Colgate University Selects ClimeCo To Help Reduce Its Greenhouse Gas Emissions
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Glossary
EPA Proposes Emission Limits for Fossil Fuel-Fired Power Plants – Is Industry Up for the Challenge?
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Nancy Marshall, SVP, Marketing
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EPA Proposes Emission Limits for Fossil Fuel-Fired Power Plants – Is Industry Up for the Challenge?
by: Noah Gannon | August 16, 2023
Boyertown, Pennsylvania (August 17, 2023) – On August 8, 2023, the public comment period ended for the Environmental Protection Agency (EPA) proposed Clean Air Act emissions limits and decarbonization technology guidance for fossil fuel-fired power plants in the United States. The proposed rule considers how different Electricity Generating Units (EGUs) are used, including the resource type and load capacity, and prescribes control technologies such as Carbon Capture and Storage (CCS) and Hydrogen co-firing to reduce emissions.
Scientists estimate the proposal, if enacted, will reduce 617 million tonnes of CO2 emissions by 2042. Additionally, economists value potential associated benefits at $64-$85 billion, including health benefits, such as 1,300 avoided premature deaths and 300,000+ cases of asthma symptoms.
In anticipation of potential legal challenges, the EPA structured the current proposal within the context of the recent 2022 West Virginia vs. EPA decision in which the Supreme Court limited the EPA’s rule-making authority.
Client Impacts
The proposed rule presents both challenges and opportunities for the energy industry. Challenges include extensive capital expenditure costs, limited CCS and hydrogen supply and infrastructure, a volatile regulatory climate, and a lack of regulatory frameworks to enable use and large-scale deployment of these projects.
However, CCS and low-GHG hydrogen offer asset owners the opportunity to entrench their existing infrastructure investments within the energy landscape and provide a dispatchable low-carbon energy resource to utilities looking to balance daily and seasonal renewable energy fluctuations.
Alternatively, some asset owners may consider reducing capacity to under 20% to avoid implementing any controls or under 50% to qualify as an intermediate load with less stringent standards. There will be impacts on grid reliability if a mass shutdown of gas-powered resources occurs before the buildout of batteries and other forms of energy storage.
Proposed Technology-Based Standards
The proposal consists of Technology-Based Standards designed to allow the power sector continued resource and operational flexibility, facilitate long-term planning, and consider the cost-effectiveness of emissions controls. Specifically, the proposal requires CO2 emissions control at fossil fuel-fired power plants starting in 2030 and phases in increasingly stringent CO2 control requirements over time. The proposed requirements vary by:
- The type of unit rather than fuel type (i.e., new or existing, combustion turbine or utility boiler, coal-fired or natural gas-fired)
- How frequently it operates (base load, intermediate load, or low load (peaking), and
- Its operating horizon (i.e., planned operation after certain future dates).
These variations hope to achieve the Standard’s goals of cost-effectiveness and operational flexibility. For example, the installation of controls such as CCS for coal and gas plants and low-GHG hydrogen co-firing for gas plants are more cost-effective for power plants that operate at a greater capacity, more frequently, or over extended periods. The table below outlines the Best System of Emissions Reduction (BSER) by phase and unit type.
Low-GHG Hydrogen Pathway
As shown above, the low-GHG hydrogen pathway offers an incremental approach through hydrogen co-firing to reduce emissions with increasing volume as hydrogen supply networks are developed. The proposed carbon intensity of low-GHG hydrogen at 0.45 kgCO2e/kgH2, “well-to-gate,” is exceptionally aggressive and much lower than all international Low Carbon Standards, as shown in the graphic below. As a result, this standard may be met with blue (coal/natural gas feedstock) and green (renewable energy feedstock) hydrogen, as well as pink (nuclear-powered) hydrogen.
The International Energy Agency predicts total hydrogen production will need to be 180 MMT by 2030, up from 90 MMT today, to reach net zero emissions by 2050. Currently, low-GHG hydrogen production represents only 1% of total hydrogen production, challenging project developers to increase product while greening their hydrogen process with renewable resources to meet new regulatory requirements, like the EPA’s proposed standards.
At current U.S. power demand and portfolio, about 1.5 trillion kWh is produced annually by gas turbines subject to this ruling [1]. Assuming a standard combined cycle unit has a 60% overall efficiency, 30% hydrogen co-firing would require 747 billion kWh of raw energy, almost 10X current hydrogen production levels. In creating this rule, the EPA attempts to dramatically scale hydrogen demand in the U.S.
