This Week in V-Carbon: Sounding Off on Offsets

Despite the slow pace of summer, there is no shortage of happenings on the voluntary carbon front this week – with experts and stakeholders across the globe weighing in on new developments.  California is again in spotlight, with the release of the public comment’s about AB 32.  Read on for v-carbon highlights from around the world.

NOTE: This article has been reprinted from Ecosystem Marketplace’s Voluntary Carbon newsletter. You can receive this summary of global news and views from the world of voluntary carbon automatically in your inbox by clicking here.

25 August 2011 | Despite the slow pace of summer, there is no shortage of happenings on the voluntary carbon front this week – with experts and stakeholders across the globe weighing in on new developments.

In California, the Air Resources Board (ARB) received a whopping 109 comment letters during the public comment period for the AB 32 Scoping Plan Functional Equivalent Document (FEV), which concluded on July 28.

These public comments – responses to which can be found here – were released on Monday. Many addressed the issue of a carbon tax, which some respondents consider a better option than the cap-and-trade scheme. The second hottest topic was the program’s forestry offset protocols – with at least one respondent pointing out that the regulation does not address REDD+.

One issue that continues to draw fire in California is ARB’s buyer liability provision, recently described in a statement by IETA as inefficient, unfair and uninsurable. “Any policy under which already-issued offset credits carry a risk of invalidation will prevent the development of a market in offsets,” commented the organization.

Much like temporary and long-term Certified Emission Reductions (CERs), liability for replacing invalidated credits rests with the buyer rather than the party at fault.

In a recent blog post, the CarbonNeutral Company’s Jem Porcaro laments, “for the sake of Californian businesses, rate payers, offset project developers and the rest of the carbon market, I sincerely hope CARB learns from Europe’s past mistakes and finally does away with its buyer liability provision.”

The AB 32 Scoping Plan and Final Supplement are being discussed at a Board meeting scheduled today – so stay tuned for updates.

Things are heating up down under as well, where on Monday the Parliament endorsed the Carbon Farming Initiative. Although the move is expected to boost market activity, the real momentum is yet to come.

“There is increased interest in the CFI from across market and the first wave of investment activity will start to unfold now the Act has been passed,” Martijn Wilder, global team leader for environmental markets at law firm Baker & McKenzie in Sydney, told Reuters. “But the really significant activity under the CFI will come with the approval of carbon pricing laws.”

Australian Carbon Traders, which owns and manages the Australian Farm Abatement Registry (AFAR), welcomed the news. “Whilst a long time coming, it is exciting that landholders can now move forward with certainty to access international and domestic carbon markets,” the company said in a statement.

Manager Ben Keogh told Ecosystem Marketplace that the move will most definitely lead to an increase in activity. “There are a whole range of projects ready and waiting,” he said. “Now we have legislation and importantly support for the package from the opposition, who said they will not repeal it but will try and improve it, developers and landholders can move ahead with confidence. There is no doubt this will be   a great benefit to the environment and to many farmers.”

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V-Carbon News

Voluntary Carbon

Rimba Raya roadblock


A Reuters Special Report delves into “How Indonesia hurt its climate change project” – referring to InfiniteEarth’s Rimba Raya REDD project, reportedly a “a casualty of labyrinthine Indonesian bureaucracy, opaque laws and a secretive palm oil company.” Reuters reports that the forestry ministry is highly skeptical about a market for forest carbon credits – at odds with President Susilo Bambang Yudhoyono. With success just around the corner, the forestry ministry decided to slash the Rimba Raya project area in half – making it unviable, and handing a large chunk of land to a palm oil company for development. The case highlights the challenges facing conservation projects in Indonesia and elsewhere in the developing world. “We have systematically not been able to demonstrate that we can complete the loop to turn projects into dollar investments,” said Andrew Wardell of CIFOR in Indonesia. “Which is why the palm oil industry is winning hands down every time.”

