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Janet PeaceVP for Markets and Business StrategyPew Center on Global Climate ChangeThis EE Noon seminar will explore questions surrounding carbon offsets, which are credits for projects that reduce greenhouse gas emissions outside a cap.http://ase.org/eenoon
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Alliance to Save Energy:
The Role of Offsets in an Emissions Reduction Program
Janet PeaceJanet PeaceVP for Markets and Business StrategyVP for Markets and Business StrategyPew Center on Global Climate ChangePew Center on Global Climate Change
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Outline
•Intro to Pew
•Introduction to Offsets–Misperceptions–Types and Issues–Quality Criteria
•Offsets and cost containment
Introduction to Pew Center
•Established in 1998 as an independent, non-partisan climate organization
•Three-fold structure:• Research – 100+ reports over 10 years• Actively advise on policy – state, federal, international• Business Environmental Leadership Council (BELC)
o46 companieso$2 trillion in revenuesoNearly 4 million employees
• Founding member of USCAP
Introduction to BELC
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Offsets
Definition:• The reduction, removal or avoidance of emissions from a specific
project that is used to compensate for emissions occurring elsewhere
Role in a GHG limitation program:• Spread the price signal beyond sectors covered by the program
(and thus generate emission reductions in sectors not covered by the program)
• Help ensure costs of meeting emission limits are as low as possible (cost containment) while ensuring environmental outcome.
• Providing a bridge for technology implementation in sectors covered by the program (emission reductions at start of the program)
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Offset Misperceptions
•Compliance Grade vs. Voluntary Offsets
•Rules vs. No Rules
•Oversight vs. No Oversight
•Demand for Compliance vs. Demand for “Greening”
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Offsets in a Mandatory Program
Administrator Sets the Rules Including: •Positive List (what counts)•Performance Standards•System for Validation•Registry for Tracking•System for Verification
−Certification for Verifiers
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Project Categories
• Direct emission reductions
• Indirect emission reductions
• Biological sequestration
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Direct emission reductions
Occur at project site
Examples:industrial operational improvementmethane capture
These are the easiest because -• clear boundaries• easily quantifiable• little risk of double counting
Indus trial Improvement Indus trial Improvement
Methane Capture Methane Capture
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Occur at location other than project site
Examples:renewable energy and energy efficiency
Not typically a good fit for a GHG program that limits emissions from electricity generators -
• boundaries unclear• ownership uncertain• risk of double counting
Are essential and should be supported through other policy and funding
mechanisms!
Indirect emission reductionsProject implemented here
Emission Reductions here
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An activity that removes and stores CO2
or other GHGs from atmosphere or avoids the release of stored carbon into the atmosphere
– cultivation of new forests or grasslands– changes in farming practices
Avoided emissions (subcategory)prevents the release of currently
sequestered carbon
– avoided deforestation– reduction of soil disturbance in agriculture
Biological Sequestration
ReforestationReforestation
New farming practicesNew farming practices
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Sequestration
Considerations:
Baseline establishment• much more complex for biological than technology-
based projects
Permanence• biological and geological sequestration can be reversed
Leakage• increase in emissions outside a project’s boundary due
to project
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Sequestration: Options
Sequestration vital to climate change mitigation
Range of policy options emerging to address previous issues:
• insurance and bonding mechanisms• buffer accounts• land use covenants, easements and long-term leases
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Key Offset Quality Criteria
•Measurable•Surplus (not required by law)•Independently verified•Unambiguously owned•Address leakage•Address permanence•Environmentally additional
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•Must be established to quantify GHG reductions from an offset project
•Baseline represents projected emission levels in the absence of the offset project
•The difference between the projected “without-project”
case and the actual emissions of the project are credited as an offset
•Offsets are only as credible as their baselines
Emissions
withoutproject
withproject
Additionality – what is it?Additionality – what is it?
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How to know if a project’s emission reductions are additional?
In practice -
1) Set a performance standard or 2) Use a series of tests, (project by project) to assess
whether it is additional: – Regulatory surplus– Financial barriers – Technological barriers– Institutional barriers – Other barriers
Additionality – how to tell? Additionality – how to tell?
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Offsets are essential for cost containmentOffsets are essential for cost containment
0
20
40
60
80
100
120
140
2015 2020 2025 2030 2035 2040 2045 2050
$/to
n C
O2e
Int'l ≤ Domestic
No G2 Forest
Delay
REDD only
Core
Methane in
Source: USCAP, 2009
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For More Information
Janet Peace
Vice President, Markets And Business StrategyPew Center on Global Climate Change
www.pewclimate.org