Executive Tutorial, Part 2: Certifications & Projects

Executive Tutorial, Part 2: Certifications & Projects

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In the first part of the Tutorial, we shared some concepts to understand what offsetting CO2 generally entails. In this post, we will delve into more technical knowledge to understand what a company supports when buying a compensation certificate.

What criteria must a CO2 project meet to be certified?

The compensation activity must be in addition to the regular activities of the project or company. It must be verified that without the donations, the CO2 compensation would not have been carried out. CO2 credits must be entered in a public registry to prevent the same ton of CO2 from being sold more than once. Finally, the project must guarantee permanence, demonstrating that the declared reductions will not get to the atmosphere at a later point in time.

What are the most commercialized standards?

The most renowned standards are: Verra (VCS): It is currently the most used voluntary standard in the market (Verra was previously the “Verified Carbon Standard”), it focuses mainly on ensuring that the emission reductions from CO2 projects are real, measurable, verifiable and additional. Gold Standard (GS): Sets high standards to additionally measure the additional benefits for the local community involved in climate projects; their certified projects have comparatively higher prices on voluntary carbon markets. Climate Action Reserve (CAR): It has developed its own eligibility criteria, approved by the VCS. It only certifies projects located in the USA or Mexico. Plan Vivo: Focuses on supporting projects that provide additional benefits such as poverty reduction, conservation and restoration of ecosystems and biodiversity, or projects that help communities adapt to climate change. Clean Development Mechanism (CDM): It is a compensation mechanism defined in the Kyoto Protocol. CO2 projects must be located in developing countries and are reviewed by auditors accredited by the United Nations. CDMs are traded in both voluntary and mandatory markets. Despite concerns about the effectiveness of some projects, CDM remains the role model for many methodologies to quantify greenhouse gas reductions. There is still no certainty what will happen with the CDMs due to the transition from the Kyoto Protocol to the Paris Agreement. American Carbon Registry (ACR): Founded in 1996 as the first private voluntary offset program in the US, ACR methodologies and protocols are based on the International Organization for Standardization (ISO) 14064. Climate, Community & Biodiversity Standards (CCB): The certified projects are high quality by providing significant benefits for local communities and biodiversity.

What does Vintage mean?

Compensation certificates become “vintage” if they are not sold within the same year of the compensation itself. So, a project can sell its carbon credits years after the actual CO2 reduction. The year of compensation is not an indicator of the quality of a certificate. However, one should be cautious if the certificates have not been sold for several years and/or the project has been continued for several years even though the certificates were not sold.

What kind of CO2 projects exist for voluntary compensation?

In general, they can be classified into 5 categories: Renewable energies: They include hydroelectric, solar, wind and biomass projects; they substitute the use of fossil sources for renewable sources for the creation of energy. Renewable energy projects are normally located in small remote towns, which is why they are considered to have positive effects on employment and energy supply in rural areas. Destruction of methane: As organic waste decomposes, it releases methane, a greenhouse gas much more powerful than CO2. There are two different types of methane projects; the first category aims to transform methane into a less harmful gas by burning it to decompose it into less harmful substances; the second category captures methane and burns it to generate electricity or heat. Energy Efficiency: The objective of these projects is to achieve energy savings, generally thanks to technological improvements, eg: change from wood-burning stoves in rural areas to more efficient stoves, with the consequent savings in burnt wood. Industrial gases: They are generated from industrial production. These projects are based on the argument that destroying their own gas emissions would not be profitable for industries; therefore the sale of certificates allows them to finance this activity. There is much controversy around this type of project, since it is argued that they do not generate long-term benefits, their additional contribution to the environment or the local community is very low and there are doubts as to whether industries have the true motivation to reduce their gases because they earn income from their creation. Afforestation and forest protection: By planting trees and protecting forests, CO2 is removed from the atmosphere. The main concern with forestry projects is that years later the trees could be cut down before their period of maturity and/or could be burned. The CO2, thus, would be returned to the atmosphere. Or that the planted tree species destroy the natural diversity of a region or that the indigenous population is displaced to make land available for tree planting.

In the final part of the series: “Tutorial for CEOs: Voluntary CO2 compensation”, we will talk about topics that will help you make decisions on “how to choose the best type of project to support”, “what kind third party solutions to compensate exist on the market” and “how to communicate a company’s environmental engagement to its community”.