Tag: Geographic North America

23 April 2014 | California has adopted ambitious – some would argue too ambitious – goals for reducing its greenhouse gas (GHG) emissions. It needs emission reductions from carbon offset projects to get there without putting too much of a financial strain on businesses regulated in the state, according to regulators.

In 2006, then-California Governor Arnold Schwarzenegger signed into law Assembly Bill 32 (AB 32) – a landmark piece of legislation that outlined the state’s efforts to reduce climate change. The legislation featured targets for reducing California’s GHG emissions to 1990 levels by 2020 and 80% below 1990 levels by 2050.

One of the ways the state chose to pursue its 2020 target was to adopt a carbon trading program that allows emissions reductions from projects in unregulated sectors such as agriculture and forestry. State regulators see these carbon offsets as a vital element of the program because the price of carbon in the state could double by 2020 without them, said Rajinder Sahota, Chief of the Climate Change Program Evaluation Branch of the California Air Resources Board, the agency overseeing AB 32 implementation.

California’s cap-and-trade program already welcomes carbon offsets generated from livestock, forestry and urban forestry projects. But market participants see opportunities for more land-based offsets – emissions reductions generated via agriculture and forestry projects – to be added to the system, including avoided grassland conversion, wetland restoration, composting, rangelands and rice cultivation projects.

“Needless to say this is an interesting time for carbon markets and land-based offsets,” Belinda Morris, Program Officer, Climate and Land Use Subprogram, The Packard Foundation, said at the Navigating the American Carbon World conference in San Francisco last month.

For a more in-depth look at potential land-based carbon offsets that could be included in California’s cap-and-trade program, please visit the Forest Carbon Portal.

17 April 2014 | – Sick and tired of waiting for the US and Canadian federal governments to lead on climate issues, the US states of California, Oregon and Washington and the Canadian province of British Columbia decided last year to reinvigorate a regional partnership aimed at tackling the climate challenge.

“We just can’t wait for the federal government,” Matt Rodriguez, Secretary of the California Environmental Protection Agency, said at the Navigating the American Carbon World conference last month. “The situation is too dire.”

The Pacific Coast Collaborative, originally formed in 2008, had the potential to be nothing more than a symbolic gesture. But in October 2013, the four partners signed the Pacific Coast Action Plan, an agreement – albeit one that is not legally binding – to cooperate on climate issues.

The wide-ranging agreement committed the four West Coast jurisdictions to a number of climate actions, including harmonizing their targets for reducing greenhouse gas (GHG) emissions by 2050 and cooperating with other governments around the world to press for an international climate agreement in 2015.

Quite noticeably, the first tenet of the agreement commits the jurisdictions to account for the costs of carbon pollution within their borders. Among the four partners, British Columbia is the frontrunner, having implemented a revenue-neutral carbon tax in July 2008 that increased every year by $5 per tonne through July 2012. California officially launched its cap-and-trade program regulating GHGs in January 2013 after years of extensive consultation and development, with 2014 allowances clearing at a price of $11.48 per tonne in February.

In the agreement, both British Columbia and California pledged to maintain their existing carbon pricing programs, while Oregon vowed to build on existing programs to set a price on carbon emissions and Washington agreed to set binding limits on carbon emissions and deploy market-based programs to meet those limits, which could build on previously established voluntary carbon offset programs in these states such as the Climate Trust. The four jurisdictions then promised to link their programs whenever possible to establish consistency and predictability across the region and expand opportunities to grow the region’s low-carbon economy.

“Not everyone has to have a cap-and-trade program,” Rodriguez said. “There are a number of ways you can put a price on carbon. What’s important is that you put the price on carbon.”

To tax or to trade?

Oregon does not have a preference for either a carbon tax or a carbon trading program, but Governor John Kitzhaber signed a bill in August 2013 to research a British Columbia-style carbon tax, said First Lady Cylvia Hayes of Oregon, who has worked as a consultant on climate and sustainability issues. The non-partisan legislative research agency is due to issue its final report on November 15.

In 2009, Washington State came within one vote in the legislature of joining California in the Western Climate Initiative’s (WCI) cap-and-trade program, said Jay Manning, a partner with Cascadia Law Group who served as Chief of Staff for former Washington Governor Christine Gregoire from 2009 to July 2011. The WCI was designed to be a cross-border carbon trading program and previously counted seven US states and four Canadian provinces as members, but only British Columbia, California and Quebec remain active in the program, with California and Quebec linking their trading programs earlier this year.

“It was a hard-fought battle,” he said. “It was very disappointing that we did not join, but it was the front end of the recession. It probably was the deciding factor that scared enough legislators. Then we plunged into the recession and that’s all we worked on for the second term. All environmental issues receded into the background.”

But Manning seems certain that current Washington Governor Jay Inslee will make progress on carbon pricing, given his relentless focus on climate issues. He famously advocated for a national cap-and-trade program as a member of Congress and has prioritized a broad range of climate-related items as governor, including joining his other Pacific Coast neighbors in putting limits on carbon emissions.

However, both Oregon and Washington have legislatures with divided political representation — a major obstacle to the establishment of a carbon pricing program. In Oregon, one factor that works in favor of a carbon pricing program is that there is bipartisan interest in the legislature in revenue reform, Hayes said.

In Washington, it’s not just Republicans who are hesitant about pricing carbon, but also progressive Democrats concerned about market manipulation, Manning said.

“It won’t surprise me if ultimately it will be necessary to go to the people on this issue to be successful in Washington,” he said.

A Role for Carbon Offsets?

Given that carbon pricing has not yet been established in Oregon and Washington, it is unclear whether any eventual programs will carve out a role for carbon offsets – instruments that represent the reduction, avoidance or sequestration of one metric tonne of carbon dioxide equivalent – as British Columbia and California have.

The Canadian province established the Crown corporation Pacific Carbon Trust in 2008 to deliver carbon offsets – in the energy efficiency, fuel switching and sequestration categories – in service of the province’s carbon neutrality goals. But the trust was nixed last year in favor of folding its responsibilities into the Climate Action Secretariat within the Environment Ministry.

California regulators have so far issued more than 7.5 million offsets in their carbon offset program, but market participants are urging the California Air Resources Board (ARB) – the agency charged with overseeing the cap-and-trade program – to pick up the pace at which they approve voluntary carbon offset project types. The state’s roster of offset project types is currently restricted to forestry, urban forestry, livestock and ozone-depleting substances protocols, but that could soon change with the ARB scheduled to consider adding a coal mine methane project type on April 25.

In Oregon, the Climate Trust was created in 1997 in response to the passage of the Oregon Carbon Dioxide Standard, which required that new power plants built in the state reduce their carbon dioxide emissions to a level 17% below those of the most efficient combined-cycle plant, either through direct reduction or offsets. The Climate Trust has a portfolio that includes eight offset project types and 21 active projects that are anticipated to offset 4.25 million metric tonnes of carbon dioxide.

In February 2014, the Climate Trust released a report prepared for the Oregon legislature evaluating potential carbon pricing mechanisms. The report examined carbon pricing programs in Australia, British Columbia, California, the European Union and the US Northeast. Of the programs studied, California’s cap-and-trade program has perhaps the clearest applicability for Oregon given the similarities shared by the states such as strong agricultural and technology sectors and strong energy efficiency and zero-emission vehicle initiatives, the report found. But Oregon’s legislature should establish clear guidelines for the management, use and retirement of offsets if it pursues the cap-and-trade route, the report suggested.

“It is likely that any cap-and-trade system Oregon may institute would borrow heavily from California’s framework to ease the potential for linkage between the two markets,” the report stated.

Giving the feds a little nudge

One of the primary goals behind the Pacific Coast partnership is to support positive federal action on climate change, including President Barack Obama’s Climate Action Plan. Despite their unwillingness to wait, the state officials did cite some promising signs that the federal government is finally ready to take action, most notably proposed regulations from the US Environmental Protection Agency that would regulate carbon emissions from existing power plants, due in June. Rodriguez called the discussions on the program, which would be established under the federal Clean Air Act, a “hopeful sign.”

Federal officials have been carefully watching California’s efforts and its early success in the cap-and-trade program breeds confidence that a carbon pricing program can work well, the officials said. “Fortunately, I can’t think of any mistakes that have occurred in the cap-and-trade program so far,” Rodriguez said.

Additional resources

14 April 2014 | Offering its residential customers a chance to minimize the impact of their lifestyles and electricity usage on the environment has been the focus of the Sacramento Municipal Utility District’s (SMUD) Carbon Offset Program since it launched in 2007. Now SMUD, the public utility for Sacramento County and parts of nearby Placer County in California, is diving deeper into the carbon markets by helping to pay for the development of a new carbon offset project type that focuses on the restoration of wetlands in the state. SMUD is taking this step because the cap-and-trade program that it is regulated by enters its second phase in 2015, and many experts say its narrow palette of recognized offsets won’t meet projected demand starting in 2015 through the life of the program.

SMUD – one of the 10 largest publicly-owned utilities in the United States – allows its customers to lower their contributions to climate change with a $10 per month added charge on their bills. The charge has financed the purchase of carbon offsets from projects registered under the Climate Action Reserve (CAR), – an offset registry that supports projects to reduce greenhouse gas (GHG) emissions – including offsets generated by a dairy digester.

The utility joined forces last year with the American Carbon Registry (ACR), a different offset registry organization, and other partners on the development of a new method (or protocol) that would count the GHG emissions reductions created from projects that restore California deltaic and coastal wetlands and turn those into offsets for both the voluntary and eventually, they hope, for California’s regulated carbon market.

SMUD set out to identify voluntary offset protocols that are good candidates for acceptance by the California Air Resources Board (ARB), – the regulatory agency overseeing the state’s carbon market – that have potential to deliver GHG emissions reductions within California and that also deliver co-benefits – social, economic and environmental benefits beyond carbon reductions. The utility started out with a list of 12 project types and narrowed the list down to six after research and discussions with stakeholders, Obadiah Bartholomy, SMUD’s Senior Project Manager, told attendees at the Navigating the American Carbon World conference in San Francisco last month.

The list of offset project types that could be added to the state’s roster – which currently includes forestry, urban forestry, livestock and ozone-depleting substances protocols originally developed in the voluntary market – and would benefit from a demonstration project or further development includes avoided conversion of grasslands, nutrient management, rangelands soil carbon sequestration and enteric fermentation, he said. Rice cultivation, which the ARB could approve in September, was also on the list.

However, the protocol that caught SMUD’s attention was wetlands restoration, with the partners tailoring an ACR protocol already developed for the Mississippi Delta to suit California. The California version is still under development and has a long ways to go before producing offsets for the state’s regulated market, likely not until 2018, assuming California regulators adopt the protocol, he said. But the protocol has the potential to produce a significant amount of offsets – anywhere from seven to 26 million tonnes of avoided carbon emissions, according to ACR estimates – and has the attractive co-benefits that SMUD is actively looking to support.

“The others, other than rice, seemed a little farther out with even more barriers to expanding supply, not to say that we shouldn’t pursue them,” Bartholomy said. “We have to keep in mind that this is a very long-term endeavor that we’re embarking on.”

What’s the Rush?

To date, the ARB has issued more than 7.5 million offsets, which should be plenty for the first phase of the program given that some organizations, particularly smaller entities, regulated by the cap-and-trade program have been slow to embrace offsets, market experts said.

SMUD, which is regulated by the cap-and-trade program because of its natural gas facilities and power imports, is one of the entities that have so far hesitated to make use of offsets to fulfill its compliance obligations, Bartholomy admitted.