Read the Reuters article



Carbon farming – it’s the law


Australia forged new ground on Monday, with parliament endorsing the world’s first national scheme regulating the generation and trade of carbon credits from farming and forestry. The laws passed with minor Senate amendments, which are due to be rubber stamped by the House of Representatives. “This is fantastic. It gives us the ability to export (credits), it gives a boost to the voluntary market and it gives confidence that we can get an administrative structure that we desperately need,” said Andrew Grant, CEO of CO2 Group. The Carbon Farming Initiative is designed to complement government plans to price carbon emissions from July 1, 2012. Despite the controversy over its proposed carbon price, the Australian government has not been deterred – announcing last week plans to introduce the scheme in Parliament next month, with expectations that it will become law by the end of the year.

Read more about the new offset laws
Read more about the proposed carbon price



CantorCO2e/BGC to drive Green Automotive credits


The company formally known as CantorCO2e – now BGC Environmental Brokerage Services following its acquisition by BGC Partners Inc. – is being retained by Green Automotive Company Corporation as the sole and exclusive agent to market its Zero Emission Vehicle (ZEV) credits and carbon credits resulting from the sale of Green Automotive vehicles in North America. Green Automotive – a US-based public company involved in the import and distribution of Eco-friendly vehicles – announced last June that it was developing a carbon credit forward sale program that could result in an infusion of up to US$60,000,000 or more into the Company this year. “CantorCO2e is well positioned to assist us in quickly penetrating the ZEV and Carbon Credit markets and monetizing the Company’s credits.” said Green Automotive President Fred Luke in a press release.

Read the press release



CMIA’s REDD rebuttal


The Carbon Markets & Investors Association (CMIA) has struck back at a recent REDD critique authored by the Munden Project – which concluded that the forest carbon market in its current form is impracticable – arguing that the report fails to properly examine the existing carbon markets. According to the CMIA statement, this leads to three key errors in “REDD and Forest Carbon: Market-Based Critique and Recommendations”: they assume that emissions reductions based on credited projects will not be suitable for commodity markets; they miss the concept that primary and secondary markets for carbon credits can and do co-exist already, and are necessary to help project developers hedge their carbon exposure and raise project finance; and they overlook the rapid pace with which carbon credit contract structures have evolved already to reduce market asymmetries. CMIA also questions how the report draws inferences about REDD from a wide range of commodities – including milk – but never from carbon itself.

Read the Climate Connect article
Read the CMIA response



Polska project achieves validation


Project developer Carbon Friendly Solutions Inc. (CFS) has successfully completed the validation of its Northern Poland Afforestation Offset Project (NPAOP) – expected to generate 1,517,025 ISO 14064-2 verified offsets over its 40-year crediting period. The NPAOP area is comprised of 4,823 ha of privately owned lands in post-agricultural, degraded conditions, aggregated through extensive stakeholder consultations held by CO2 Reduction Poland (CRP) – a wholly owned subsidiary of CFS. The Project – which will see 24,248,614 trees planted – will be listed on the Markit Environmental Registry. “The successful completion of our Northern Poland Afforestation Offset Project marks an important milestone in the company’s history,” said Slawek Smulewicz, Director and CEO of CFS. “We look forward to future contributions by Polish farmers and landowners towards our objective of reducing CO2 emissions from the atmosphere.”

Read the press release



No carbon COP-out


Engineering and management consultancy Arup has been contracted by the eThekwini municipality to assist in calculating the carbon footprint of the 17th Conference of the Parties (COP 17), taking place from November 28 to December 9 in Durban. Organizers are aiming for a carbon neutral event this year, offsetting emissions in three ways: through the expansion of existing reforestation projects or the initiation of a reforestation project in a new area from the existing Buffelsdraai Landfill Site Reforestation Project; from South Africa’s five existing CDM projects; and through a program whereby delegates could make a voluntary contribution to offset their emissions. An initial estimate by eThekwini Municipality’s Energy Office estimates the likely footprint to be approximately 22,085 tCO2e.