The energy needed to produce hydrogen leads to as much or more energy used to produce hydrogen as is recovered when the hydrogen burns.
If project developers can create a supply, hydrogen transportation will present another hurdle. Hydrogen can be transported by pipeline, tanker, rail, and truck, but ammonia and liquefication are the best delivery methods for longer distances and have the biggest impact on costs. Approximately 1,600 miles of hydrogen pipelines are currently operating in the U.S., primarily in the Gulf Coast region, in support of petroleum refineries and chemical plants [2]. Converting the nations existing natural gas pipeline to carry a blend of hydrogen would only require modest upgrades compared to more substantial modifications for pure hydrogen. Industry initiatives and the DOE H2Hubs program take a grassroots approach to increasing regional engagement.
Importantly, the Inflation Reduction Act (IRA) includes Hydrogen Production Tax Credits, which offer producers $3/ kg H2 for ten years for low-GHG carbon intensity for projects that begin construction by 2033 with retrofit facilities eligible. While direct pay and transferability allow revenue streams for companies with low tax liabilities, the credit cannot be stacked with the Carbon Capture and Sequestration Credit (45Q), which may disincentive co-locating CCS and low-GHG hydrogen controls.
Using electricity to produce hydrogen, only to be re-converted into electricity through co-firing, results in as much or more energy being lost than is recovered for grid use. This makes hydrogen co-firing for electricity a much less efficient process than traditional electricity transmission. We believe hydrogen is better applied in the transportation industry given its quick refueling, easy adoption, and decent conversion efficiency for fuel cells and hydrogen-compatible ICEs. This leaves CCS as the most practical and economically viable control technology for fossil fuel-fired power plants in the U.S.
Carbon Capture and Sequestration (CCS) Pathway
According to the IEA, Carbon Capture and Sequestration projects capture more than 45 million tCO2 annually from 40 facilities globally. Although CCS deployment has increased with over 500 projects in various stages, the IEA estimates that deployment remains substantially below the level required to achieve net zero emissions by 2050. Similar to low-GHG hydrogen, project developers face a handful of challenges in meeting CCS demand generated from new regulatory requirements:
First, CO2 lacks national pipeline infrastructure but has a history of industrial uses, primarily enhanced oil recovery (EOR). This infrastructure is primarily in the Gulf Region and the Dakotas. Last month, Exxon Mobile bought Denbury, the largest CO2 pipeline network in the country, in a bid to accelerate Exxon’s carbon capture goals.
The Department of Energy has also prioritized CO2 transportation and sequestration, with $8.5B earmarked for CCS in the infrastructure package. The bill envisions four regional direct air capture hubs, prioritizing localized networks over a nationwide pipeline.
The IRA included a Carbon Capture and Sequestration Credit (45Q), which offers up to $85 per tonne for storage of CO2 in deep saline geologic formations. For other uses, such as low-carbon fuels, chemicals, building materials, or enhanced oil recovery (EOR), the credit falls to $60 per tonne, with direct pay for the first five years after the equipment is placed in service.
Implementation
States will have 24 months to submit plans establishing performance standards and transparency requirements for power plants within their state borders if the proposed rule is enacted, as shown in the timeline below. Plans must include an environmental justice analysis of impacted communities and meaningful engagement with affected stakeholders. States are encouraged, but not required, to develop emissions trading and averaging schemes. A less stringent standard may be requested for facilities with long-remaining useful lives.
The future of this legislation is not certain. Four major grid operations — PJM Interconnection, Midcontinent Independent System Operator, Southwest Power Pool, and the Electric Reliability Council of Texas — have filed joint comments that grid reliability will “dwindle to concerning levels.” A coalition of 21 states, led by West Virginia, have also filed comments warning about the legal implications of the rule. With the 2024 presidential election approaching, a Republican administration could repeal this rule before the enforcement period begins. Individual states and joint ISOs/RTOs must decide if they will proactively plan for controls or wait and see, hoping external players derail technology implementation and CO2 standards.
[1] Regional Clean Hydrogen Hubs | Department of Energy
[2] Electricity data browser – Net generation for all sectors (eia.gov)
About ClimeCo
Over the last 14 years, ClimeCo has supported corporates in hard-to-abate sectors and energy asset owners in decarbonizing their operations by evaluating policy updates and incentives, supporting decarbonization project implementation, leveraging environmental markets, and becoming trusted decarbonization technology experts. Please inquire with the ClimeCo team to learn more about our case studies and service offerings.