“SMUD is one of those that’s kind of on the bubble,” he said. “I think we are going to make use of our 8%, but it takes some internal education and discussion and some willingness for us to bite the bullet.”

What the experts are concerned about is what they say is the likelihood that there will be a shortage of offsets in the middle and latter years of the program. California entities are allowed to meet up to 8% of their compliance obligations using offsets, meaning that the maximum demand during the second phase of the program in 2015-2017 is 91.8 million offsets. While many experts say the 8% maximum will never be exhausted, they are concerned that there will simply not be enough offsets generated under the four project types currently allowed in the program.

“My view is that the offset supply will be extremely short,” said Derek Six, CEO/CFO of offset project developer Environmental Credit Corp. “I think we’ll be short for a very long time.”

Consultancy Alpha Inception projects that total demand for offsets will only be about 50% of the possible maximum demand, meaning that the market should come out of the first compliance period with a pretty big surplus, but could be short in the second and third phases depending on what else happens in the market, said Founder and Manager Director Andre Templeman.

Another concern is that it takes time – usually several years – to get through the ARB’s rigorous evaluation process, the experts noted. In fact, the rice cultivation protocol, as well as one for coal mine methane projects, have been delayed several times as top regulators have sent their staff back to the drawing board for further examination and development.

“They are being extremely conservative and with good reason,” Templeman said. “They don’t want any holes to be opened up, especially in these early years of the program.”

California’s cap-and-trade program is currently scheduled to end in 2020, but there are discussions about how to meet the state’s 2030 target for reducing GHG emissions, with continuing the program –including the offsets component — being an option on the table.

“In those types of timeframes, expansion of supply through additional protocols is quite viable,” Bartholomy said.

What’s the Problem?

California’s offset market has been plagued by a host of regulatory and legislative disruptions that have had the effect of restraining the development of offset projects, Templeman said. For example, a bill introduced into the California legislature last year by Senator Ricardo Lara sought to exclude all offsets outside of the state. The bill, which is likely to resurface this year, eventually was amended to focus its restrictions on international offsets because of arguments that California’s stringent environmental regulations would severely limit in-state offset development, he said.

“That’s the reality,” Templeman said. “If you took all of the out-of-state offsets out, you wouldn’t leave very many behind. That would be an interesting bill were it to pass because I think that would affect supply quite dramatically and in essence create a massive shortage.”

“That pressure is not going to go away,” he added. “There will be a bill at some point that will basically seek to say ‘we’re paying for it, we want some of the benefits to be local’.”

Another proposal not specific to the offset program would exempt the transportation sector that is scheduled to be phased into the cap-and-trade program in 2015 from its grasp by instead implementing a carbon tax on fuels. While the odds of the proposal making it into law are not strong, that bill if adopted would have a dramatic impact on the offset market because removing the transportation sector would have the effect of turning a market that is projected to be short into one that could be oversupplied by a factor of two, Templeman said. The mere proposal is problematic because “even if the bills themselves die, there are reasons these bills come up,” he said.

And then, of course, there are the so-called buyers’ liability provisions of California’s cap-and-trade program, which allows the ARB to invalidate offsets that the agency deems problematic and forces the buyers of these offsets to take responsibility for replacing them. The risk adds to the cost of buying offsets and makes them a less attractive option for smaller entities, Templeman said.

“You really have to be over a certain size before it really makes a lot of sense in today’s current market design,” he said, adding that he expects products to emerge during the second and third compliance periods that will address the invalidation risk for a cost.

Other concerns that have kept smaller entities out of the market, including the potential of getting stuck with offsets they did not need to purchase, should subside after the first few years of the program, Bartholomy said.

“I think that fear will recede as the market continues to demonstrate success,” he said.

What’s the Solution?

Aside from adopting protocols from SMUD’s list of potential candidates, the ARB could also amend their rules to maximize the supply generated from the protocols already eligible. The costs of verifying the emissions reductions generated by livestock projects, for example, under current ARB rules are so high that they essentially exclude more than 95% of the dairies in the United States from participating in the program, Six said.

And the ARB could revisit voluntary offset protocols that it has previously rejected, such as pneumatic valves in the oil and gas sector, nitric acid production and organic waste digestion, in part because of the view that some of these activities are already regulated even if the specific emissions reductions associated with them do not fall under the carbon cap, Bartholomy said.

“Unfortunately, the logic behind that is still kind of murky,” he said. “I think we can hold out some hope that maybe if there is a shortage they may be willing to expand the offset supply.”

Additional resources

This article was originally published in the Forest Carbon newsletter. Click here to read the original.

10 April 2014 | California carbon market watchers on the lookout for any sign that the US state is still on a path to accepting international offsets from Reduction of Emissions from Deforestation and Degradation of forests (REDD) got a pretty good one when a California Air Resources Board (ARB) official stepped up to the plate at the Navigating the American Carbon World conference in San Francisco last month. In front of a packed and eager crowd, the ARB’s Jason Gray stated publicly that the agency will continue considering allowing REDD offsets into its cap-and-trade program.

“The world is watching to see if California is going to implement REDD or not,” said Daniel Nepstad, Senior Scientist and Executive Director of the Earth Innovation Institute.

REDD project development and accounting frameworks have matured in the voluntary market over the last five years, with $70 million worth of transactions in 2012, according to Forest Trends’ Ecosystem Marketplace’s State of the Forest Carbon Markets 2013 report. However, supply of REDD offsets still far outstrips demand, and experts such as Nepstad say that a compliance market’s inclusion of REDD would have a “magnifier effect” in terms of sending the signal to developing countries that their efforts to reduce deforestation will indeed be compensated. In July 2013, California signed a memorandum of understanding (MOU) on REDD with the states of Acre, Brazil and Chiapas, Mexico.

“California is obviously not going to buy all of Brazil’s credits, but putting a signal that says there is a compliance carbon market out there that accepts this and here’s what the rules look like would be enormously powerful,” said Steve Schwartzman, Director of Tropical Forest Policy at Environmental Defense Fund.

Eighty percent of the world’s REDD offsets originated in Latin America in 2012. According to Forest Trends’ REDDX Initiative data, the Andean countries of Colombia, Ecuador, and Peru are among the countries where the highest percentage of committed REDD funding has actually been dispersed. Of the more than $111 million pledged to these three countries from international agencies, domestic governments, foundations, and companies, nearly half has been delivered. In Peru, where almost half of greenhouse gas (GHG) emissions come from deforestation, a nested (or jurisdictional) approach could give coherence to the 41 REDD projects that currently exist.

Forest Trends’ Katoomba XX event in Peru on April 22-23 will serve as an important precursor to the upcoming United Nations climate negotiations in Lima, where countries will build on last year’s progress in developing a REDD+ Rulebook. Titled Climate, Forests, Water, and People: A Vision of Development for Tropical America, the event will bring together a unique cast of characters to identify opportunities for climate policy and finance to align with other public and private investments in forest carbon and other ecosystem services. If you’re able to make it to Lima for the public event, you may register for Katoomba XX here, through April 11.

More stories from the forest carbon markets are summarized below, so keep reading.

—The Ecosystem Marketplace Team

If you have comments or would like to submit news stories, write to us at [email protected].

