guidance on how to properly mitigate different environmental impacts with appropriate solutions In this next installment we provide insight into another important aspect of the development and deployment of VERs the offset project certification process and how your organization can select the certification that is the best match for your environmental impact goals

All credible offset projects are certified to a particular standard confirming that the project has met a rigorous set of requirements which lead to its accreditation and the ability to bring the project offsets to market There are two important issues here one is that all credible projects (and therefore offsets) must be certified to a respected standard and two that there are a variety of standards in the marketplace each unique in its own way While all standards have the same goal of creating a methodology that confirms the quality and value of the offset project the variation in these standards may represent an emphasis on different offset features such as project type location and technology as well as additional benefits to the local community or environment

STEPS OF CERTIFICATION ndash STANDARDS AND VERIFICATION

Letrsquos begin by reviewing what all offset certifications have in common before discussing what differentiates them The fundamental role of any offset project certifier is to pro-vide a standard to which a project developer can adhere This assures the consumer that the projects are accomplishing the goal of reducing the volume of greenhouse gases (GHGs) being emitted into the environment Some projects use the direct destruction of GHGs to reduce emissions methane capture and flaring is one example Others use sequestration or the trapping of these gases (such as projects that maintain the integrity of forests) Regardless of the project type a project developer must choose the certification that they wish their project to adhere to and then go through the process of submitting the project to that certifier for review documentation verification and the eventual retirement of the offsets on behalf of the end user

Regardless of the standard that a project is certified to you can be sure that the project has been deemed ldquoadditionalrdquo by the certifying body Although this is a somewhat technical issue to discuss here it is important that as a participant in this market you understand the term ldquoadditionalityrdquo as you will most likely come across it as you review these different standards

CORE a joint venture of the GHG Management Institute and the Stockholm Environment Institute describes the concept of additionality this way ldquoIn theory additionality answers a very simple question Would the activity have occurred holding all else constant if the activity were not implemented as an offset project Or more simply Would the project have happened anyway If the answer to that question is yes the project is not additionalrdquo1 The first step any project must take is to demonstrate its ldquoadditionalityrdquo to the normal course of business by proving that the project would not

Renewable Choice wwwrenewablechoicecom | 2

have happened in a ldquobusiness as usualrdquo environment If in the course of normal busi-ness these emissions would have been avoided anyway the project is not additional and no offsets may be sold If you are interested in further exploring how a project clears the various financial legal and other implementation barriers please visit the GHG Institutersquos guidance on additionality

Once certified to a particular standard all projects are required to adhere to ongo-ing verification that the certifier uses to confirm that the project is continuing to perform as expected In the case of a methane capture and destruction project that verification would include regular on-site inspections of project activity equipment monitoring systems and so on In the case of a forestry project that monitoring would be focused on confirming the preservation and protection of the land that has been set aside for the purposes of both creating a carbon ldquosinkrdquo as well as promoting the natural ecosystem of the set aside land Once a project has cleared these hurdles been certified to a standard and the offsets verified they may be brought to market sold and retired

COMMON CERTIFICATIONS

In 2008 the development of the Kyoto Protocol lead to the creation of the Clean Development Mechanism the single certifier of offsets within the protocol for partici-pating governments and entities Inspired by and built upon this compliance model the demand for voluntary offsets led to the development of a variety of certifications for projects outside of Kyoto typically producing offsets for individual and corporate consumers interested in addressing their own emissions Beyond the CDM each of the following certifications have taken some guidance from the CDM but also added their own focus and guidance to the general structure It is worth stating that all of the below certifications other than CDM are considered part of the voluntary--rather than compliance--offset market

Below we will review the six most common certifications and try to help you decide if there is one in particular or a group of certifications which might be most appropri-ate for your specific goals

THE CLEAN DEVELOPMENT MECHANISM (CDM)

The Clean Development Mechanism is a mechanism under the Kyoto Protocol through which developed countries may finance GHG emission reductions or removal projects in developing countries and receive credits for doing so which they may apply towards meeting mandatory limits on their own emissions CDM credits not used by Kyoto Protocol participants or generated prior to the final registration with the CDM Executive Board can be sold in voluntary markets as voluntary carbon offsets

The CDM is supervised by the CDM Executive Board under the guidance of the conference of the Parties of the United Nations Framework Convention on Climate Change (UNFCCC) Operational since the beginning of 2006 the mechanism has already registered 4470 projects and is anticipated to produce offsets amounting to more than 27 billion tons of carbon dioxide equivalent (CO2e) in the first

White Paper The Certification of Carbon Offset ProjectsChoosing the Right Project Certification to Meet your Environmental Impact Goals

If in the course of normal business these emissions would have been avoided anyway the project is not additional and no offsets may be sold

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White Paper The Certification of Carbon Offset ProjectsChoosing the Right Project Certification to Meet your Environmental Impact Goals

commitment period of the Kyoto Protocol (2008ndash2012) The mechanism is seen by many as a trailblazer it is the first global environmental investment and credit scheme of its kind providing standardized emissions offset instrument The CDM is the refer-ence standard used by the highest quality voluntary offset verifiers

THE AMERICAN CARBON REGISTRY STANDARD (ACR)

The American Carbon Registryreg is a leading non-profit US carbon market registry and carbon technical services provider In 1996 market-oriented environmental experts at the Environmental Defense Fund founded the Environmental Resources Trust (ERT) and launched the GHG Registry now known as the ACR The ACR Standardrsquos intent is to inject quality and integrity into the development of the volun-tary carbon market in the US In order to qualify under the ACR Standard the offsets must meet the following criteria

bull Only direct emission reductions are eligible

bull Emission reductions must demonstrably exceed business-as-usual

bull All claims should be independently verified and verifiable

bull Emission reductions should be generated in ways that produce net positive environmental and community benefits