Contact us at +1 484.415.0501, info@climeco.com, or through our website climeco.com to learn more. Be sure to follow us on LinkedIn, Facebook, Instagram, and Twitter using our handle, @ClimeCo.
Forest Management Strategies for Creating Carbon Offsets
Forest Management Strategies for Creating Carbon Offsets
by: Juliana Magalhaes & Karina Salimbayeva | June 21, 2023
Did you know that land use change and deforestation contribute between 12–20% of global greenhouse gas (GHG) emissions [1]? It is no wonder that the idea of harnessing the carbon market– to reverse these trends has attracted substantial interest.
In our recent editorial series, Transparency in Developing Carbon Credits, we explain how offsets are generated, discuss the meaning of high-quality, and describe the difference between industrial, technology-based, and nature-based projects. As forest and ecosystem experts, we want to take you beyond that series and elaborate on what high-quality nature-based solutions (NBS) mean in terms of forest carbon accounting and how Improved Forest Management (IFM) practices can boost the potential to generate carbon credits.
IFM as a Tool in Managing Existing Carbon Stocks
High-quality NBS projects remove and store large amounts of carbon from the atmosphere while also benefiting local communities and biodiversity. Generally, NBS projects are classified into two primary sub-categories (or project types): protection (stewardship/avoided emission) and restoration (reforestation or afforestation/removed emissions). Protection projects revolve around preventing forest loss in high-risk areas, typically determined based on a 10-year historical trajectory of deforestation rates. Credits are allocated based on the number of carbon emissions (CO2e) avoided from entering the atmosphere due to successful forest conservation efforts. Meanwhile, restoration projects generate credits that reflect the annual carbon emissions removed from the atmosphere and are stored because of additional tree growth. These projects focus on expanding tree coverage through the following practices:
- Reforestation – the natural or intentional replenishing of existing forests that have been depleted, usually through deforestation but also after clearcutting
- Afforestation – the establishment of a forest in an area where there was no recent tree cover
- Agroforestry – cultivation, and use of trees and shrubs with crops and livestock in sustainable agricultural systems
- Silvopastoral – the practice of integrating trees, forage, and the grazing of domesticated animals in a mutually beneficial way
Can you combine the benefits of both protection and restoration with IFM? Yes, you can.
IFM projects focus on maximizing carbon emissions avoidance and removal potential of working forests, those subject to commercial timber harvest. A great example and triumphant story of carbon credits generated by an IFM project can be seen on Afognak Island in Southern Alaska. Here is an excellent example of how ClimeCo strives to ensure that our NBS projects go above and beyond the current standards.
The Afognak Forest Carbon Project, developed from a partnership between the American Land Conservancy and the Rocky Mountain Elk Foundation, protects 8,200 acres of centuries-old Sitka spruce forests from any future logging exploitation, ensuring it will sequester and store carbon long into the future. Protecting unlogged Afognak’s forests will retain the carbon in the current forest biomass, sequester additional carbon in the conserved forests, and avoid emissions from logging and transportation.
The Afognak Forest Carbon Project achieves net GHG emission reductions and removals by avoiding carbon emissions from logging in the baseline scenario. The Afognak properties were being managed for timber production by previous managers with logging plans and adjacent properties owned by the previous owners. The most plausible baseline scenario would be clearcut timber harvesting following minimum State of Alaska forest requirements and standard practices, evident from the slow recovery times resulting from previous logging in the project lands across Afognak Island.
The Afognak project scenario is conservation management, wherein the State of Alaska manages the properties for wilderness and ecosystem protection and enhancement activities under the terms of the title transfer agreement and federal conservation easement. Additionality is demonstrated as the project activity prevents planned harvest of the current native forests in perpetuity.
Forest Carbon Accounting: How Are Credits Estimated?
High-quality NBS have a measurable and verifiable atmospheric impact. As demonstrated in the equation below, credits are based on the difference between baseline and project carbon emissions. Different carbon source/sink pools depend on the project type (protection, restoration, IFM) and the standard applied: Verified Carbon Standard (VCS) [2], Climate Action Reserve (CAR) [3], American Carbon Registry (ACR) [4]. For instance, the Afognak project follows VCS Methodology VM00012, providing for IFM in Temperate and Boreal Forests. The source/sink pools included in estimating baseline and project carbon emissions were standing live trees (aboveground biomass), standing dead trees, harvested wood products, roots (belowground biomass), and dead wood. Secondary effects may also be considered, such as burning logging slash and fossil fuels, including carbon emissions related to machinery during site preparation, and emissions from clearing shrubs in the project area.
