Glossary

Offset Pricing Monthly Market Digest – March 2021

Offset Pricing Monthly Market Digest – March 2021

Offset Pricing Monthly Market Digest – March 2021

Offset Supply Information:

All CCOs issued to date: 219.75 million

Compliance credits awaiting issuance: 11.27 million

CA and General Market Commentary:

  • On April 1st, ARB announced a new invalidation investigation against the Dairyland Farm LLC digester project. The investigation involves possible regulatory violations at the project during the period 4/1/2018-3/31/2019 and involves up to 30,811 CCOs. This is the third investigation related to regulatory compliance at a dairy project over the past year.

  • ARB will hold its next quarterly auction on May 19, 2021, with results released May 27th.

ClimeCo is a respected advisor, transaction facilitator, and trader of environmental commodity market products and related services. 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 services, 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 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.

A Chat About Sustainability

A Chat About Sustainability

A Chat About Sustainability


by Kendall Bedford, Project Manager | March 31, 2021


Background

This blog flourished while two ClimeCo colleagues sat down to enjoy a virtual cup of joe while discussing a topic that inspires them – Sustainability.

Long-time Project Manager (and part-time master’s student), Kendall Bedford, and her team leader, Emily Damon, VP of Sustainability, Policy and Advisory discussed what they love about sustainability and what they see in the marketplace. Their responses have been edited for conciseness and clarity.



A Journey in Sustainability

To some, “Sustainability” can be a loaded word due to its multiple definitions and implications in the business world. For myself, it simply implies an opportunity to ensure longevity within our society for our peers, our planet, and our work. As a young professional and master’s student, these topics are meaningful to me. Through the work I am currently doing at ClimeCo, and Sustainability’s intersection with Business, which I am studying at UPenn, I hope to become a future leader in this space and help to unite various priorities and people while working to create real progress under a shared goal.

Today, I am speaking to a leader who is impacting the sustainability field, and one I am lucky to call my teammate, Emily Damon. Below, Emily and I discuss her previous work in the Environmental, Social, and Governance (ESG) space and why she continues to enjoy it, the challenges she encounters, and how this space has evolved and will continue to change over time.

Kendall: So, let’s start off with you telling me a little bit about yourself and why you chose to build a career in the sustainability field.

Emily:  I suppose the short answer is … *laughs* …frisbee. I played competitive ultimate frisbee for most of my life, and I chose my college so that I could play for one of the best women’s teams. Then I chose my major based on my teammates. Many of them were majoring in Earth Systems, an interdisciplinary degree with a focus on climate change. I liked science and cared about climate change, so I gave that a try. I ended up liking the engineering approach to climate change even more, so I shifted over partway through. I have stayed in this field because I’m making an impact, learning new things, and working with teams. The daily work gives me a steady drip of optimism for the future.

Kendall:  I completely get that. As someone who is in school for this subject now, it’s nice preparing to work in an evolving field! You’ve been working in this space for a significant amount of time, how has your perspective on ESG work changed?

Emily:  When I finished my degree, I felt that the solutions for climate change were clear. Over time, I have come to appreciate that seeing the optimal solution is only half the battle. Getting very-human business mechanisms to change is hard, slow, and important work. It can feel sluggish, but I think it’s the kind of change that sticks around.

Kendall:  What about the field itself – how have you seen that develop over time? Do you think the changes have been for the better?

Emily:  When I first started out doing this work, I was often supporting a smaller, independent sustainability department within organizations. Within the last 4-5 years, their ties to the rest of the company, especially to the C-Suite, have grown significantly. I think that’s a wonderful thing! It acknowledges that the drivers for sustainability are more significant, and the benefits of pursuing sustainability are more obvious.

Kendall:  I love that! Buy-in from executive leadership and company board members is something we discuss in class all the time; it’s so important because it offers credibility to the work the sustainability teams are doing and can even help garner more support from stakeholders.

Emily:  You know, without the ties to the C-Suite, smaller teams could sometimes be more nimble, at least when it came to things like measuring impacts, reporting, and making small commitments. But the connections to the leadership became essential when those sustainability teams were ready to change the organization’s behavior and needed funding for projects. As connections to leadership strengthen, processes change and new governance takes shape. It can sometimes seem as if things have slowed down, but it’s usually just a phase of growing pains. It’s an interesting dynamic! *laughs*

Kendall:  When it comes to sustainability and communication, especially now that you get to work with more organizations with a higher-level team, there are many different definitions for sustainability floating around, and it can be a “triggering” term for some. How do you level the playing field and communicate sustainability (the idea) to your teams and clients?

Emily:  I start with a very broad definition and with the understanding that any company I’m working with probably has its own, so I’m flexible. ESG is what I see typically falling under a company’s sustainability umbrella. To me, it’s a logical review of everything a company touches. So, what are our impacts on the planet (E) and on people (S), and how have we set up our structures and processes to ensure we can be improving those impacts (G)?

