Transparency In Developing Carbon Credits
Quick Links – Part 1 | Part 2 | Part 4
Part 3 – Carbon Quality In Context
Efforts to measure, track and manage the effects of greenhouse gases (GHG) have taken decades to mature to our current state. Today, the Voluntary Carbon Market (VCM) is part of a holistic global strategy to address the real-world challenges of climate change. As with GHG accounting, climate risk disclosure, and mitigation planning, the VCM is facing questions about its operations and the urgency to increase scope and action at the same time.
As we outlined in part 2 of our 4-part editorial series on the Transparency of Carbon Credits, the VCM’s leading standards provide a rigorous process involving extensive data collection, project documentation, continuous monitoring, reporting, and verification. An accredited independent verifier also audits each project that ClimeCo participates in to confirm integrity and accountability.
In this third part of our editorial series, we will review what high-quality means in the VCM and why it is that ClimeCo strives to offer our clients a diverse portfolio of projects to choose from.
What does High-Quality mean in the VCM?
The term “high-quality” is commonly used in discussions about the carbon offset market, but there is no standard definition of what it actually means.
At ClimeCo, we look to ensure that our projects go above and beyond these standards, ensuring that each activity is quantifiable, defensible, and positively impacts the community and environment in which it is located. We believe third-party registries and independent verification are the minimum requirements for developing high-quality credits. ClimeCo defines high-quality credits as a real reduction or removal of CO2e that is third-party verified, additional, quantifiable, durable, avoids leakage, and is listed on a reputable carbon registry. To ensure the integrity of the carbon credits, credible methodologies base their practices on the GHG Protocol and the ISO 14064 standards.
Next, we will discuss two categories of projects – nature-based solutions and industrial or technology-based solutions – and how the label “high-quality” applies to each of them. ClimeCo operates in both project categories. We believe that with careful design and measurement, both will play an essential role in the deep decarbonization that society needs.
High-Quality Nature-Based Solution Projects
Protecting, stewarding, and restoring ecosystems is necessary for the fight against climate change. These activities also have benefits beyond sequestering and storing carbon – they support biodiversity, clean water, and can be an important source of food and resources for local and indigenous peoples. These co-benefits are the core of any high-quality nature-based project – enhancing co-benefits and ensuring impacted communities receive their share of positive outcomes is a key priority. Accounting standards for nature-based solutions can be complex and are different between the two primary sub-categories, protection (or stewardship) and restoration (reforestation / afforestation) projects.
Protection and stewardship projects in the forestry sector generate offsets based on models of future extractive activities such as logging. These are primarily emissions avoidance-type projects, though a portion of the credits are also removals. Methodologies outline the procedures required to evaluate future land use as an alternative to project activities and its impact on GHG emissions. This counterfactual argument has inherent uncertainty, and it thus should be constructed to ensure emissions estimates are conservative and defensible. Protection and stewardship avoidance-type projects could also be on working lands, with activities such as grassland protection and fertilizer efficiency. ClimeCo strives to prioritize long-term protection for all our nature-based projects to realize their benefits across multiple decades.
Restoration projects are the second sub-category, and their carbon accounting is done differently. The tangible benefits from our removals-based nature projects, such as reforestation, can be measured directly. It can take decades for a new forest to be fully functional and to realize its full suite of benefits. We believe that high-quality reforestation removal-type projects go beyond just planting trees – these projects also restore valuable habitats. Utilizing healthy and vigorous native seedlings, proper planting techniques, and relying on local knowledge ensures the best chances of success. Removal-based projects can also be on agricultural lands through activities that secure soil carbon such as cover crops or reducing tillage rates.
High-Quality Industrial and Technology Projects
Industrial and technology projects are what ClimeCo was built on. Our first verified credit in 2010 was generated from an N2O abatement project. Since then, we have avoided nearly 20 million metric tons of carbon dioxide equivalent emissions through our N2O abatement projects. Technology-based projects can be designed for avoidance (prevent future emissions) or removal (direct-air capture before it reaches the atmosphere).
ClimeCo has been a leader in developing the methodologies and standards associated with our industrial projects – we developed a Nitric Acid Abatement Protocol and an Adipic Acid Abatement Protocol under the Climate Action Reserve, and are currently finalizing a Low-Carbon Cement Protocol. When it comes to creating new project pathways, we see the tremendous impact it will have on reducing emissions. With a rigorous approach, creating new project pathways for these types of projects helps incentivize the large capital expenditures required for available technologies, helping to accelerate the investments needed to quickly decarbonize industrial processes.
While industrial and technology projects do not usually have the suite of direct co-benefits as nature-based solutions, they benefit from highly accurate quantification. For example, many of our N2O abatement projects have continuous emissions monitoring systems that can precisely measure the amount of N2O decomposed into harmless N2 and O2. For these projects, the impact and measurement are highly certain. Additionally, there is no risk of the greenhouse gas ever re-entering the atmosphere resulting in permanent emission reductions and removals.
Technology-based offsets foster innovation and help to scale capital-intensive emerging technologies such as alternative cement production, direct air capture, and carbon capture and utilization or storage (CCUS). These activities provide compelling solutions in the hardest to abate sectors, many of which are vital for our day-to-day lives, contributing to food and energy security and a resilient built environment. High-quality emerging technology offset projects prioritize activities that need extra funding to be deployed and support deep, economy-wide decarbonization.
ClimeCo’s mission and values when developing high-quality carbon credits
Throughout our operations, ClimeCo takes a comprehensive approach to combatting climate change. We develop complementary high-quality credits, both nature-based and industrial, to help clients meet their broader goals with robust commodity portfolios and operational decarbonization strategies. As ClimeCo continues to grow and expand, we will always strive to offer our clients a diverse set of services to best meet the needs of their climate program.
Next in the series, we will cover how we can all make a difference today, which high-quality project is right for your business, and how Environmental, Social, & Governance (ESG) and Science Based Targets (SBTi) fit into the VCM. Stay tuned for Part 4!
Did you miss the first half of our “Transparency In Developing Carbon Credits” editorial series? Read Part 1 & Part 2 now.