INTERNATIONAL POLICY REDDy when opportunity knocks Protecting and restoring forests may not only represent an important strategy to mitigate climate change, but also an opportunity for the private sector to drive a transition to a green economy, especially in Latin America. In an op-ed in the Huffington Post, Renat Heuberger of South Pole Carbon writes that “countries such as Mexico and Costa Rica are already moving ahead with laws that are putting a price on carbon, which will ultimately increase the attractiveness of low-carbon investments.” Voluntary purchases are indeed catching on: The Forestal San José / South Pole reforestation project was the first in Colombia to be certified under CarbonFix (now Gold Standard), and NOEL, a Colombian cookies and chocolates company, bought offsets from the project. NATIONAL STRATEGY AND CAPACITY Are we there yet? Though Luis Guillermo Solis, Costa Rica’s newly elected president as of Sunday, announced early this year on the campaign trail that the country could not reach its carbon neutrality goal by 2021, the Ministry of Environment and Energy declared last week that Costa Rica was actually within 19% of the target. The progress towards neutrality comes mainly from forest protection and reforestation, with forests covering more than half of Costa Rica’s land area, offsetting 81% of the country’s emissions. René Castro, Minister of Environment, estimates that the remaining 19% could be achieved by reducing emissions from transportation and industry. PROJECT DEVELOPMENT Forest focus in humanity’s birthplace Ethiopia has big dreams: to become a low-carbon and middle-income economy by 2025. REDD is a part of that strategy, and last week the country launched a two-year capacity-building project to use satellite imagery to measure carbon absorption capacity across 900,000 hectares and to train personnel in monitoring, reporting, and verification (MRV). The €400,000 project will be carried out by Ethiopia’s Ministry of Forestry in collaboration with German partners Blackbridge, Remote Sensing Solutions GmbH, and Gesellschaft fí¼r Internationale Zusammenarbeit (GIZ). The government has renamed the Environmental Protection Agency the Ministry of Environment and Forest, reflecting the new focus on forest protection. FINANCE AND ECONOMICS Let’s bond A recent publication by Forest Trends proposes a new mechanism called Jurisdictional REDD Bonds that aims to jump-start the infusion of much-needed REDD+ capital to forest conservation projects. The paper illustrates how payments of $5 per tonne of carbon dioxide equivalent over 10-15 years for meeting emissions reduction targets in Brazilian states would cover the interest rates that states would have to pay to bondholders. “Our proposal is that Jurisdictional REDD+ Bonds would have the yield and risk characteristics that investors are used to seeing in Brazilian or Colombian or other sovereign bonds,” Rupert Edwards, one of the report authors, wrote. Countries with poorer credit ratings would need additional protection for investors from a financial body such as the World Bank. SCIENCE AND TECHNOLOGY Degradation decoded It’s no April Fools’ joke: Researchers at Winrock International have developed a unique method for estimating carbon emissions from forest degradation caused by selective logging in tropical forests –published in the academic journal Environmental Research Letters on April 1. While methods for estimating emissions from deforestation exist, this is the first robust methodology for forest degradation. Based on extracted volume, it considers the country context, incidental damage to the surrounding forest, and logging infrastructures such as roads. The methodology has been tested in six countries and “belies the notion that all REDD+ accounting must be based on remote sensing,” said co-author Sandra Brown. Average emissions from degradation are about 12% of those from deforestation, the study finds, though the range is wide (6-68%). Cool and smart The Cool Farm Institute’s Cool FarmTool allows farmers to calculate emissions savings online by entering parameters such as the farm and field area, planted crops, and fertilizer and machinery use. The tool was originally developed by Unilever and the University of Aberdeen. The institute and the Gold Standard Foundation have signed an MOU to make the tool eligible as a carbon accounting methodology for climate-smart agriculture. “Farmers will be able to evaluate not only which practices are more efficient and more climate smart than others, they can directly reward their efforts by obtaining Gold Standard carbon credits,” said Pieter van Midwoud, Business Director of Gold Standard Land Use & Forests. Details on when and how the combined tool could be used are to come. HUMAN DIMENSION Happy 1st Birthday Launched in April 2013, REDD+ Community, an online learning platform through the World Wildlife Fund’s (WWF) Forest and Climate Programme has grown to 650+ members in more than 50 countries. The platform includes monthly webinars, and any member can post a conversation topic. “We need to ensure that ideas (individual and collective) are made explicit, clear and accessible to the collective,” Breen Byrnes of WWF program wrote in the Huffington Post last week. “For example, we need to make sure that a case study from a REDD+ project in Nepal can be shared with a policymaker who is negotiating at an international policy conference, and use it as evidence of something that does or does not work in the real world.” REDD war or peace? In a recent op-ed, Janpeter Schilling of KlimaCampus and Janani Vivekananda of International Alert argue that “REDD+ is still a fairly new mechanism, but so far, it pays too little attention to its potential contribution to peace or conflict.” REDD+ could contribute to peace by strengthening community land rights and reducing poverty, sometimes by providing employment to local residents as forest monitors and guards. The flip side is that the opportunity for short-term monetary gains could aggravate existing conflicts over land ownership and forest access. For instance, in Bangladesh, community representatives say that any restrictions on use of the Sundarbans mangrove forest puts stress on their livelihoods. STANDARDS AND METHODOLOGY Seeding the inner cities Urban trees play an important role in sequestering carbon. California allows urban forestry projects to produce offsets for its cap-and-trade program, but development has been virtually non-existent in both the voluntary and compliance markets due to substantial costs and other challenges. The Climate Action Reserve (CAR) is hoping to change that by revamping its urban forestry protocol to expand the scope of eligible projects beyond street trees and establish a set of environmental and social co-benefits for projects by public entities, among other things. CAR is accepting comments on the proposed revisions through April 25. VCS on fire Some forest carbon projects may cross all their t’s and dot all their i’s, but as forest fire risks increase with climate change, there is still the chance that they will (literally) go up in flames. To incentivize fire management practices such as controlled burns, the Verified Carbon Standard (VCS) last month released its New Fire Management Methodology for public comment. Developed by Value for Nature Consulting on behalf of the Mpingo Conservation and Development Initiative with funding from the Royal Norwegian Embassy of Tanzania, the methodology applies to the Eastern Miombo woodlands in Tanzania and Mozambique. The comment period on the methodology is open through April 24. In step with ‘insetting’ A video from Plan Vivo Standard introduces the concept of carbon ‘insetting’ – or creating emissions reductions projects within a supply chain or business network. “This new approach is an example of shared value creation. It’s based on the idea of forming new positive relationships, but seeks to create carbon reductions from within an existing network,” Richard Tepper of Ecometrica explained in the video. One company example is Source Climate Change Coffee, which is working with 30 communities of mestizo and Mayan Plan Vivo farmers in Mexico to plant trees, therefore neutralizing the carbon footprint of the coffee production. Grazing for soil Australia’s Carbon Farming Initiative program has released a proposed methodology that would allow soil carbon sequestration projects in grazing systems. Developers would have to estimate sequestration by measuring changes in soil carbon stocks based on specified soil sampling and analysis techniques. Eligible land management activities could include converting from cropland to permanent pasture, changing pasture species composition or changing grazing patterns. But the methodology specifically excludes some activities such as certain types of tillage that would result in significant GHG emissions and undermine the project’s soil carbon sequestration. The proposal is open for public consultation until May 6. PUBLICATIONS Business savvies in the Amazon A new report entitled Lessons from the edge: What companies can learn from a tribe in the Amazon portrays the big challenges that businesses face in today’s economy and how these could be successfully addressed by following the example of the Surui, a tribe of the Brazilian Amazon. Published by the Deloitte Center for the Edge, the report looks at how the Surui have thrived by ‘cultivating their talent’, ‘leveraging their resources’, and ‘staging their moves’. Since Chief Almir first saw his tribe in the context of Google Earth in 2007, the tribe has forged more than 50 partnerships – including ones with the US Agency for International Development and Natura, the cosmetics giant that bought carbon offsets from their forest project. CliffsNotes for REDD A new manual, The Knowledge and Skills Needed to Engage in REDD+: A Competencies Framework, aims to break down the complexities of REDD into a simple document that makes sense even to those who do not live and die with these projects. The manual, compiled by a coalition of NGOs, breaks REDD+ down into 10 themes, each of which builds on the one before it, and provides just enough information to frame the issues central to each theme before closing with links to resources available on the Internet. Survival of the best prepared The policymaker summary of the climate change ‘impacts, adaptation, and vulnerability’ section of the International Panel on Climate Change’s Fifth Assessment Report was approved at a workshop in Yokohama, Japan in late March. The verdict? Climate change is here and will be here, and we need to adapt – especially in the most vulnerable regions. Major world crops such as maize, which has trouble at temperatures above 38 degrees Celsius, will suffer, but agroforestry techniques could play an important role in cooling fields. Bolsa Floresta flourishing A recent study published on Bolsa Floresta, a program that pays families for conservation and sustainable community development, showed a decrease in deforestation and livelihood improvement in the communities where it has been implemented. The authors of the study – officials with the Center for International Forestry Research, Fundaçí£o Amazonas Sustentí¡vel, and Zentrum fí¼r Entwicklungsforschung – advise that the program could be developed in other communities as long as it is adjusted to their particular situations. JOBS Portfolio Manager – ClimateCare Based in Oxford, United Kingdom, the Portfolio Manager will play a key role in management of ClimateCare’s Verified Emission Reduction portfolio, also covering some other offset types and helping to tailor bespoke carbon portfolios for new and existing clients. The successful candidate will have strong Excel skills, a commercial and proactive approach, excellent interpersonal skills, and the ability to manage a high work load effectively and independently. Read more about the position (and others from ClimateCare) here REDD+ Governance Manager, Zambia –BioCarbon Partners Based in Luangwa Valley, Zambia, the Governance Manager will be responsible for developing relationships with local stakeholders and engaging community-based forest governance organizations. The ideal candidate will have a master’s degree or equivalent, at least five years experience in resource management, REDD, community development or rural outreach, and be a Zambian citizen. Read more about the position here Junior Analyst – Face the Future Based in Amsterdam, Netherlands, the Junior Analyst will support Face the Future’s Investment Management Team’s efforts and initiatives to expand their portfolio and raise capital. This will include research on strategic investment activities, helping to implement a business development strategy, and negotiating and carrying out due diligence to manage the investment process. The successful candidate will have one to two years of previous work experience in management consulting or a related area, hold an advanced degree in business administration or a similar field, and be fluent in English. Read more about the position here REDD+ Team Leader – Österreichische Bundesforste AG Consulting Based in Togo, the team leader will support REDD+ readiness and forest rehabilitation in the country. The successful candidate will have at least eight years of work experience in forest inventories through remote sensing; have a detailed knowledge of REDD MRV, reference levels, and safeguards; and be fluent in French. Read more about the position here ABOUT THE FOREST CARBON PORTAL The Forest Carbon Portal provides relevant daily news, a bi-weekly news brief, feature articles, a calendar of events, a searchable member directory, a jobs board, a library of tools and resources. The Portal also includes the Forest Carbon Project Inventory, an international database of projects including those in the pipeline. Projects are described with consistent ‘nutrition labels’ and allow viewers to contact project developers. ABOUT THE ECOSYSTEM MARKETPLACE Ecosystem Marketplace is a project of Forest Trends, a tax-exempt corporation under Section 501(c)3. This newsletter and other dimensions of our voluntary carbon markets program are funded by a series of international development agencies, philanthropic foundations, and private sector organizations. For more information on donating to Ecosystem Marketplace, please contact [email protected].

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April 9, 2014 | The Yurok tribe has seen first-hand the devastation that deforestation wreaks on trees and plant and animal species living on its tribal lands. Now, with a big stamp of approval from California regulators, the tribe is hoping to tap into the carbon markets to help reverse these devastating trends.

The California Air Resources Board (ARB) on Wednesday announced that the Yurok Tribe/Forest Carbon Partners CKGG Improved Forest Management Project was the first to be issued offsets under its compliance forestry protocol. The improved forest management (IFM) project will guarantee long-term forest protection, improve forest habitat diversity, provide benefits to salmon and steelhead populations, and generate revenues for the Yurok Tribe. IFM projects are those in which existing forest areas are managed to increase carbon storage and/or to reduce carbon losses from harvesting or other silvicultural treatments.

“We have lost many of our old trees to deforestation, and numerous native plant and animal species, especially deer and elk, are struggling because of it,” said Thomas P. O’Rourke, Sr., Chairman of the Yurok Tribe. “This forest carbon project enables the Tribe to help transition these acres back into a tribally managed natural forest system where wildlife and cultural resources like tanoak acorns, huckleberry, and hundreds of medicinal plants will thrive.”

The ARB’s compliance protocol was developed based on a version originally created by the Climate Action Reserve (CAR), which acted as the Offset Project Registry for the Yurok project.

Click here to continue reading on the Forest Carbon Portal.

About 13 million hectares of tropical forests are being lost every year – despite the best efforts of many committed stakeholders. California could take efforts to combat this trend to the next level by allowing projects that reduce emissions from deforestation and forest degradation to count as offsets in its carbon market, according to supporters of these projects. But is the US state ready to take that step?

8 April December 2014 | Tropical forests are being cleared, often illegally, to make room for the production of paper and other products, a deforestation trend that is directly responsible for an estimated 16% of greenhouse gas (GHG) emissions globally – more than the 12% caused by the transportation sector. A possible solution to reverse this destructive trend lies in the form of what is known as REDD projects, which stands for reducing emissions from deforestation and forest degradation.

“If we don’t tackle tropical forests (loss), we’re not going to be able to solve the climate crisis,” said Toby Janson‐Smith, Director of the Agriculture, Forestry & Other Land Use program for the Verified Carbon Standard – an organization that develops methods to account for carbon mitigation. “This is where REDD comes in.”

Some individual REDD projects have flourished, thanks to the committed efforts of major global corporations such as software giant Microsoft and entertainment conglomerate The Walt Disney Company that are propelling forest conservation efforts by paying high prices – often much higher than the prices for other kinds of emissions reductions– for the offsets generated by these projects.

“We’re seeing (demand) a lot in the corporate social responsibility space with companies that not only want to mitigate their climate impacts, but also care about broader social and environment benefits,” Janson‐Smith said at the Navigating the American Carbon World conference in San Francisco last week. “And conserving forests can be a very compelling story.”

But REDD projects have yet to achieve the necessary scale to put a significant dent in the deforestation trend, in large part because their development is subject to the whims of voluntary carbon offset buyers, rather than driven by the demands of a regulated carbon market.

“REDD is indeed happening at a very large scale and in a very significant way, but not unfortunately yet at the scale and in the form that we need to deliver on the promise of this idea to stop tropical deforestation for good,” said Steve Schwartzman, Director, Tropical Forest Policy for environmental NGO Environmental Defense Fund.

However, in a positive sign for REDD projects, regulators in the state of California have publicly expressed their commitment to consider allowing the offsets generated by these projects into their carbon market. California may not be the only game in town for supporters of REDD projects, but in some respects it is the most important potential player.

“We all strongly agree that California should embrace REDD+ in a domestic compliance market and set a strong example for the world,” said Karin Burns, Executive Director of Code REDD, a nonprofit organization designed to support and scale REDD+.

However, California regulators refused to commit to a timeline for the possible incorporation of these offsets into their compliance market, as REDD still faces political and logistical hurdles in the state.

For an in-depth analysis, visit the Forest Carbon Portal’s coverage of the California market.

Urban forestry helps keep US cities green and their air clean. For this, urban foresters can earn carbon offsets that reflect their pro-climate contributions. Though these offsets could be sold to voluntary buyers or even into California’s carbon market, urban forestry offset projects have been underutilized due to high costs and technicalities. The Climate Action Reserve is hoping to change that.  