Read the Climate Connect article



Reserve revises N20 Protocol


The Climate Action Reserve has revised its Nitric Acid Production Project Protocol – now available for public review and comment. Reserve staff has revised the protocol to incorporate all errata and clarifications, expand eligibility criteria, improve verification guidance, and make general improvements to the usability of the protocol, with changes tracked and available on the Nitric Acid Production Revision webpage. Please submit written comments by using the form by 5:00 pm PDT on September 9, 2011. The protocol will be presented to the Reserve Board of Directors in September 2011. A public webinar to discuss the proposed changes will be held by the Reserve on Wednesday, August 31, 2011 from 10:00 am – 11:30 am PDT. Interested parties can register here.

Read more about the protocol



VCS methodology for lightweights


No, we’re not referring to boxing (or drinking) – but a new energy demand/transport methodology currently being assessed under the Verified Carbon Standard (VCS) methodology approval process. Developed by Axios Mobile Assets Corporation, Methodology for Transport Energy Efficiency from Light Weight Pallets outlines procedures to estimate the avoided net GHG emissions resulting from project activities involving the use of pallets that are lighter in weight than their conventional alternatives for freight transport – reducing the total weight of goods transported and the associated fuel consumption. The methodology element is now available on the VCS website for a 30-day public comment period. Respondents should email comments to [email protected] by September 13th along with their organization/institution, country and email address, or submit them using the link below.

Submit your comments here
View the methodologies under development



A/R forest carbon standards working?


A study published last week in Carbon Balance and Management aims to identify and analyze the characteristics and indicators that determine the efficiency and organizational legitimacy of standards for afforestation/reforestation carbon projects – and according to the results, the market is still in an immature stage characterized by significant fragmentation. While new standards act as ‘market-making’ intermediaries – contributing to the quality and transparency of the OTC market – the variety of different standards imposes new hurdles for their efficiency and creates confusion instead of confidence among potential buyers. But despite their perceived lack of legitimacy, the study concludes that standards are already a crucial element of the voluntary market – providing valuable learning experiences for existing and planned compliance markets.

Read the CBM article



SKM pricing carbon from the inside out


Global projects firm Sinclair Knight Merz (SKM) is taking emissions reductions into its own hands – recently launching a Carbon Fund to drive investment in developing solutions to further reduce or offset carbon emissions. The company looked to the global marketplace for guidance, benchmarking itself against the Clean Development Mechanism (CDM) – resulting in an internal price on carbon of A$15 per tonne. SKM is now inviting its staff to identify innovative projects worthy of investment by the fund to reduce or offset its emissions – with renewable energy initiatives in developing countries expected to be high on the list. “We want to be a proactive party in this, not just to continue to buy green energy but to go further and proactively develop clean energy sources and sustainable solutions that have widespread benefits,” said SKM CEO & Managing Director, Paul Dougas.

Read more from SKM
Watch the SKM Carbon Fund Video



SOCIALCARBON seeks input on indicators


The SOCIALCARBON Standard is calling on project developers and stakeholders to participate in their public consultation of indicators elaborated for Energy-Efficient Lighting Projects. This public consultation is to ensure that the indicators – which can be found here – reflect the project activities. Comments should consider, but are not limited to: applicability of indicators to project activities (suggestions for revision); suggestions for new indicators or project impacts; and input from experience working in similar projects. Project proponents, designated operational entities (DOEs), coordinating and managing entities etc. are all encouraged to provide written feedback to [email protected] by September 5th, 2011. The approved indicators will be available September 12th, 2011.



Reduce & Retire: The Latest on Carbon Neutral

Equinox takes a carbon neutral stand


Exhibition stand production company Equinox Design has teamed up with the Middle Eastern headquarters of carbon trading organization Advanced Global Trading (AGT) to offset the environmental impact of the exhibition industry – which generates an estimated 200,000 tCO2 per year in the UAE alone. Equinox’s new Exhibit Green division – which already has Samsung and Hi-Tec on board – will offer its clients the option of retiring carbon credits to offset the emissions generated during the transport, manufacture and disposal of the stands. AGT director Charles Stephenson commented, “As an industry-leader in sourcing and trading carbon credits, we’re targeting some of the biggest brands in the world to help them improve their CSR and negate the significant environmental impact the temporary stands they build for exhibitions right across the globe.”

