In the classic comedy The Producers, an unscrupulous businessman sells one product to scores of investors, each of whom believes they are the sole owner. In ecosystem markets, we call that "double counting" – and it’s what registries have been set up to prevent. The Ecosystem Marketplace takes stock of carbon credit registries in the voluntary markets.
In the classic comedy The Producers, an unscrupulous businessman sells one product to scores of investors, each of whom believes they are the sole owner. In ecosystem markets, we call that “double counting” – and it’s what registries have been set up to prevent. Ecosystem Marketplace takes stock of carbon credit registries in the voluntary markets.
24 April 2008 | Max Bialystock is the carbon sector’s worst nightmare. He’s the character who, in the Mel Brooks classic The Producers, persuades scores of investors to back a single stage play – each thinking they own the whole deal.
The scam collapses, of course, and Bialystock ends up in jail – as well he should. Investor confidence is the cornerstone of any financial market. When that conficence suffers, we all lose.
And nowhere is that more true than in the market for environmental offsets.
After all, these are units of trade that represent verified economic good, and the amount of environmental good they create depends on that verification.
Carbon credit registries that track credit ownership are a cornerstone of that verification.
Registries: Public, Private, and In-Between
Here we take a look at registries that have been set up to track offsets in the voluntary carbon markets, but registries are by no means limited to this one sector. They have also been set up for compliance markets, such as the European Union Emissions Trading Scheme (EU ETS), which was designed to meet the needs of companies seeking to comply with the Kyoto Protocol.
Kyoto’s Clean Development Mechanism (CDM) has links to its own established registries, as does Australia’s New South Wales Greenhouse Gas Abatement Scheme (NSW GGAS).
In 2007, we found that many participants were utilizing their own organization’s specific registry – some of which are public. For example, the Carbon Neutral Company created its own type of online registry, which posts detailed information on projects contracted. Dom Stichbury of the Carbon Neutral Company notes that the company does not see its private online registry as a substitute for a third-party, multi-company registry. Instead the “registry was created to be as open as possible about the projects that we’ve contracted … and to contribute to increased transparency in the voluntary markets.”
In the latter part of this article, you will find links to all of the registries covered.
Emissions Tracking versus Carbon Credit Accounting
Dozens of greenhouse gas (GHG) registries exist around the world, and most of them can be divided into two different categories: emissions tracking registries and carbon credit accounting registries.
Emissions tracking registries identify emission reductions at the source, leaving others to track the credits once they enter the market.
“We’re measuring the beans, not tracking the trades,” says Joel Levin of the California Climate Action Registry (CCAR), an emissions tracking registry.
Because these registries help companies establish baselines and account for emission reductions, they’re a critical tool for both regulated and voluntary cap-and-trade systems.
Among emissions tracking registries up and running, the World Economic Forum has launched its Global Greenhouse Gas Registry, while Canada has the Canadian Greenhouse Gas Challenge, and the United States has the Department of Energy’s 1605(b) Program and The Climate Registry.
Carbon credit accounting registries, on the other hand, are designed specifically to “track the trades” – to follow the ownership of verified emission reductions (VERs) after they start getting bought and sold. Many carbon credit accounting registries utilize serial numbers as an accounting tool, and most incorporate screening requirements such as third-party verification to a specific offset standard.
Carbon credit accounting registries include the Bank of New York’s Global Registry and Custody Service, verifier TÃƒÅ“V SÃƒÅ“D’s BlueRegistry, and the New Zealand-based Regi (not to be confused with the US Regional Greenhouse Gas Initiative, or RGGI, pronounced “Reggie”).
Other registries are designed to underscore an exchange, such as the Chicago Climate Exchange (CCX) Offset Registry and the Asia Carbon Registry.
Then you have registries created by suppliers, such as the Carbon Neutral Company, as well as those created by third-party standard organizations, such as the Gold Standard Voluntary Registry.
The Environmental Resources Trust’s (ERT) GHG Registry and California Climate Action Registry cover both categories, tracking corporate emission reductions and carbon credits.