27 March 2014 | Urban trees play a host of important roles. They’re air conditioners. They’re crime-stoppers. They remove tens of metric tons of particulate matter from cities. And they’re carbon sequesters: The US Forest Service estimates that urban trees in the United States sequester 25.6 million tonnes of carbon annually, at an estimated value of $2 billion – based on government projections of the social cost of carbon.

But this value isn’t always accounted for in public and private planning activities as cities often struggle to build and maintain urban canopy because of the costs of planting and caring for trees. The Climate Action Reserve (CAR) – an organization that develops methods (or “protocols”) to account for carbon mitigation – is trying to change that by making their urban forestry protocol more user-friendly.

CAR’s protocol guides the quantification of greenhouse gas (GHG) reductions from urban tree planting and maintenance activities by municipalities, educational institutions and utilities, and has been available in various forms since 2008. In October 2011, the California Air Resources Board (ARB) approved urban forestry as one of four offset project types eligible to produce carbon offsets for its cap-and-trade program.

But only one project – to plant 1,000 trees by the City of Santa Monica – has ever made any significant progress, and no compliance-eligible urban forestry offsets have been granted by the ARB. CAR officials have received consistent feedback that the current version is too challenging to facilitate project development of any significance.

“That’s problematic—we want our protocols to be used,” John Nickerson, CAR’s Director of Forestry, said Wednesday during the Navigating the American Carbon World 2014 conference in San Francisco.

So, with support from the California Department of Forestry and Fire Prevention (CalFire) and the US Forest Service, CAR embarked on a review and proposed update of the urban forest protocol that would address some of these issues by:

• Expanding the scope of eligible urban forest projects beyond “street trees” to include trees located in parks, private lots, open spaces and other areas not currently eligible.
• Eliminating a costly requirement to inventory every tree (that’s right, every tree) within and outside the project area.
• Making urban forest management projects commit to increasing existing inventories relative to baseline levels eligible to generate carbon offsets.Currently, only urban tree planting activities are eligible under the protocol.

And there are many more issues the protocol addresses including covering for unavoidable reversals and establishing environmental and social co-benefits.

Read about the specifics of ‘The Makeover’ on the Forest Carbon Portal.

On a separate note, it’s last call to respond to our survey informing the State of the Voluntary Carbon Markets report.

Returning survey-goes can login HERE (http://survey.ecosystemmarketplace.com/carbon2014/) to report on 2013 offset transactions and/or project developments.

Newbies can create a login HERE (http://survey.ecosystemmarketplace.com/carbon2014/users/users/add)

Contact Allie at [email protected] with any questions about the survey. We look forward to hearing from you!

19 March 2014 | Part of the solution to the climate problem may lie within the 2.7 million acres of rice cultivated in the United States last year. Rice growing is the third largest source of methane emissions in the United States’ agricultural sector. When rice fields are flooded, the organic matter decomposing sans-oxygen below releases methane gas, a climate pollutant that has 21 times the strength of carbon dioxide.

A proposed protocol being considered by California’s Air Resources Board (ARB) – the regulatory agency that oversees the state’s cap-and-trade program – could offer incentives for farmers to reduce these emissions and monetize carbon offsets that could then be sold to companies capped under the law. Through the rice cultivation offset protocol, rice growers in California and the Mid-South could reduce methane emission reductions through small but important tweaks to their cultivation practices, such as dry seeding or draining the standing water from fields earlier than they otherwise would.

None of these methane-reducing rice cultivation practices are considered ‘business as usual.’ Paul Buttner of the California Rice Commission estimated that only 1-2% of farmers are currently doing dry seeding, mostly because of the inherent risk of moving away from established practices.

“The early drain practice is experimental, it’s viewed by most growers as too much of a risk,” said Buttner. “The most important thing to them is maintaining the quality of the rice. We do have studies showing that maybe they can drain those fields a little earlier…but without a program, very few growers would expose themselves to that risk.”

The ARB estimates the methodology could produce between 500,000 and 3,000,000 tonnes of greenhouse gas reductions through 2020, the current end-date for California’s cap-and-trade program.

The protocol was developed based on standards tested in the voluntary carbon markets, those outside of California that are not motivated by regulation. The American Carbon Registry’s (ACR) rice protocol was released in May 2011, with the Climate Action Reserve following with its protocol in December 2011. To coincide with the ARB workshop, the ACR on Monday announced the expansion of its previously California-specific protocol to the Mid-South states. It also unveiled the first rice project listed on its registry, which aggregates rice growers over a 5,000-acre area in California’s Sutter, Colusa, and Glenn Counties to reduce the equivalent of 6,700 tonnes of carbon dioxide emissions (tCO2e).

If approved by an ARB vote in September, the offsets would be eligible for the state’s cap-and-trade program starting on January 1, 2015.

Read a more in-depth (read: wonky!) version of this story on the Forest Carbon Portal

… Our survey informing the 2014 State of the Voluntary Carbon Markets and State of the Forest Carbon Markets report is still open. If your organization transacted carbon offsets in 2013, or developed a forest or cookstove project, be sure to get us your data for the only market-wide, international report tracking voluntary offsetting. As always, your response is confidential.

Organizations that already received login information from Ecosystem Marketplace can access the survey HERE.

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Left for dead for years, the Regional Greenhouse Gas Initiative (RGGI) soared to record heights after a major overhaul of the program gave market participants new confidence in its longevity. RGGI could receive another major boost if the US Environmental Protection Agency decides that the cap-and-trade program can be used for compliance with its upcoming greenhouse gas regulations for existing power plants.

13 March 2014 | While many of the hopes and dreams of carbon market advocates in the US were squarely focused on California’s developing cap-and-trade program in 2012, officials in the Regional Greenhouse Gas Initiative (RGGI) were busy plotting its comeback.

The Northeast carbon trading market had been weighed down for three years by an overabundance of allowances that forced credits to trade at the market’s floor prices. But the participating RGGI states, with the exception of New Jersey which pulled out of the program at the end of 2011, committed to overhauling the program, an effort that appears to be paying off in a big way.

In the first auction since the planned changes went into effect, held on March 5, RGGI allowances sold at a record $4 per ton. This surpassed the previous $3.51/t high, set during the March 18, 2009 auction, the first auction held during the program’s initial compliance period (2009-2011). Also noteworthy was the fact that RGGI exhausted its back-up supply of allowances for 2014 after triggering their sale by hitting that magic $4 mark.

“I think it’s a true market at this point,” Collin O’Mara, Secretary of the Delaware Department of Natural Resources and Environmental Control and Vice-Chair of the RGGI, Inc. Board of Directors, told Ecosystem Marketplace. “The market is functioning as a true market.

The $4/t price for RGGI allowances, while low in comparison to the roughly $11/t prices seen in the now-linked California and Quebec cap-and-trade programs, represents a more than doubling of the allowance price before the February 2013 announcement of the planned changes. And for long-time followers of the RGGI program, it sends an important message: RGGI is real and is here to stay.

“The main takeaway is growing confidence in the RGGI market,” said Peter Shattuck, director of market initiatives for NGO Environment Northeast.

The Comeback

The winter that refuses to end, with the infamous Polar Vortex, may have played a role in driving the robust demand for allowances seen in the latest auction. But the biggest factor in reviving the RGGI program has been the lowering of the emissions cap.

After thoroughly reviewing the program in 2012, RGGI officials decided to reduce the 2014 emissions cap by 45% to 91 million tons, with additional cuts taking into account the bank of allowances that had been acquired by private entities during the program’s down years. This decision sparked renewed interest in the market last year, with allowances selling for $2.80/t in the March 13, 2013 auction, well above the $1.93/t floor price the allowances cleared at the previous auction. Allowance prices dipped up and down for the rest of 2013 as the RGGI states all had to go through their respective regulatory or legislative processes to officially implement the proposed cap adjustment.

“You could say there was some uncertainty to whether that change was actually going to get made,” Shattuck said. “This is the first auction since the change was fully in effect and prices have continued to come up.”

Deflating the Cushion

The triggering and exhausting of the program’s cost containment reserve (CCR) was a historic and unexpected development. Cap-and-trade programs for greenhouse gases (GHG) often include mechanisms – a CCR being one such mechanism – to add flexibility or establish price certainty in response to concerns that the costs of complying with the program will spiral out of control. After conducting the program review, RGGI officials decided to add a new mechanism that would release more allowances if auction prices reached a certain point, set at $4/t in 2014. That price point was triggered in the March 5 auction, which emptied out all five million of the CCR allowances available for sale in 2014.

“It operated exactly as it was intended – it suppressed prices,” O’Mara said. “It’s a very nimble mechanism for mitigating price impact, particularly as a lot of entities were buying for future use, not just the immediate quarter.”

If fundamental factors begin to shift, for example, if a warming weather trend takes hold over the summer or natural gas prices rise significantly, shifting more electricity back to coal sources, market participants will not have a CCR to cushion them from major price spikes for the rest of the year.

“I think some parties view a $4 price as a relative bargain right now,” said William Shobe, an economist and professor at the University of Virginia who helped design the original RGGI program.

Return of the Players

When RGGI was languishing at the floor price, traders and bankers were not buying allowances. But these market speculators have returned to the program with a vengeance. The latest auction results showed that compliance entities and their affiliates purchased only 45% of the available allowances, meaning that market speculators and other entities actively participated in this auction.

“My take on that is that there are plenty of players out there who think that the price is going to continue to rise,” Shobe said. “It’s good for the market. There are going to be plenty of counterparties for trading for the compliance entities. But it also indicates that there are people out there who think this is a good investment for the future.”

Rising RGGI allowance prices also beg the question of whether there could finally be development of carbon offset projects for RGGI compliance, which has not occurred to date with prices hovering at the floor for so long.

“With the firming of the price, you would expect to see some activity for generating offsets,” Shobe said. “The very fact that the cost containment reserve is gone is a signal to people who might invest in offsets that there is going to be more opportunity to sell offsets into this market than might have been expected before this auction.”

RGGI officials developed a new protocol that aimed to replace the afforestation project type included in the original RGGI model rule. Some of the participating RGGI states have adopted the new forest protocol, which covers improved forest management, avoided conversion and reforestation activities.

The idea was to bring RGGI’s forestry protocol in line with the Western Climate Initiative (WCI), the program under which California and Quebec have linked their cap-and-trade programs. But that could mean that project developers interested in selling into a compliance market would remain focused on the WCI because prices in the program are still nearly triple RGGI allowance prices.

“We don’t anticipate offsets coming into the market until a time, if ever, allowance prices are significantly higher,” O’Mara said. “We’re not anticipating the results of this auction having a significant impact on RGGI offset activity, at least for the near future.”

Offset project developer Environmental Credit Corp would not be inclined to even look at the RGGI program until allowance prices exceed $10/t, which is unlikely in the next couple of years because of the price points that trigger the CCR, said CEO/CFO Derek Six. Even if the market reached $10/t for the allowances, there are obstacles that would make offset development difficult such as technical problems with the RGGI protocols and the state-by-state administration of offset projects in the program, he added.

A Bright Future

In June 2013, US President Barack Obama directed the US Environmental Protection Agency (EPA) to propose rules to regulate GHG emissions from existing power plants by June 1, 2014, with final rules due a year later.

RGGI officials have been working behind the scenes over the past several months talking about the economics of their market-based program and why the EPA should recognize the RGGI model as an effective system of GHG emission reductions for the power sector.

Many experts believe that RGGI will be accepted as a compliance mechanism by the EPA and that would likely have a positive impact on the program. That expectation could have been a factor in boosting demand for RGGI allowances in the latest auction, but it’s difficult to know for certain.