Read the press release



Seattle: on the road to zero emissions


Seattle is one step closer to achieving its carbon neutrality goal – announced last year – thanks to a recent government-commissioned study outlining how the city might get to zero. Authored primarily by the Stockholm Environment Institute, the report describes a scenario under which Seattle could cut its GHG emissions 90 percent compared to 2008 levels by 2050 through a variety of initiatives – including a more efficient transportation system, building efficiency, higher tolls and recycling programs. Furthermore, the study concludes that the city could completely offset its emissions by the same year if it invested in urban forestry initiatives or emissions reduction projects elsewhere. Seattle’s 2006 Climate Action Plan already supports the use of offsets through the City Light’s program – which has made the electric utility the first in the US to become carbon neutral through a combination of conservation, renewable energy and carbon offsets.

Read the Mother Jones article



Winners or losers, they’re all Carbon Clear


Environmental news source BusinessGreen has offset the carbon footprint of its recent BusinessGreen Leaders Awards – an event recognizing the cream of the green crop from across the UK. BusinessGreen partnered with Carbon Clear to calculate the environmental impact of the event using data on the distance travelled by attendees on the evening and the gas and electricity used on the night – a total of 10.4 tCO2. The company then purchased 10.5 tonnes of offset credits from Carbon Clear’s portfolio of VCS credits, including projects such as the Gunung Salak geothermal power plant in Indonesia and an anaerobic digestion project in Kalasin Province, Thailand.

Read the BusinessGreen article



Climate North America

Happy birthday to California carbon trading


There may not be a party, but it’s definitely an event to remember: Climate Connect reports that the first transaction has been struck in California’s cap-and-trade program – an over-the-counter deal between Vitol and Enserco Energy Inc., facilitated by Evolution Markets. The two companies agreed to trade California Carbon Allowance (CCA) future contracts for settlement in December 2012 – with the deal to be cleared immediately upon opening of clearing in the CCA contract on the Green Exchange. Last month the Green Exchange unveiled the details of its CCA futures contract, which will be available for trading on the Green Exchange beginning September 12, 2011 – but Vitol and Enserco were able to agree on the terms of a trade OTC and in advance of the start of trading on the exchange.

Read more about the transaction



RGGI under review


Participating states in the second compliance period of the Regional Greenhouse Gas Initiative (RGGI) – now reduced to nine with the withdrawal of New Jersey – have announced a proposed schedule for gathering analytic material and receiving comments from interested parties in preparation for the 2012 program review. The RGGI Memorandum of Understanding (MOU) calls for a comprehensive evaluation to include program success, program impacts, program operations, additional reductions, imports and emissions leakage and offsets. As part of this process, a Stakeholder Meeting on Preparations for the RGGI 2012 Program Review will be held on September 19, 2011. Webinar and teleconference access will be provided. Please register by email to [email protected]. The complete meeting agenda and materials will be posted at in early September.

Read more about the program review
Read more about the stakeholder meeting



Kyoto & Beyond

China CO2 caps close, but no cigar


Although China appears to be stepping up its game – announcing earlier this month plans to set an absolute cap on industrial GHG emissions – the move is unlikely to sway the EU from banning Chinese CERs from its ETS post-2012, say market observers. “I think the EU will look at this with a bit of skepticism,” said David Lunsford of Hong Kong-based carbon consultancy Enecore. The EU plans to accept only CERs from new projects in least developed countries (LDCs) from 2013. More advanced developing countries may be able to negotiate bilateral agreements with the EU – but according to Lunsford, “(Europe) does not see China as a CER-generating country anymore.” Since 2005, European companies have paid several billion dollars to China for CERs to help meet caps under the EU ETS.