The ACR and ERT joined Winrock International in 2007 expanding the Winrock team of climate change forestry clean energy agriculture and carbon market experts As the first private voluntary GHG registry in the US the ACR boasts time-tested integrity in high quality carbon offset registration and carbon technical services

The total amount of verified emissions reduction tons issued by the ACR is 34944365 metric tons of CO2 and the program has retired 2897248 metric tons of CO2

THE GOLD STANDARD CERTIFICATION

Based in Switzerland The Gold Standard is a non-profit t foundation endorsed by over 80 NGOs worldwide The Gold Standard Certification includes three screens

bull Does the project use renewable energy or energy efficiency technologies

bull Does the project go above and beyond business-as-usual

bull Does the project promote sustainable development

One of the primary differences between Gold Standard Certification and some others is the requirement for sustainable development benefits (eg additional environmental social andor economic benefits) Projects with the Gold Standard Certification demand a premium price due to these requirements

Operating on the APX Environmental Market Depository platform the Gold Standard Registry manages the full lifecycle of a carbon credit including creation serialization

Renewable Choice wwwrenewablechoicecom | 4

White Paper The Certification of Carbon Offset ProjectsChoosing the Right Project Certification to Meet your Environmental Impact Goals

transfers and retirement The registry ensures the transparency quality reliability and security of each offset

The Gold Standard has certified more than 700 projects in over 50 countries Gold Standard projects have saved the carbon equivalent of taking 15 million cars off the road for 1 year

THE VERIFIED CARBON STANDARD (VCS)

The VCS program (formerly known as The Voluntary Carbon Standard) provides a comprehensive global standard for the approval of voluntary carbon offsets The VCS is the largest growing voluntary standard in the world and follows the Kyoto Protocol and the United Nations CDM This standard is recognized as credible due to its stringent qualification requirements and worldwide support from both industry and NGOs

In order to qualify under VCS standards offsets must meet the following criteria Offsets must have already been put in place occur beyond simply business-as-usual practices and be measurable permanent independently verified and unique VCS carbon offsets are issued held and cancelled in VCS registries VCS has approved three independent registries NYSE Blue Caisse des Depots and Markit A total of 866 projects have been registered and VCS has issued 100151553 Verified Carbon Units (VCUs) which is the unique name for the programrsquos voluntary offsets VCS has retired 25843553 VCUs the equivalent of 25843553 metric tons of CO2

THE CLIMATE COMMUNITY AND BIODIVERSITY ALLIANCE (CCBA)

The CCBA is a partnership of international NGOs and research institutes seeking to promote solutions to global environmental issues Launched in 2005 the CCBA has developed voluntary standards to help design and identify land management activities that simultaneously minimize climate change support sustainable development and conserve biodiversity

The CCBA standard is unique as a credible means for identifying projects that simul-taneously counter multiple global problems The CCBA encourages carbon project developers to use the standards when designing developing and implementing proj-ects CCBA certification can help projects garner international credibility and locate additional support and resources In conjunction the CCBA encourages governments investors carbon portfolios development agencies and private entities to support projects that meet the standards Similar to the Gold Standard the additional atten-tion paid to the co-benefits of these ldquocharismaticrdquo projects may make them more desirable to some organizations and therefore carry a premium price

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White Paper The Certification of Carbon Offset ProjectsChoosing the Right Project Certification to Meet your Environmental Impact Goals

THE CLIMATE ACTION RESERVE (CAR)

CAR began as the California Climate Action Registry which was created by the State of California in 2001 to address climate change through voluntary calculation and public reporting of emissions As one of the premier carbon offset registries for the North American carbon market CAR encourages action to reduce GHG emissions by ensuring the environmental integrity and financial benefit of emissions reduction projects CAR establishes high quality standards for carbon offset projects oversees independent third-party verification bodies issues carbon credits generated from such projects and tracks the transaction of credits over time in a transparent publicly-accessible system The CAR program demonstrates that high-quality carbon offsets foster real reductions in GHG pollution support activities that reduce local air pollu-tion spur growth in new green technologies and allow emission reduction goals to be met at lower cost

CARrsquos expertise and insight helped inform the development of the State of Californiarsquos cap-and-trade program which adopted four of the CAR protocols for use in its regulation Many of Californiarsquos largest corporations are currently focusing on CAR certified offsets to address emissions caps implemented around the AB32 requirements managed by the California Air Resources Management Board As a result CAR projects which focus on methane capture and forestry are currently carrying a premium price in the market Additionally CAR certifies organic waste composting coal mine methane nitric acid production and landfill projects

SELECTING A PROJECT TO SUPPORT

As the above certification descriptions make clear this is a complex universe of project types locations benefits and certifications all of which should be considered during your offset selection process For example if your organization is focused on understanding compliance issues and markets offsets generated under programs like CAR or CDM may be the most appropriate If your focus is more toward the additional benefits a project may have on the local ecology and economy certifica-tions such as the Gold Standard and CCBA might be right for you

While this ever-changing landscape can feel overwhelming at times fortunately you donrsquot need to navigate it alone The team of professionals at Renewable Choice have years of experience working with leading international companies to help you define and prioritize your goals when it comes to managing or offsetting your carbon footprint

This primer is a starting point to help you in this critical process of beginning or further developing your organizationrsquos climate strategy At Renewable Choice we work with you to help you to move your organizationrsquos sustainability initiative forward whatever your goals may be Talk with one of our business development consultants today to see how we can assist you in this process