“I think there is a bet on the future of RGGI under the EPA rules,” Shattuck said. “I would be surprised if (the EPA) didn’t leave enough room for RGGI.”

“There might be some gambling going on that RGGI allowances could be a more valuable commodity under heightened federal rules on climate change,” Shobe observed. “But the risk works the other way as well. We don’t really know what EPA is going to do. There’s some risk that RGGI cap-and-trade program wouldn’t satisfy the requirements of EPA rules. I just don’t see that as a huge driver of current prices under RGGI. It could be happening, but that’s a very speculative bet right now.”

Expectations that RGGI would comply with the EPA’s program have driven an increasing awareness among non-RGGI states of its cost-effective, market-based approach, O’Mara said. While no state has said it wants to join RGGI tomorrow, several have been carefully studying the RGGI approach, he said. A benefit for other states is that RGGI has already worked through all of the potential kinks of a market, including ensuring a smooth auction and monitoring for potential manipulation. As more states focus on planning for compliance with the upcoming EPA rules, O’Mara expects an even greater focus on RGGI and potentially a decision by some states to join the program.

“It’s going to be an exciting next 12 months,” he said.

The Backstory

The Regional Greenhouse Gas Initiative (RGGI) is the first cap-and-trade program implemented in the United States to reduce greenhouse gas (GHG) emissions in the power sector. It was established in 2005 by 10 states in the US Northeast – although the state of New Jersey dropped out of the program in December 2011— and held its first auction of carbon dioxide (CO2) allowances in September 2008. Under the cap, the RGGI states will achieve an almost 50% reduction in CO2 emissions in the power sector from 2005 levels by 2020.

RGGI officials engaged in an extensive revamp of the program in 2012, with the changes taking effect in January 2014. Those changes included:

• Reducing the 2014 cap by 45% from 165 million tons to 91 million tons of carbon dioxide, with additional decreases of 2.5% per year from 2015-20.
• Adding a new cost containment reserve that releases allowances if auction prices reach a certain pre-determined pricing points: $4/t in 2014, $6/t in 2015, $8/t in 2016, and $10/t in 2017, rising by 2.5% in each of the following years.
• Adding a new forestry protocol that covers improved forest management, avoided conversion and reforestation activities, bringing RGGI’s protocol more in line with California’s forest protocol, which has spurred development of forestry projects across the US.

10 March 2014 | After a relatively silent auction of carbon allowances in December 2013, demand for carbon allowances in Quebec soared in the first auction after it officially linked its cap-and-trade program to California’s system.

Quebec sold 98.7% of the more than one million 2014 vintage allowances available for sale in the March 4 auction, with allowances clearing at the CAN$11.39 per metric ton floor price. In addition, 84.2% of the 1.5 million 2017 vintage allowances also sold at the floor price.

This represents a significant increase from Quebec’s first auction in December when only 34% of the current vintages and 27% of the future vintages available sold at the then-price floor of CAN$10.75/t.

“These results reflect growing interest and demand in this burgeoning carbon market after it officially linked with California’s program at the beginning of 2014,” said Erica Morehouse, an Environmental Defense Fund attorney who focuses on the policy and legal aspects of implementing AB 32, the legislation underpinning the state’s cap-and-trade program.

The first cross-border compliance trading program to reduce greenhouse gas (GHG) emissions in North America officially took off on January 1 when California and Quebec joined their carbon trading programs. The linkage between California and Quebec’s carbon markets is the first tangible fruit of the Western Climate Initiative (WCI), formed in 2007 to design a regional cap-and-trade program to limit carbon pollution and curb climate change. At one point, the WCI counted seven US states and four Canadian provinces as members, but only California and Quebec have put a trading program in place.

The two jurisdictions are not holding joint auctions yet, but are planning to do so later this year, meaning the two markets will completely align with a uniform price for both sets of allowances, she said.

“Until then, given that Quebec’s program is much smaller and has had less time to develop, the California auction prices and market conditions are more predictive of what the linked program will look like once joint auctions begin,” Morehouse said.

Prices and demand are lower in Quebec than California in part because companies regulated by the US state that do not have a Canadian presence have to wait until the joint auctions to buy allowances directly from Quebec’s environment ministry, she said. In addition, there were just 16 participants in the Quebec auction compared to 71 participants in the last California auction.

Unlike California entities that must turn in allowances to cover a portion of their compliance obligations at the end of this year, covered entities in Quebec do not have to turn in their first batch of allowances until 2015 – one of the few small differences between the programs.

“These entities aren’t feeling the same sense of urgency to acquire allowances as California entities,” Morehouse said.

Quebec’s new carbon market could push the volume of Canada’s ecosystem markets over the $1 billion mark by 2016, according to a new report that says volume may have topped $600 million in 2012.

10 March 2014 | Canada’s environmental markets executed between $406 million and $625 million in transactions in 2012, according to a report called Environmental Markets in Canada 2013 by Canadian green policy think tank Sustainable Prosperity. But this value does not include the new Quebec carbon market, which alone is estimated to have an annual value of $425 million by 2016, the report noted.

The report breaks Canada’s markets down by air, water, and habitat, and says the country had 10 air and carbon markets in 2012, including the Alberta Greenhouse Gas Emission Trading System and the now-defunct Pacific Carbon Trust. The combined value of these markets was pegged between $121 million to $134 million, with the variation due in part to a range of offset prices reported between $11/t and $15/t in Alberta’s program.

Source: Sustainable Prosperity Web Site  

Offsetting in Canada

Alberta’s offset credit system is a compliance mechanism for entities regulated under the province’s mandatory GHG emissions intensity-based regulatory system. The Pacific Carbon Trust was a British Columbia Crown corporation tasked with purchasing offsets to meet the provincial government’s carbon neutrality commitment, but was nixed in November in favor of folding its responsibilities into a division of the Environment Ministry.

Climate change policy will continue to be the main driver of new environmental markets, the Sustainable Prosperity report said. The Canadian provinces have taken the lead on developing GHG reduction policies that incorporate markets. The federal government has lagged behind although the upcoming federal regulations for the oil and gas sector could possibly contain provisions for market mechanisms.

“Canada has the potential to use environmental markets much more widely,” the report stated.

However, data and transparency challenges persist and are a major impediment to valuing environmental markets and promoting their more widespread use in Canada, the report found.

Automaker Chevrolet’s announcement about a new carbon offset program aimed at US colleges and universities capped off a particularly busy week. The Verified Carbon Standard launched a new tool for estimating leakage in reduced emissions from REDD+ programs and the California Air Resources Board reaffirmed its commitment to considering international sector-based offsets such as REDD.

This article was originally published in the V-Carbon newsletter. Click here to read the original.

25 February 2014 | In 2013, automaker Chevrolet ditched its old advertising slogan in favor of a new tagline: “Find New Roads.” That motto could easily apply to Chevrolet’s efforts to find new ways to meet its emissions reduction commitments. The automaker, a major player in the voluntary carbon market, has unveiled an innovative program that could unlock a potentially significant new source of carbon offsets: US-based colleges and universities.

The company financed a new methodology under the Verified Carbon Standard (VCS) to quantify greenhouse gas (GHG) emissions reductions from clean energy and efficiency projects implemented by US-based higher education institutions. But Chevrolet has gone beyond just paying for the methodology by committing to buy at least 400,000 to 500,000 tonnes of offsets from the schools.

“We wanted to support innovative ways people are reducing carbon across America,” said David Tulauskas, director of sustainability for General Motors, Chevrolet’s parent company.

A major benefit of the commitment by Chevrolet is that schools constrained by tight operational budgets will have a critical financing source to tap in support of their clean energy and efficiency initiatives, said Robert Koester, professor of architecture and chair of the Ball State University Council on the Environment. Chevy has committed to buying thousands of tonnes of emissions reductions generated by Ball State over the next three years.

About 15% of the roughly 4,000 colleges and universities in the United States are engaged in an aggressive effort to reduce their carbon emissions. Chevrolet hopes other corporates committed to carbon reduction will tap into a built-in base of students already passionate about addressing the climate issue and follow its lead by purchasing voluntary offsets from these higher education institutions, Tulauskas said.

The announcement capped off a particularly busy week for the VCS, which also released a new tool that will allow reduced emissions from deforestation and degradation (REDD+) programs to estimate leakage emissions, a critical tool for the development of jurisdictional programs. In addition, a new VCS methodology to quantify net GHG emission reductions and removals resulting from projects to restore tidal wetlands just went out for public comment. See the Science & Technology section below for additional details.

Meanwhile, the path for inclusion of REDD projects in California’s cap-and-trade program has appeared very shaky of late due to growing political opposition. However, the California Air Resources Board (ARB), the agency charged with overseeing the program, reaffirmed its commitment to considering international sector-based offsets such as REDD in a proposed update to its scoping plan, the document governing its implementation of California’s Global Warming Solutions Act of 2006.

These and other stories from the voluntary carbon marketplace are summarized below, so keep reading!

Here at Ecosystem Marketplace, we’ll soon launch data collection for our 2014 State of the Voluntary Carbon Markets report. Every year, we rely wholly on offset market participants to financially support this research. In return, sponsors ($7.5k+) and supporters ($3k) benefit from the report’s growing exposure, early insight into our findings, and opportunities to engage directly with Ecosystem Marketplace in report-related outreach and events. Interested organizations should contact Molly Peters-Stanley ([email protected])