Read the Reuters article



Nordic scoops up CERs


The Nordic Environment Finance Corporation Carbon Fund (NeCF) announced last week that it has closed deals to purchase 4.6 million CERs from 10 clean energy projects located in India and Southeast Asia. “We are closing a large number of projects with a view to meeting the 12/12 registration deadline for EU ETS eligibility from projects not located in the least developed countries,” said Ash Sharma, NEFCO vice president and head of carbon finance and funds unit, in a statement. The company said it also intends to buy CERs from eight clean energy projects in Vietnam, Thailand and China. The fund purchases emissions reduction credits on behalf of its investors to allow them to meet their commitments under the EU ETS and/or Kyoto Protocol, and has access to €165 million from both the public and private sectors.

Read the Reuters article



Nuru deal to give African carbon a boost


A deal signed between Nuru Energy and Bank of America-Merrill Lynch in February of this year has given the bank an option to buy several million carbon credits over a 10-year period, which can then be resold on the market. It is hoped that the deal will bolster clean energy projects in African countries, using the long-term revenue potential in the form of carbon credits to alleviate poverty. “This deal will provide us with the capital to scale up in five countries in east Africa: Rwanda, Kenya, Tanzania, Uganda and Burundi,” says Sameer Hajee, Nuru’s founder. Climate Connect reports that Nuru is also hoping to scale up in India and several other African countries, notably Ghana and Nigeria. A recent World Bank study identified the technical potential for 3,200 CDM projects in Africa, with an emission reduction potential of 740 million tCO2e.

Read the Climate Connect article



Global Policy Update

Deutsche Bank named in VAT fraud trial

(Updated to remove the names of defendants.)


Six men accused of evading more than €200m in value-added tax (VAT) as part of a carbon market fraud appeared before a Frankfurt court for the first time last week. The German, French and British men are accused of conspiring to evade VAT on the trading of carbon credits between September 2009 and April 2010. Reuters reports that of the 170 suspects accused of carbon fraud, seven were employees of Deutsche Bank. Judge Martin Bach said he would focus on whether Deutsche Bank employees could have been aware of the risks of wrongdoing by carbon traders when it made finances available for the EU scheme. Deutsche has said the bank itself is not subject to investigation and that there is no evidence of wrongdoing by its employees.

Read the Reuters article
Read more about the trial from BusinessGreen



ETS proposed to keep maritime emissions shipshape


In the wake of widespread industry disagreement over reducing GHG emissions from international shipping, the UK Chamber of Shipping has released two briefing papers on market-based mechanisms. The ‘manuals’ outline two possible ways to go about cutting shipping carbon: a global emissions trading scheme, or a simpler system of bunker fuel levies. The UK Chamber of Shipping has said that a global cap-and-trade scheme would be more effective and beneficial than the inclusion of the sector into the EU ETS, arguing “the market-based approach of cap-and-trade is attractive in allowing choice and flexibility within a global, goal-based system.” The EU has warned the industry that if no serious actions are taken to improve its efficiency, the EU could include the sector in its ETS from 2013. The bloc is already facing retaliation and legal action over the inclusion of the airline industry in the EU ETS – with the International Air Transport Association (IATA) and its affiliates in the US, Asia and China all declaring their opposition to the plan.

Read more from Climate Connect
Read more from Carbon Positive
Read more about the aviation cap



The future remains un-CER-tain


With the prospect of extending the Kyoto Protocol beyond 2012 looking less and less likely, many are wondering what role the future will hold for the CDM. Carbon Positive suggests that things might look remarkably different from 2013 – with new sources of demand emerging as others dwindle. Restrictions coming into force will mean that credits from projects registered after 2013 will only be eligible for use in the EU if generated in LDCs – shutting out once-dominate China, India and Brazil. But New Zealand’s ETS does not place the same limitations on CERs, and demand there may increase once introductory measures are removed in 2013. Across the Tasman Sea, Australia is aiming to transition to a carbon trading market from 2015 – where Bloomberg New Energy Finance estimates that total demand for CERs up to 2020 could be 330Mt. South Korea is also working towards an ETS by 2015 and could be expected to allow CERs. Either way, the recent rush of projects entering the pipeline – more than 150 in July alone – means that demand should be met for at least for the first few years beyond 2013.