Carbon-Credit Accounting Registries: The Architecture
Registries themselves face the quandary of how to make sure they can trust the information they are receiving. Some focus on transparency, while others focus on levels of legal liability. Still others look at the “ethos” behind how reporting companies are contributing to the voluntary carbon marketplace.
This has led the registries to embrace different standards.
TZ1, for example, is a carbon registry and exchange based in New Zealand. Set to launch in June, it will accept credits verified to the Voluntary Carbon Standard and perhaps the Gold Standard.
TÃƒÅ“V SÃƒÅ“D’s Blue Registry, on the other hand, only lists credits certified to the VER+ standard, but plans to extend its registry services to encompass a wide array of different standards, such as the Voluntary Carbon Standard, Chicago Climate Exchange Standards, and the Gold Standard.
The Bank of New York’s Custodial Registry only accepts credits certified to the Voluntary Carbon Standard, and ERT’s GHG Registry doesn’t specify whether or not registered credits are screened by a specific standard.
The majority of greenhouse gas registries are designed as public or partially public databases. For example, stakeholders interested in tracking the sales or purchases of a particular company registered on the Environmental Resource Trust’s GHG Registry website will find that most of the information is publicly-available.
Alternatively, the Bank of New York registry is structured less like a public database and more like a bank account – something Alex Rau of Climate Wedge says is critical to many investors.
“Would you want your bank account open to the public?” he asks.
Getting Registered: The Costs
The cost of listing credits on an OTC registry varies widely, and is often difficult to pin down – especially when you factor in the way different registries bundle their services.
ERT’s registry process, for example, costs more than Regi’s and plenty of others, but often includes third-party verification, while Regi only accepts credits that have passed inspection by a certification service.
The Registry Roster
Here is a brief run-down of registries either up and running or in the works:
The Asia Carbon Registry (ACR) was developed in 2007 by the Asia Carbon Group (ACG), which provides carbon advisory, finance and asset management services under several different initiatives, primarily the Asia Carbon Exchange (ACX) and the Asia Carbon Asset Development Facility. The Registry plans to accept a variety of carbon credit types, including Voluntary Carbon Standard and Gold Standard credits. Currently, however, voluntary credits traded on ACX are simply third-party VERs. The scope of registry services includes electronic listing, transferring, and eventually retiring VERs.
The Environmental Resources Trust (ERT) GHG Registry is a relatively long-standing registry. Created in 1997, it tracks both “qualified emissions reductions” and actual carbon credits. Both buyers and suppliers can register credits, which they can either re-sell or retire.
In mid-2008, Canada’ Globe Advisors plans to launch the Globe Carbon Registry, which attaches serial numbers to offset credits and uses them to track ownership transfer and retire credits against end-users emissions. It’s designed around accepting credits verified to a third party standard, but will also accept credits verified to a ‘custom standard’ and provide users information on the criteria utilized.
The GHG CleanProjects Registry‘s chief objective is to list and de-list GHG reduction projects that result in Verified Emission Reduction-Removal credits (VERRs) for the voluntary and regulated markets. Participants in this Canadian registry may attach a unique serial number to each VERR representing one tCO2e. Because the GHG CleanProjects Registry is structured to track projects rather than serve as an accounting tool, however, serialization of verified emission reduction volume is not required. The VERR classification requires adherence to the ISO 14064 standards adopted in March 2006.
New Zealand’s new online voluntary carbon offset registry is a project of M-co and hosted by Regi. While the website is tailored to players in New Zealand’s voluntary carbon market, it will also consider foreign account requests on a case-by-case basis. The online registry was created to get a feel for how much demand exists in New Zealand’s voluntary market. Gold Standard credits are issued on a provisional basis until the Gold Standard Foundation establishes a Gold Standard Registry, upon which all of the information on Regi will be transferred to APX, which administers the trading platform. Regi has a high level of transparency, and the general public can visit its website and view the Certificate Summary Listing, which identifies the offset provider, project name, credit type and volume, and transaction status.