Voluntary Carbon Inspiring people to care about the planet(‘s forests) The last installment of Ecosystem Marketplace’s “buyer series” explores why the National Geographic Society – perhaps best known for the stunning photos featured in its magazine – has been investing in forest carbon. Nat Geo purchases carbon offsets to neutralize discrete aspects of its operations: offsets from a reforestation project in Panama cover emissions from natural gas use in its buildings; offsets from an avoided deforestation (REDD) project in Brazil cover emissions from business travel; and offsets from another REDD project in the Yaeda Valley of Tanzania cover emissions from its adventure travel operations in the area. Read more in this Ecosystem Marketplace exclusive. – Read more from Ecosystem Marketplace here Thank you for your hospitality Hilton Worldwide is boosting its carbon offset program in Southeast Asia by investing in a biomass and two hydropower projects in Indonesia, Thailand and Vietnam. Combined, the three projects are expected to offset more than 900,000 tonnes of carbon dioxide equivalent (CO2e) per year. The hotel chain has previously invested in offsets from the Borneo rainforest rehabilitation project in Sabah, Malaysia, which prevents about 140,000 tonnes of CO2e per year In October 2012, Hilton began offsetting the emissions generated by meetings and events held at its properties, at no costs to its guests.   – Read more from the Hilton website – Read more from the Nation Windows into the forests Microsoft is at it again. The software giant – in partnership with UK’s The CarbonNeutral Company –reaffirmed its affection for forestry projects by agreeing to purchase offsets from the government of Madagascar’s REDD+ project in the Makira Natural Park. The transaction will finance long-term conservation of rainforest ecosystems, with half the proceeds supporting education, human health and other projects in the surrounding areas, according to park manager Wildlife Conservation Society. Last September, 710,588 tCO2e of carbon offsets were certified for sale from the project, which has been verified by the VCS and received gold-level validation from the Climate, Community and Biodiversity Alliance. – Read more from newswise – Read more from Microsoft – Read more from Ecosystem Market Place Singling out Singapore High-tech Singapore has been slow to embrace the voluntary carbon markets, but two in-country projects just sold their first offsets to fund massive upgrades to green LED light bulbs and improved cooling systems. “[Singapore] has a great track record in technology so energy efficiency is a good fit,” explains Grattan MacGiffin, a manager at Ecoinvest Services, about the Swiss-based company’s decision to obtain 8,469 Verified Carbon Units from both projects. Southeast Asia’s contribution to the world’s voluntary offset supply has been growing, but until now Singapore was noticeably absent. – Read more from Ecosystem Market Place Olympics falling short of carbon gold? The Sochi Winter Olympics have fulfilled a pledge to offset (some of) its carbon emissions, according to organizers who highlight the offsetting of emissions related to power consumption and transportation of some attendees to and from the games. But the Olympics can’t even medal in its own event, argue environmental experts who say the carbon neutral commitment fails to take into account emissions generated by the massive construction that was required to build the Olympic venues hosting the events. Meanwhile, a Russian crackdown on environmental protestors has raised concerns from human rights organizations. – Read more from the New York Times – Read more from rsport – Read more from Mashable Sudan wins gold The Gold Standard has issued the first offsets to a carbon project in Sudan, a country plagued by civil war. The Darfur Efficient Cookstoves Project, developed by Carbon Clear and NGO Practical Action, will deliver 10,000 energy efficient and clean-burning cookstoves to replace wood and charcoal fires and reduce carbon emissions while providing social, economic and health benefits. Given the reluctance of emissions auditors to send staff to the war-torn area, the Gold Standard created rules to allow objective observers from NGOs or United Nations (UN) staff already deployed in Sudan to help with monitoring and verification. “It is essential that carbon finance reaches poorer countries, regions and communities – and it must deliver both climate and development outcomes,” said Gold Standard CEO Adrian Rimmer. – Read more here Climate North America US Northeast takes it down a notch Carbon emissions in the nine Northeastern states participating in the Regional Greenhouse Gas Initiative (RGGI) declined for a third straight year. The RGGI region emitted about 86 million short tons of carbon in 2013, falling below the new cap of 91 million short tons set for 2014 by the RGGI states, amid mild temperatures and increasing use of natural gas, as well as expanded energy-efficiency programs that were financed in large part by revenues generated by RGGI’s allowance auctions. The first allowance auction under the new cap will be held on March 5. – Read more here EPA walking a fine line The Environmental Protection Agency (EPA) is trying to strike a delicate balance in crafting new regulations to curb carbon emissions from the 1,500 power plants in the US. The new rules must have sufficient environmental impact without risking soaring electricity bills and power blackouts, as well as legal challenges. But opponents of the upcoming rules aren’t waiting for the EPA to finish its work. Senator James Inhofe (R-Oklahoma) plans to introduce a bill that would allow states to opt-out of the regulations out of concern that the forced shutdown of coal-fired power plants could cause energy shortages. – Read more from the New York Times – Read more from the Hill – Read more from eNews Park Forest Kyoto & Beyond Back-loading fast track front-loads expert concerns The European Parliament agreed to fast-track a plan to bolster the EU Emissions Trading Scheme (EU ETS) by withholding 900 million permits from 2014-2016. The temporary fix has some experts concerned about market volatility and the impact of reintroducing the credits in 2020. The back-loading of permits may also cause temporary shortages for European manufacturers. Prices jumped 6.2% after the 6 February vote and closed at the highest level in more than a year on the ICE Futures Europe exchange, but retreated after an official cast doubt on the notion that the backloading could start in March. – Read more from Bloomberg Global Policy Update Iran drops hints of ETS in line with lifted sanctions Iran is the latest country to embrace the carbon markets, with its recent 5-year plan outlining Iran’s intentions to limit emissions, particularly from the energy sector. The country’s last report to the UN’s climate body in 2011 noted that sanctions had prevented the country from modernizing its fleet of power stations. Although the specific details of the planned market are still unknown, some industrial facilities will be allocated credits to cover a limited amount of their carbon emissions and would have to buy permits in the market to cover the rest, a nod to growing acknowledgement of the role of fossil fuels in global warming and the need to slash increasing demand for fuel within the country. Iran, a member of the Organization of the Petroleum Exporting Countries, is one of the world’s largest producers and exporters of crude oil. – Read more here No pain, lots of gain Australian Environment Minister Greg Hunt’s staffers may have been guilty of the ultimate Freudian slip when they sent out a press release claiming the government’s carbon tax is “still inflicting plenty of gain, with no environmental pain.” Hunt was appointed to his position in September 2013 by Prime Minister Tony Abbott, a steadfast opponent of the carbon tax. The minister’s staffers later claimed that the words pain and gain were inadvertently switched. Hunt, who refused to attend the UN climate negotiations in Poland last November, publicly denounced the tax, which added a lower-than-expected $4.1 billion to the government’s coffers in 2012-13. Supporters appear to have enough votes to prevent repeal until the new Senate takes control in July. – Read more from The Brisbane Times – Read more from UPI – Read more from The Sydney Morning Herald New Zealand on the wrong track A group of more than 60 Maori tribes plan to sue the New Zealand government for NZ$600 million for what they say are estimated losses for their forests caused by a pricing freefall in the country’s ETS. An influx of inexpensive carbon offsets from China and Russia put significant pressure on prices in the New Zealand ETS, which declined from NZ$20/t in 2010 to NZ$3.25/t as of 14 February. The tribes blame the government for failing to follow through with initial plans to restrict the use of foreign offsets in the program. – Read more from The South China Morning Post Costa Rica dreamin’? Costa Rica aims to be the first country to become carbon neutral by 2021, in large part by reducing its dependence on fossil fuels and increasing forest cover to offset unavoidable carbon emissions. However, some experts argue this is an unrealistic goal because the country will need more time to achieve neutrality and must integrate its climate policies with other public policies, particularly those aimed at the transport sector, which generates 42% of its carbon emissions. Reaching this goal will also depend on the level of priority given by the next president, who will be elected in April. Meanwhile, the country’s forest sector continues to advance implementation of its REDD+ jurisdictional program, as the first recipient of funds channeled through the World Bank’s Forest Carbon Partnership Facility. – Read more from the Independent European Daily Express Be careful what you wish for The EU ETS has been plagued by an economic crisis that led to lower-than-expected GHG emissions and a glut of allowances. But South Korea’s ETS, scheduled to launch on 1 January, 2015, could have the exact opposite problem. The South Korean government is sticking with a forecast for 2020 emissions that may be too low, according to an analysis by Thomson Reuters Point Carbon, and could cause carbon prices to skyrocket up to $93/tCO2. The country has set a target of reducing emissions by 20% below business-as-usual levels by 2020. – Read more from the Environmental Reader – Read more from Reuters Carbon Finance Risky business Investors have filed shareholder resolutions with 10 fossil fuel companies to force them to improve their assessments of carbon-related risks to their infrastructure and business operations, amid growing concern these companies are not preparing for the possible impact of carbon regulations. In February 2010, the US Securities & Exchange Commission (SEC) released guidance on how to report “material” regulatory, physical and indirect risks and opportunities related to climate change, but a recent Ceres report found that 41% of Standard & Poor’s 500 companies failed to address climate change in their 2013 filings. The investor coalition urged the SEC to focus on ensuring companies provide adequate disclosure of climate issues. – Read more from P&I – Read more from Ceres Science & Technology VCS springs a new leak… Last week, Naomi Swickard, VCS Agriculture, Forestry and Other Land Uses (AFOLU) Manager, alerted market participants to the standard’s release of a new Leakage Tool for Jurisdictional Nested REDD (JNR) programs implemented at the subnational scale. VCS highlights two modules that account for leakage –or the idea that deforestation avoided in one place might ‘leak’ to another – from the production of global commodities by applying an “Effective Area Approach” or a “Production Approach”. Jurisdictions can alternatively apply a simplified default approach. VCS will host two webinars on 27 February 2014 to present the tool and modules. – Read more …And rides a tidal wave Restore America’s Estuaries proposed a new VCS methodology for Tidal Wetland and Seagrass Restoration, which went up for public comment 11 February. Wetlands store more carbon than almost any other land type, and their draining and degradation – largely human-induced – releases large quantities of GHGs. Restoring tidal wetlands should slash these emissions, and this methodology is a new attempt to quantify and monetize them in order to incentivize restoration projects. VCS will hold a webinar about the methodology on 20 February, and the public comment period will end 13 March. – Read more here Burning the midnight oil The American Carbon Registry has approved a new methodology to generate carbon offsets by recycling transformer oil. The methodology quantifies emission reductions produced by diverting highly refined used transformer oil to a refining facility that processes the oil for re-use. Refiner Hydrodec plans to verify and issue its first offsets under the new methodology in the first half of 2014. The company’s oil product would represent about 60,000 tonnes of saved carbon emissions as offsets that can be sold on the voluntary carbon market. – Read more – Read more from Stock Market Wire Post-Doctoral Fellow – Targeting Climate-Smart Development Interventions Under Multiple Uncertainties, World Agroforestry Centre (ICRAF) Based in Nairobi, Kenya, the post-doctoral fellow will work for one year with the decision engagement and analytics team at ICRAF to develop methods for targeting interventions under uncertainty, and for projecting likely impacts of such interventions. The successful candidate will have a PhD in economics, decision analysis, business analysis, development or related field; excellent quantitative analysis skills; good understanding of Bayesian networks, Monte Carlo simulation and other approaches to modeling under uncertainty; advanced programming skills; proficiency in oral and written English; and track record of publication in peer-reviewed journals. – Read more here Post Doctoral Fellow – Mitigation Options & Poverty Reduction, ICRAF Based in Nairobi, Kenya, the post-doctoral fellow will lead the development and testing of tools and approaches to assess farming practices that contribute to both GHG reductions and farmers’ livelihoods. The successful candidate will have a PhD in agronomy, agro-ecology, environmental sciences or related field; expertise in modeling with programming skills, integrated assessments and GIS/database applications; proven experience working in an interdisciplinary, cross-cultural team; strong publication record in peer-reviewed journals; and proficiency in English. Working knowledge of French and/or Spanish, and field experience in the tropics preferred. – Read more here Analyst – ICIS Based in San Diego, California, the analyst will join ICIS to assist the Director of US Emissions Markets in product development, and will work closely with colleagues based in Europe and Asia to help to tailor product offerings to the evolving market needs. The ideal candidate will have a degree in public policy, economics, business, finance, or related field; experience in US energy markets and political analysis; knowledge of legislation and markets (California ARB, Western Climate Initiative, EPA, etc.); and programming/modeling skills. – Read more here Project Manager – Global Footprint Network Based in Orissa, India, the project manager will join Global Footprint Network for 18 months, and will lead the successful execution of the Sustainable Development Return on Investment project in a timely manner and under a budget. The ideal candidate will have at least four years of experience managing international development projects, expertise in metrics, and an advanced degree in a related field. Strong leadership skills and proven ability to inspire an international cross-cultural team are required. – Read more here Business Carbon Footprinting Intern, Carbon Footprinting, Planet First Based in London, England, the intern will join Planet First for three months, and will play a fundamental role in consultancy operations that offer solutions for business sustainability. He/she will help to deliver sustainability reporting including the measurement of carbon footprints and social performance for a wide range of organizations as they aim to achieve The Planet Mark, a sustainability certification. Eligible candidates will have a strong mathematical background, close attention to detail, high proficiency in Excel and Word, great communication skills, and a desire to learn more about environmental issues. – Read more here ABOUT THE ECOSYSTEM MARKETPLACE Ecosystem Marketplace is a project of Forest Trends, a tax-exempt corporation under Section 501(c)3. This newsletter and other dimensions of our voluntary carbon markets program are funded by a series of international development agencies, philanthropic foundations, and private sector organizations. For more information on donating to Ecosystem Marketplace, please contact [email protected].