Read the Carbon Positive article



Carbon Finance

Japan extends climate aid to Indonesia


The Japanese government has agreed to provide US$809 million in climate aid to Indonesia – one of the developing world’s biggest carbon emitters. The agreement – part of Japan’s contribution to a US$30 billion global fund to help poor countries to curb emissions and adapt to climate change – was signed in Jakarta last week by the Japanese ambassador to Indonesia and officials at the Indonesian Finance Ministry’s, according to a news release. Most of the money was provided in the form of low interest loans, mainly to build five geothermal power plants, and will be repaid over 40 years at 0.3 percent annual interest. According to the World Bank, Indonesia has the world’s largest geothermal resources – nearly 40 percent of known global resources.

Read the Reuters article



Brokers Carbon lists 24 million CERs


Online carbon broker and environmental matchmaker Brokers Carbon has listed 24 million primary CERs for sale on their new platform – with a potential market value of €300-400 million. The credits originate from three run-of-river hydro projects located in South East Asia, which – upon completion – will have a total installed capacity of approximately 750 MW and the potential to produce up to 90 million CERs over a twenty-one year crediting period, subject to eligibility under the EU ETS and other emerging markets such as New Zealand, Australia and California post-2020. Expressions of interest close on August 26, 2011. For further information on these projects or other opportunities visit or contact Nathan Dale direct at [email protected].

Read the press release



Green Power Play: Renewable Energy

New York state of solar


Green Mountain Energy Company is offering New Yorkers the chance to support the local development of solar energy for area non-profit organizations, rolling out the NY chapter of its Green Mountain Energy Sun Club. For a donation of US$5 per month, Green Mountain customers can help donate solar energy technology to worthy local non-profits. Not only will the program help charitable organizations to cut their electricity costs and carbon footprints – each donation will include an educational component to help New Yorkers learn more about the importance of solar energy. The New York State Energy Research and Development Authority estimates that each kilowatt of new solar photovoltaic installed avoids 1,254 pounds of CO2 emissions a year – equivalent to planting 72 trees, or avoiding 471 taxi rides in the city.

Read the Brooklyn Daily Eagle article



Science & Technology

Carbon Cowboys and Aliens


Even those who don’t believe in climate change may now have a far-out reason to curb their GHG emissions – saving humanity from a pre-emptive alien attack. According to scientists, extraterrestrials observing us might view changes in the Earth’s atmosphere as symptomatic of a civilization growing out of control – and take drastic action to keep us in check. This is just one of several ‘plausible outcomes’ that NASA-affiliated scientists and researchers at Pennsylvania State University say could play out if humans and aliens were to make contact. “Green” aliens might object to the environmental damage humans have caused on Earth and wipe us out to save the planet. “These scenarios give us reason to limit our growth and reduce our impact on global ecosystems,” the authors write. “It would be particularly important for us to limit our emissions of greenhouse gases, since atmospheric composition can be observed from other planets.”

Read the Guardian article



Target practice


If Australia really wants to meet its 5 percent GHG reduction target it should look no further than its forests, says a new report from Australian National University (ANU). The study – led by climate law expert Andrew Macintosh – estimates that ending logging could generate enough carbon credits to meet 45 percent of the country’s emissions reduction target. “It’s one of the fastest and cheapest ways for Australia to cut its emissions,” said Macintosh. According to Macintosh, there is significant public interest in identifying cost-effective ways of reducing emissions that may not be captured by the Government’s proposed carbon pricing scheme. “There is space for complementary policies that capture cheap abatement opportunities that might not be realised through carbon markets. The native forest sector is one area where there are these additional opportuni

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