Uncertainty in estimating carbon credits from NBS projects is expected. It arises from errors associated with measuring and modeling carbon stored in biomass, mapping errors, and various quantifying carbon impacts. These errors are estimated and accounted for by deducting error terms from calculated emission reductions and removals. Furthermore, there is the possibility of market forces causing the activities and carbon emissions to leak out of the project boundary [5]. Current standards require monitoring “leakage belts” and discounting credits to account for estimated leakage [6]. Finally, there is the possibility of project failure. To ensure that credits are effectively permanent (e.g., emissions reduction or removal will not be emitted within the next 100 years), some standards require a contribution of 10–30% of the generated credits to an insurance buffer pool that backstops emissions associated with natural disturbances (e.g., fire, floods, hurricanes) or human-induced disturbance (e.g., illegal logging).
ClimeCo addresses uncertainty in forest carbon credit estimation through improved methodologies and data collection. By adopting conservative estimates, reduced uncertainty occurs. A rigorous MRV process is implemented to provide stakeholders with reliable information and reduce the risk of inaccurate reporting. 
Conclusion
We know forest carbon accounting can be complex, but transparency is crucial to ensure the credibility and effectiveness of NBS project types in mitigating carbon emissions. IFM can increase avoidance and removal of carbon emissions through planned activities over business-as-usual projections. This approach helps to sustainably manage forests and protect and provide economic development and biodiversity conservation opportunities.
Our nature-based project development experts are rich in ecosystems and forest sciences. We are here to support and are ready to share our knowledge to help our clients make the best decisions for their business and our planet. To learn more about the environmental benefits of the Afognak, please read our previous blog, Beyond the Trees.
[1] Climate Change 2022: Impacts, Adaptation and Vulnerability (Cambridge University Press, 2022)
[2] Verified Carbon Standard (2023, June 12)
[3] Climate Action Reserve (2023, June 12)
[4] American Carbon Registry (2023, June 12)
[5] United Nations Framework Convention on Climate Change (2021)
[6] Jenkins, W. A., Olander, L. P., & Murray, B. C. (2009)
About the Authors
Juliana Magalhaes, a Senior Project Associate at ClimeCo, is passionate about turning science-based ideas into actions that promote the sustainability of forests. Her experience with forest growth data and understanding of multi-objective forest management is helping to develop high-quality NBS projects at ClimeCo.
Karina Salimbayeva is a Senior Project Associate at ClimeCo, specializing in nature-based solutions. With a deep understanding of forestry and extensive experience in spatial analysis, Karina combines her passion for the environment with cutting-edge technology to inform decision-making in carbon projects.
ClimeCo Responds to the Greenhouse Gas Protocol’s Surveys for Standard and Guidance Updates
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Nancy Marshall, SVP, Marketing
+1 484.415.7603 or nmarshall@climeco.com
ClimeCo Responds to the Greenhouse Gas Protocol’s Surveys for Standard and Guidance Updates
Our experts weigh in on recommended updates to the global greenhouse gas accounting standard.
by: Garrett Keraga | March 20, 2023
Boyertown, Pennsylvania (March 20, 2023) – In 2023, the Greenhouse Gas Protocol (GHG Protocol) invited stakeholders to recommend updates to its widely-used standards and guidance for measuring greenhouse gas inventories. This presents a rare opportunity to help shape the way that companies report on emissions, track them over time, and use market-based mechanisms to support global decarbonization efforts. The ClimeCo team gathered leaders from around the company with expertise in measuring inventories, developing environmental commodities, and helping companies lower their emissions. We’ve crafted a response to help push the industry forward constructively and mindfully.
In the survey for the Corporate Accounting and Reporting Standard, we indicated a high level of satisfaction with the existing material and provided a range of minor tweaks to improve fidelity. This included suggestions like improved guidance on emission factor databases and leased asset accounting, improved accounting procedures for companies or portfolio managers with high levels of inorganic growth, and a clear recommendation on a baseline recalculation threshold.
Our responses for Scope 2 and Scope 3 similarly indicated satisfaction with the current guidance but suggested several more areas of improvement. Within Scope 2, we requested clearer guidance around renewable energy certificate (REC) boundaries and improved residual mix emission factor availability globally. We did not see a current need for revisions to the REC market that incorporate proof of total change in low-carbon supply. Our Scope 3 suggestions included creation of a remote work emissions category: consistent allocation of upstream versus downstream emissions, additional industry specific guidance for several categories, and guidance around market-based mechanisms within Scope 3.