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17 February 2014 | California’s Yurok people and Australian project developer New Forests yesterday announced that they have successfully registered the first forest carbon project developed under the California Air Resources Board’s (ARB) protocol for US forests. Located near the Klamath River, the Improved Forest Management project over 7,660 acres of Douglas fir and mixed hardwood will issue 704,520 offsets, destined for California’s compliance carbon market.

“Our partnership with New Forests will provide the Tribe with the means to boost biodiversity, accelerate watershed restoration, and increase the abundance of important cultural resources like acorns, huckleberry and hundreds of medicinal plants that thrive in a fully functioning forest ecosystem,” said Thomas P. O’Rourke Sr., Chairman of the Yurok Tribal Council.

On the voluntary side, the last installment of Ecosystem Marketplace’s buyer series explores why the National Geographic Society – perhaps best known for the stunning photos featured in its magazine – has been investing in forest carbon. Nat Geo purchases offsets from a reforestation project in Panama, an avoided deforestation (REDD) project in Brazil, and another REDD project in the Yaeda Valley of Tanzania to neutralize the impact of various aspects of its operations.

“Some people are not going to be comfortable using carbon offsets to counter their greenhouse gas (GHG) emissions,” National Geographic’s Chief Sustainability Officer Hans Wegner admits. “But we feel they are a viable way to deal with those emissions we cannot eliminate in our operations. So long as they are third-party certified, audited, and properly accounted for, we consider them an important tool.”

In global news, the United Nation’s (UN) Millennium Development Goals are set to expire in 2015, and countries are hard at work coming up with some new resolutions to rudder global development over the next generation. Forests are one of 32 themes addressed in the Sustainable Development Goals (SDGs), which a 30-member UN Open Working Group discussed in Indonesia last week.

Peter Holmgren, the Director of the Center for International Forestry Research (CIFOR), made a presentation to the group, highlighting the fact that forests are relevant to many of the other items on the world’s to-do list, from poverty eradication to food security to sustainable agriculture to water. Unlike the Millennium Development Goals, which were sector-specific, the SDGs will be set more holistically – lending themselves to a ‘landscape approach,’ Holmgren says. He suggests nine specific forest metrics that could be used to track progress going forward.

Chevrolet has been one of the most active and prominent buyers of carbon credits in the voluntary market in recent years. Now a potentially game-changing new program financed by the automaker aims to reward US-based colleges and universities for renewable energy and energy efficiency projects undertaken via a new methodology under the Verified Carbon Standard.

13 February 2014 | When Ball State University joined the American College and University Presidents Climate Commitment (ACUPCC), it vowed to slash its greenhouse gas emissions 40% by 2020. Then it identified nine pilot projects to help it achieve its goal “as funding becomes available”.

Now Automaker Chevrolet is helping to make some of that funding available by purchasing roughly 400,000 to 500,00 carbon credits from institutions of higher learning that undertake energy-efficiency and renewable-energy projects.

Not only is Chevrolet buying the credits, but the company financed the development of a new methodology that made their creation possible. The exact price the automaker will pay each institution for credits is confidential, but likely around $5 per metric ton.

“It could potentially be a game-changer in carbon reduction and the carbon market,” said David Tulauskas, director of sustainability for General Motors, Chevrolet’s parent company. “For the first time, it offers a streamlined, easy process for universities and colleges, many have set a target to become carbon neutral in the future, a way to monetize this.”

Specifically, the methodology developed under the Verified Carbon Standard (VCS) provides the procedures for quantifying reductions in “Scope 1”, or direct, stationary combustion emissions and “Scope 2”, or indirect, electricity emissions achieved as a result of campus-wide interventions or through Leader in Energy and Environment Design certification of individual buildings.

“There hasn’t been a convenient way for higher ed institutions to enter the carbon market and to effectively participate,” said Robert Koester, professor of architecture and chair of the Ball State University Council on the Environment. With the new methodology, “that barrier is gone.

Colleges and universities are increasingly pursuing clean energy and energy efficiency projects as part of a widespread sustainability movement in the higher education community, which has a built-in base of students already passionate about addressing the climate issue and eager to ensure their schools are doing their parts to reduce carbon emissions.

Ball State University in Muncie, Indiana is applying the new carbon-reduction methodologies and selling some of the carbon reductions from installing the largest geothermal system at a U.S. college.

At last count, 679 campuses – about 15% of the roughly 4,000 colleges and universities across the United States – are engaged in an aggressive effort to reduce their carbon emissions as part of the ACUPCC. Under this commitment, the institutions agree to complete an emissions inventory, set a target date and interim milestones for achieving climate neutrality and take immediate steps to reduce greenhouse gases, among other things.

“That’s what this methodology really is about,” Talauskas said. “It’s about rewarding those leaders, those innovators that are going beyond business as usual.”

If Chevrolet had not financed and promoted the development of the methodology, these progressive institutions would not have the mechanism to access the voluntary carbon market in a trusted way, Koester said.

The Pioneers

Ball State University in Muncie, Indiana and Valencia College in Orlando, Florida are the first to apply these new methodologies with pilot projects. Ball State’s pilot involves selling some of the carbon reductions from installing a geothermal system while Valencia will use Chevrolet’s funds to finance additional energy efficiency retrofits.

“They have first mover advantage so they’re getting a bit of premium,” Tulauskas said. “There’s some real skin in the game and some real benefits to the universities, to the students and the climate.”

Valencia College in Orlando, Fla. is participating in the Chevrolet carbon-reduction initiative as a pilot project. Chevrolet’s funds will be used for additional energy efficiency retrofits on campus.

Chevrolet has committed to buying at least 30,000 to 40,000 credits from Ball State, which often had trouble finding the money to engage in clean energy and efficiency initiatives, Koester said. The university is not alone in that regard as other institutions are often forced to draw from tight operations budgets for these types of programs, he said.

“Chevrolet’s intervention is changing that game because now there’s a way for universities to actually acquire funding to undertake projects that will drive more deeply the carbon reductions laid out in their climate action planning,” Koester said. “It’s a really significant incentive pool.”

“We should be able to achieve carbon neutrality sooner as a result of this kind of incentive,” he observed.

Chevrolet is the largest US corporate buyer of voluntary carbon credits, purchasing offsets at above-average prices, according to Forest Trends’ Ecosystem Marketplace’s 2013 State of the Voluntary Carbon Markets report.

In 2010, the company voluntarily committed to reduce up to eight million metric tons of carbon and pledged about $40 million to the effort. Chevrolet has reduced about 7.6 million tonnes to date and the new offset purchases will complete that commitment.

To develop the new methodology, which has been approved by the VCS, Chevrolet worked with an advisory team led by the Climate Neutral Business Network with support from the Bonneville Environmental Foundation, the U.S. Green Building Council (USBGC) and the Association for the Advancement of Sustainability in Higher Education. The methodology uses a combination of performance benchmark and project method approaches to assess additionality and quantify campus-wide and/or building-specific emission reductions.

“We’re excited that there is a durable methodology and we’re excited that Chevy’s investment actually supports project teams on the ground,” said Chris Pyke, vice president, research for the USBGC.

Valencia College

It really provides an integrated solution from the sense that it provides not only the methodology, but also the underlying financing,” said David Antonioli, Chief Executive Officer, VCS Association.

Chevrolet hopes other corporates will follow its lead and commit to purchasing carbon credits from higher education institutions under the new methodology, Tulauskas said.

“Once Chevy has stepped out of the picture … we’re still positioned as an institution to continue to play in (the voluntary) market,” Koester said.

Market participants have been growing increasingly pessimistic about the possibility of offsets from projects that reduce emissions from deforestation and forest degradation (REDD) making it into California’s cap-and-trade program. But REDD credits may yet have a fighting chance, as officials with the California Air Resources Board confirmed that they will continue considering adding international sector-based offsets to the program.

13 February 2014 | Major doubts have been expressed recently about whether offsets from reduced emissions from deforestation and degradation (REDD) will ever make it into California’s cap-and-trade program. But state regulators affirmed this week that REDD credits are still on their radar.

Political opposition has been one of the major factors driving the growing reservations that REDD would ever be allowed into California’s program . In February 2013, State Senator Ricardo Lara introduced Senate Bill 605, a proposal that would have limited offsets to anywhere in the US and possibly within the Western Climate Initiative, which includes Quebec but not states outside of North America. The bill did not pass the California Assembly before the end of last year’s legislative session, but could be reconsidered in its new form this year and remains a threat to the role of international offsets in California’s program, observers say.

But the California Air Resources Board (ARB), the agency charged with overseeing the cap-and-trade program, appears to be committed to considering the offsets in spite of that political opposition. In a proposed update to the AB 32 scoping plan, the outline governing California’s compliance with its landmark greenhouse gas (GHG) emissions reduction law, the ARB clearly states that the agency still views international offsets as potentially playing a role in the program and will continue considering them.

“As the cap-and-trade program continues to help achieve our long-term climate goals, it will be increasingly important to bolster the offset program,” the ARB said in the document. “There are real challenges to identifying in-state offset protocols, but ARB is committing to pursuing those that are workable. Part of the strategy to ensure sufficient offsets are available is to continue to consider international sector-based offset programs.”

The ARB specifically mentioned the REDD placeholder featured in the cap-and-trade regulations, but did not provide a timetable for starting a REDD rulemaking, which would need to happen before the credits are allowed into the program.

The agency also cited the safeguards recommended by the REDD Offsets Working (ROW) Group, which limit accepted offsets to those from jurisdictional REDD+ programs. ROW released its technical and policy recommendations to California and Acre, Brazil and Chiapas, Mexico, the US state’s partners in a memorandum of understanding, in July 2013. The document also referred to the Governors’ Climate and Forests Task Force, a coalition of 22 subnational jurisdictions contemplating programs and policies such as REDD.

“Continued evaluation of REDD and other sector-based offset programs further demonstrates California’s ongoing climate leadership and could result in partnering on other mutually beneficial and low emissions development initiatives, particularly those in Mexico,” the ARB said in its proposed update.

Leading By Example

California’s Global Warming Solutions Act of 2006 (AB 32) sets a goal of reducing state-wide GHG emissions to 1990 levels by 2020 and reducing emissions 80% below 1990 levels by 2050. The proposed update recognizes that the US state must continue to lead at the international level by planning for emissions reductions after 2020 – the scheduled last year of the trading program – and by continuing collaborations with other states, provinces and countries taking action on climate change, said Erica Morehouse, an Environmental Defense Fund attorney who focuses on the policy and legal aspects of implementing AB 32.

“The proposed update identifies international sectoral offsets, such as REDD, as a potential key opportunity for California to help curb deforestation, the cause of roughly 15% of the world’s greenhouse gas emissions, while efficiently meeting the state’s domestic emission reduction targets,” she said in a blog post. “The state’s engagement on REDD, along with the ongoing collaborations with China, Mexico, and other U.S. states, is a building block of meaningful global climate leadership.”

Companies that must reduce their emissions under California’s cap-and-trade system may use offsets for up to 8% of their compliance obligations. However, the program restricts the use of international offsets to 2% of a regulated entity’s compliance obligation in the second compliance period (2015 – 2017) and 4% in the third compliance period (2018 – 2020).