The Triodos Climate Clearing House is a project of Netherlands-based Triodos Bank, which focuses on financing “enterprises which add social, environmental and cultural value”. It claims to track”CO2 credits in a transparent, accountable and efficient manner.” The organization does not explicitly state a requisite for third party verification or certification, but it does state that qualified projects include activities involving “afforestation, renewable energy and energy efficiency” and was created, in part, to assure that credits cannot be double counted. Account holders include the Carbon Neutral Group and the Dutch Face Foundation.
The upcoming TZ1 Registry was created to underpin the TZ1 Carbon Exchange. It aims to act as a “meta registry” that combines and connects the systems of other major voluntary carbon market registries. Credits will be assigned a serial number. In addition to tracking trades, the registry will also include an externally-audited retirement facility for both VERs and Kyoto credits. Organizations listing information on the registry will be able to choose the level of transparency in their account.
Examples of Exchange, Standard, Verifier or Supplier-Specific Registries
Similar to other trading platforms operating in emissions markets, the Australian Climate Exchange (ACX) maintains an operational registry that facilitates transparent transactions in its “Electronic Emissions Trading Platform.” The “product listing process” that compliments the ACX Registry provides market participants with the ability to track emission credits along the supply chain, from project generation, offset verification, transaction status, and eventually retirement. Transparency is limited to ACX participants, but ACX is in the process of establishing trade mechanisms to facilitate international transactions of CERs and VERs.
The Bank of New York’s Global Registry and Custody Service for Voluntary Carbon Units was created to become a means of accounting for Voluntary Carbon Standard Voluntary Carbon Units (VCUs). It aims to streamline and legitimize the trading process of the standard’s VCUs. This centralized, electronic, and private accounting system stores VCUs, assigns each a unique serial number for tracking and verification purposes, and provides clear parameters for defining account ownership. The registrar requires certification under the Voluntary Carbon Standard and account information is not publicly disclosed.
TÃƒÅ“V SÃƒÅ“D, a German company that validates and verifies both Kyoto and voluntary emission credits, created the BlueRegistry. For now, the database only covers VERs certified by TÃƒÅ“V SÃƒÅ“D, but the goal is to become a “master” registry for voluntary carbon credits, including CCX CFIs and Voluntary Carbon Standard VCUs. The BlueRegistry is designed to be transparent, and will have publicly available information on factors such as credit-type, credit ownership and vintage.
The California Climate Action Registry (CCAR) was established by California law as a non-profit voluntary registry for greenhouse gas (GHG) emissions aimed at protecting and rewarding companies reducing greenhouse gas emissions before required by regulation. Building on its emissions reporting system, CCAR launched the Climate Action Reserve in April. A program designed specifically to track and register voluntary projects verified to CCAR Protocols, CCAR currently has approved protocols for livestock methane and forest activities and will soon release a natural gas transmission and distribution reporting and certification protocol.
The Chicago Climate Exchange registry is an accounting system for the CCX cap-and-trade program. Suppliers seeking to include their credits in the Chicago Climate Exchange’s (CCX) registry must first become members and then have their offsets approved by The CCX Committee on Offsets, which then assigns serial numbers to ensuing third party verified credits. Because the CCX system trades both emissions reduction allowances and project-based offset credits, the registry is both an emission reductions tracking program and carbon credit (in this case referred to as Carbon Financial Instruments) accounting system. The registry is somewhat transparent, providing publicly available information regarding the offset provider/aggregator, project type and location, as well as transaction volume.
In 2008, the Gold Standard Foundation joined forces with APX to create a registry that creates, tracks, and enables the transfer of Gold Standard certified VERs, ERUs, and CERs. The Gold Standard Registry for Voluntary Emissions Reductions aims to be a user-friendly, low-cost and transparent electronic database. Information about the status of credits (for example, if they are sellable or retired) can be accessed by stakeholders who register on the website. The registry features the serialization of each Gold Standard VER credit, a double-entry accounting framework, and full ownership and transaction tracking for VERs, CERs and ERUs.
Katherine Hamilton is the Associate Director of Ecosystem Marketplace. She can be reached at [email protected].
Thomas Marcello is a Research Assistant at Ecosystem Marketplace. He can be reached at [email protected].
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