Our experts had numerous suggestions for the future of market-based accounting, including expanding market-based accounting into Scope 1 and Scope 3 through inset credits, mass-balance certification, and book and claim certificates. We advised the GHG Protocol to establish systems that use the same principles as the current market-based Scope 2 reporting. Our team believes the voluntary market will continue incentivizing fast-paced, cost-effective progress toward net-zero, regardless of physical limitations. The graphic below explains how this system might work with a book and claim approach for a shipping company.
About ClimeCo
ClimeCo is a respected global advisor, transaction facilitator, trader, and developer of environmental commodity market products and related solutions. We specialize in voluntary carbon, regulated carbon, renewable energy credits, plastics credits, and regional criteria pollutant trading programs. Complimenting these programs is a team of professionals skilled in providing sustainability program management solutions and developing and financing of GHG abatement and mitigation systems.
For more information or to discuss how ClimeCo can drive value for your organization, contact us at +1 484.415.0501, info@climeco.com, or through our website climeco.com. Be sure to follow us on LinkedIn, Facebook, Instagram, and Twitter using our handle, @ClimeCo.
ClimeCo Continues Carbonfund.org Mission Toward a Net-Zero Carbon World
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Nancy Marshall, Senior, VP, Marketing
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ClimeCo Continues Carbonfund.org Mission Toward a Net-Zero Carbon World
Boyertown, Pennsylvania (November 2, 2022) – Carbonfund.org Foundation, Inc. (“the Foundation”), now named Environment Next, Inc., has decided to rebrand its foundation and divest certain carbon offsetting and its Carbonfree certification operations. ClimeCo is excited to announce that it has chosen to continue the Carbonfund name and mission to make it easy and affordable for individuals, businesses, and organizations to reduce and offset their climate impact. ClimeCo and the Foundation, both pioneers in the voluntary carbon market space, have always been aligned in their values and have been trusted counterparties to each other over the years. Environment Next, Inc., will continue as a non-profit organization providing climate change leadership grants to individuals and non-profits globally.
“We have had the pleasure of working with the Foundation for about 15 years,” says Derek Six, Chief Operating Officer at ClimeCo. “The Foundation was one of the first groups to emphasize the potential of voluntary markets to address the climate change problem, and we have admired their mission and impact. We believe the Foundation’s customers will find in ClimeCo an equally dedicated and passionate team. We look forward to continuing to serve the needs of the Foundation’s customers and offer them an expanded suite of solutions, a diverse portfolio of projects, and new and innovative programs like our ocean-bound plastics collection projects. We are also very excited to welcome several members of the Foundation’s team to the ClimeCo family so that previous customers can expect a familiar experience.”
Together, these two organizations can provide substantial support to those who want to positively impact their environmental footprint. Anyone, from an individual who wants to offset their plastic footprint to a business needing renewable energy credits, will be able to create the best solutions to fit their budget and goals.
“On behalf of the Foundation team transitioning to ClimeCo, I am thrilled that we’re joining a highly qualified company with the same enthusiasm and focus for climate change mitigation,” says Linda Kelly, who served as the Foundation’s SVP of Programs and Partnerships and will be joining ClimeCo as SVP of GHG Markets. “The Foundation’s business partners will greatly benefit from ClimeCo ESG solutions, carbon emissions reduction strategy, and Product Life Cycle Assessments. During my twelve years at the Foundation, I’ve worked with the majority of our business partners. My colleague Anna O’Brien and I look forward to continuing and expanding these relationships.”
Along the eCommerce website and current project inventory, ClimeCo will also be expanding the Carbonfund Carbonfree Partner Program, which provides an innovative and flexible way to help businesses calculate, reduce, and offset their carbon footprint. ClimeCo’s ESG Advisory team has extensive experience in assisting new Carbonfree Partners to go beyond what they thought was possible for their sustainability efforts.
About ClimeCo
ClimeCo is a respected global advisor, transaction facilitator, trader, and developer of environmental commodity market products and related solutions. We specialize in voluntary carbon, regulated carbon, renewable energy credits, plastics credits, and regional criteria pollutant trading programs. Complimenting these programs is a team of professionals skilled in providing sustainability program management solutions and developing and financing of GHG abatement and mitigation systems.
For more information or to discuss how ClimeCo can drive value for your organization, contact us at +1 484.415.0501, info@climeco.com, or through our website climeco.com. Be sure to follow us on LinkedIn, Facebook, Instagram, and Twitter using our handle, @ClimeCo.