California’s program already allows offsets from domestic forestry, urban forestry, livestock and ozone-depleting substances (ODS) projects. ARB officials have pledged to continue evaluating additional offset protocols, with an emphasis on in-state opportunities. The agency has already proposed a coal mine methane protocol and is also developing a protocol to reduce GHG emissions from rice cultivation.
More than 3.6 million offsets have been issued by the ARB under the ODS protocol, while more than 1.6 million have been issued under the forestry and nearly 83,000 under the livestock protocol, as of February 12, according to the ARB. Credits have yet to be issued under the urban forestry protocol, which is not expected to contribute major volumes to the program.

“With just the envisioned six compliance offset protocols, it is clear there will not be enough offsets to meet the 2013-2020 maximum offset demand if every entity chose to use the maximum number of allowable offsets,” the ARB said in the document. “It should be noted that the cap-and-trade program is designed so that offsets will play a larger role in cost containment in the later years of the program.”

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Despite the cold start here in D.C., January is blooming with carbon news. Quebec and California started off the year by officially linking markets, while a sustainable agriculture project in Kenya became the first to verify credits from carbon sequestration in soils under VCS in mid-January. These new developments only enhance 2013’s top stories, also featured in this Special 2014 New Year Edition.

This article was originally published in the V-Carbon newsletter. Click here to read the original.

28 January 2014 | NY Times contributor Mark Bittman began the New Year by looking at all the good, bad, and ugly that has happened in Years Ending in 4. Here at Ecosystem Marketplace, we’re not superstitious, but we do like to mark the turning of the calendar with a look back before charging forward.

Our Year in Voluntary Carbon retrospective summarizes 2013’s major milestones, and below, our reader poll revealed your Top 10 stories of last year:

1. California officially launches cap-and-trade program, issues first carbon offsets: After a one-year delay, California’s cap-and-trade program for greenhouse gas (GHG) emissions reductions got underway in January, spurring project development and offset purchases state-side. California regulators finally started to issue ozone-depleting substances offsets in September and forestry offsets in November, paving the way for more development activity in 2014.
2. Voluntary demand for carbon offsetting grew 4% in 2012: In June, Ecosystem Marketplace released its 2013 State of the Voluntary Carbon Markets report, which found that purchases of voluntary carbon offsets rose 4% in 2012 to 101 million tonnes of carbon offsets (MtCO2e), but market value decreased 11% to $523 million as offset prices fell slightly for several popular project types.
3. UN climate negotiators reach agreement on REDD+ rulebook, defer several decisions to next COP: At the United Nations climate change negotiations in Warsaw, agreement on the so-called “REDD Rulebook” established guidelines for determining national deforestation baselines, a key step for allowing compliance-based REDD finance to flow.
4. China launches domestic pilot carbon trading programs: China spent 2013 launching four of its seven planned subnational carbon markets. Trading in Shenzhen started in June, Shanghai and Beijing’s markets launched in November , and Guangdong commenced trading in mid-December. China could offer a lifeline to Clean Development Mechanism (CDM) project developers by allowing them to re-register their credits as China Certified Emission Reductions, which would fetch higher prices on the domestic markets.
5. Disney, Microsoft use carbon tax revenues to propel offset purchases: Some of the biggest names in the energy sector, including ExxonMobil, BP and Royal Dutch Shell, are using double-digit carbon price projections to guide their business planning decisions. Disney and Microsoft have gone a step farther by using the revenues generated from their internal carbon fee programs to invest in a wide range of offset projects, showing a particular affinity for REDD projects in Asia, Africa and Latin America.
6. Clean cookstoves become all the rage, more than half use carbon finance: Carbon offsets contributed funding to half of the eight million clean or efficient stoves distributed in 2012, as high offset prices and corporate demand for the projects drove $167.3 million into the sector, according to a new report by Ecosystem Marketplace on behalf of the Global Alliance for Clean Cookstoves. Former US Secretary of State Hillary Clinton spoke about the report’s findings in New York in September.
7. Costa Rica launches domestic carbon trading program: In support of domestic reforestation and conservation efforts, Costa Rica officially launched a domestic carbon market in September. Ecosystem Marketplace’s earlier coverage explores how the country’s independent carbon standard is helping it get REDD-ready.
8. CDM market collapses, remains in limbo: Negotiators at the Conference of Parties (COP19) in Warsaw in November failed to lock in a concrete solution for the CDM market. Proposals to set a price floor and to have financial institutions such as the Green Climate Fund bail out the oversupplied market by buying up the very cheap credits both fell through. But key players such as United Nations Framework Convention on Climate Change Executive Secretary Christiana Figueres still see a role for market-based mechanisms such as the CDM in a future climate agreement.
9. President Obama pushes power plant carbon regulations via EPA: The US Environmental Protection Agency’s upcoming rules to control carbon emissions from existing power plants is a landmark move to regulate climate pollutants in the United States. The Regional Greenhouse Gas Initiative is already making the federal case that its cap-and-trade program should be eligible for compliance, and many experts believe jumping on board the existing programs in California and the Northeast may be a much easier path for states than starting a new regulatory regime from scratch.
10. EU ETS crashes to record lows, countries step in with backloading fix: EU ETS prices slumped to $2.81 euros per tonne in January and set a new record low of $2.63 euros per tonne in April after the European Parliament rejected an emergency fix for the beleaguered compliance market. After months of intense negotiations, however, EU countries finally agreed to the so-called “backloading” proposal, in which the sale of up to 900 million allowances will be postponed, a move that participants hope will prop up the market until a more permanent solution is reached.

Carbon Crystal Ball 2014

Our readers can’t exactly forecast the future, but they often come close. Last year, they (correctly) predicted that 2013 would be a year for innovation in methodologies and project development; that cookstove and water filtration projects would gain in popularity; that voluntary market players would begin to diversify their attention to compliance markets; and that buyers would continue to seek out quantifiable co-benefits to differentiate their offsetting efforts.

Roberto L. Gí³mez of Fundacií³n Natura Colombia, predicts that 2014 will be a year of consolidation in the voluntary market. “The most effort will go towards strengthening the instruments that grow demand for verified emissions reductions,” he said.

Martin Clermont of Will Solutions envisions an increasing presence of the voluntary carbon market beside the efforts to structure the dozens of regulated ones.

On the compliance side, Harold Buchanan of CE2 Carbon Capital thinks the California Air Resources Board (ARB) will approve the Mine Methane Capture protocol that they delayed last October. But, “Offset supply will fall far short of ARB/Analyst/Registry expectations due to [the] buyer liability policy,” he said.

Even as climate negotiators gear up for the 20th Conference of the Parties in Lima, Peru in December, our readers predict that jurisdictional approaches to limiting carbon emissions will continue to move forward throughout the year.

“Jurisdictional carbon markets will continue to grow in North America,” said David Rokoss of Offsetters Climate Solutions. “We’ll see policy drafts from a number of Canadian provinces as they try to address emissions ahead of potential Canadian Federal policy (in certain sectors)…I would also expect to see movement in a few US states that have indicated carbon policy interest – particularly western coastal states.”

David Antonioli of the Verified Carbon Standard (VCS) predicts the issuance of the first jurisdictional REDD+ credits in 2014, as well as new issuance of AFOLU (agriculture, forestry, and other land uses) credits: “Issuance to a number of agriculture-related projects [will be] important because it will serve as demonstration and help to further the integration of agriculture and forests into broader landscape approaches,” he said.

Here at Ecosystem Marketplace, we’re getting ready to begin data collection for our 2014 State of the Voluntary Carbon Market and State of the Forest Carbon Market reports, and we’ll also be launching a revamped survey of clean cookstoves projects in collaboration with the Global Alliance for Clean Cookstoves.

We look forward to again providing reliable and transparent market information in the New Year, with many thanks going to those organizations that support our research. Most recently, this includes Impact Carbon, ClimateCare, and the Forest Carbon Group. In addition to the gratification of helping us provide market information and insight to the world free of charge, sponsoring organizations (above a certain level) receive a few perks. To inquire, email Molly Peters-Stanley.

May this Year Ending in 4 bring you much happiness and fewer emissions. Best wishes from all of us here at Forest Trends’ Ecosystem Marketplace.

—The Editors

For comments or questions, please email: [email protected]

2014 So Far 2014 has already seen plenty of action on the voluntary carbon market front. Last week, a sustainable agriculture project in Kenya became the first to verify credits from carbon sequestration in soils under the VCS. The standard’s new Reduced Impact Logging methodology is now open for public comment, and more projects are beginning to work towards the Climate, Community and Biodiversity Standard’s new Triple Gold designation, which certifies beyond-carbon benefits such as endangered species protection and climate adaptation (more to come on this from EM). On the compliance side, Quebec officially linked its carbon market with California’s as of January 1, opening the opportunity for cross-border offset purchases. A new Environmental Defense Fund report projects offset market growth in California in 2014, though market experts say that Quebec will not contribute much to this demand until more sectors are regulated beginning next year. Supply is also beginning to ramp up in North America’s compliance markets: Finite Carbon and Potlach Corporation registered the second-ever forest carbon project with the California ARB at the beginning of January. Recent news from across the pond is a bit more mixed. While China has already launched subnational carbon markets in Guangdong province and four cities, a lack of transparency about the number of emissions permits issued and pricing could undermine the market, and a permit surplus could be looming, according to recent reports. And things look pretty stark in Australia, where the proposed abolition of the country’s carbon tax led the head of CO2 Group, Australia’s largest carbon project developer, to leave his position last week. Meanwhile, the EU is expected to vote todayon the backloading provision that would tighten its carbon market. Research Associate, Greenhouse Gas Protocol – World Resources Institute (WRI) Based in Washington, DC, the Research Associate will join WRI’s GHG Protocol Corporate Team and be tasked with capacity building for Scope 3 accounting in the financial sector. The successful candidate will have 2-4 years of professional work experience related to the financial sector and/or corporate sustainability, preferably with a master’s degree in a relevant field, as well as experience with corporate GHG reporting and/or corporate value chains. – Read more about the position here Analyst, Climate Finance – Climate Policy Initiative Based in Venice, Italy, the Climate Finance Analyst will join the Climate Policy Initiative’s European team, looking at issues such as the governance of international funds, their allocation and effectiveness, and the role of risk allocation within this context. The position requires performing rigorous quantitative evaluation of national and international finance mechanisms and advising policymakers on the implications of research findings. The successful candidate(s) will have a degree in a quantitatively rigorous field, 2+ years of experience analyzing climate finance, and experience in macroeconomic modeling. – Read more about the position here REDD+ Knowledge Sharing and Learning Consultant – World Wildlife Fund (WWF) Based in Washington, DC, the consultant will assist WWF’s Forest and Climate Programme to deliver specific REDD+ Knowledge Sharing and Learning activities through June 31, 2014. The ideal candidate will have a proven track record in providing strategy expertise in the field of development-based knowledge sharing and learning; strong writing and communication skills; and experience working in an international, multi-cultural environment. – Read more about the position here Call for JNR Expert Applicants – Verified Carbon Standard (VCS) The VCS is seeking practitioners with significant expertise in the development and/or assessment of REDD+ programs to serve as expert reviewers around the Standard’s new Jurisdictional and Nested REDD+ (JNR) Framework. These experts will review more than a dozen jurisdictional programs that are now seeking validation under VCS JNR. Experts can be based anywhere. – Read more about the position here ABOUT THE ECOSYSTEM MARKETPLACE Ecosystem Marketplace is a project of Forest Trends, a tax-exempt corporation under Section 501(c)3. This newsletter and other dimensions of our voluntary carbon markets program are funded by a series of international development agencies, philanthropic foundations, and private sector organizations. For more information on donating to Ecosystem Marketplace, please contact [email protected].

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