Kendall:  That being said, something I’ve heard is that it’s a bit harder for companies to wrap their head around certain aspects of ESG work. In your experience, what has been the hardest concept for a business to learn about and improve on?

Emily:  This is one with a lot of variety. It’s a common story to get on the phone with someone who started out working in an environmental role and then had a sustainability role pushed their way. That trajectory can leave companies with a blind spot regarding stakeholder’s “S” and “G” expectations.

Kendall:  What do you recommend to those who find themselves in this position?

Emily:  Even when companies have things like great employee training programs or hiring practices designed to increase workforce diversity, these initiatives aren’t always linked with the sustainability program. One thing that can often help a company in this position is a materiality assessment, a structured process for looking at a wide range of possible sustainability topics and determining the company’s priorities based on a diverse set of stakeholder perspectives.

Kendall:  Why do you think ClimeCo is uniquely positioned to participate in this kind of work?

Emily:  Oh, I think ClimeCo is in an amazing position to help companies with sustainability! Companies have a lot that they need to be doing right now, from communicating their progress or measuring their impacts to creating new strategies and executing them across the ESG space. What’s unique to ClimeCo is that we can support companies through more of these steps than other firms can. We have teams that advise, measure, and communicate, but also teams that can execute by developing emission reduction projects or transacting environmental commodities. It’s a natural progression! Many companies are doing each of those things, but none do all three as well as we do.

Closing Thoughts

In the classroom and at the office, Sustainability has been an almost constant discussion subject for me within the past year. In speaking with Emily, not only was I able to validate some of my suspicions about how broad-reaching and impactful the ESG field can be, but I was able to confirm my beliefs about the exciting work I have gotten to do at ClimeCo.  In my (almost) four years of working here, the idea of “we can do it all, and do it well” has rung true. Even more so now, I am exceptionally excited about everything that the team, and Emily with her expertise and passion, will be able to accomplish in this space.

To find out more about the ClimeCo’s Sustainability, Policy and Advisory team’s great work, please contact us by visiting, www.climeco.com.


About the Author

Kendall Bedford started off at ClimeCo in 2017 specializing in managing the data associated with ClimeCo’s extensive network of biogas destruction projects. She now dedicates her expertise to the team in the form of assisting with Sustainability consulting work and working closely with the environmental crediting process. She is currently pursuing a dual degree Master’s in Environmental Studies and MBA at the University of Pennsylvania.

 

Offset Pricing Monthly Market Digest – March 2021

Offset Pricing Monthly Market Digest – February 2021

Offset Pricing Monthly Market Digest – February 2021

Offset Supply Information:

All CCOs issued to date: 218.44 million

Compliance credits awaiting issuance: 15.61 million

CA and General Market Commentary:

On February 24th, the CA ARB released the results of the first 2021 quarterly auction, held February 17th. The results were perhaps stronger than expected; current vintages sold out, with a bid-to-cover ratio of 1.24 and a clearing price of $17.80, which is above the floor price of $17.71.

ClimeCo is a respected advisor, transaction facilitator, and trader of environmental commodity market products and related services. 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 services, 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 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.

Creating Carbon Offsets – It Starts With A Methodology

Creating Carbon Offsets – It Starts With A Methodology

Creating Carbon Offsets – It Starts With A Methodology


by David Priddy, VP of Business Development | February 24, 2021


With the continued push by businesses in recent years to establish more stringent sustainability goals with lower GHG thresholds, there’s been a corresponding rush by corporations, project developers, technology providers, and charitable foundations to implement emission reduction solutions to help meet this growing demand.  This has led to a plethora of innovative ideas and concepts from entities seeking to utilize carbon financing to bring their ideas to life.  As a leader in the carbon emission reduction and sequestration space, ClimeCo will frequently field requests on how to implement these ideas to generate and sell carbon offsets, which incentivizes continued investment in project activities that deliver emission reductions.  But after listening to entities pitch their ideas, the question that I most often hear is:  “Can we create carbon offsets?”  Well, the answer to that question can depend on many factors, but it all starts with an appropriate methodology.


Carbon Offset Methodologies

A carbon offset methodology is a framework document that defines the quantification and parameters that are required to generate carbon offsets throughout the life of a project. It establishes the project’s baseline, identifies qualifying practice changes to reduce carbon, and defines the monitoring requirements necessary to ensure that the reductions are real, quantifiable, verifiable, and additional to what would have happened in the absence of the project.

There are seemingly as many different offset methodologies available today as there are carbon reduction project ideas, but continuous innovation in this space keeps challenging that theory.  Voluntary registries, along with those carbon compliance programs that allow for the use of offsets, generally utilize their own protocols and methodologies.  In the North American voluntary market, we primarily work with three voluntary offset registries:  The Climate Action Reserve (CAR), American Carbon Registry (ACR), and Verra; these three registries offer more than 100 established methodologies.  Most of these existing methodologies can be classified into one of several primary categories, including industrial, agricultural, energy efficiency, waste, transportation, and renewable energy; however, the requirements for a particular methodology are usually written for a specific project activity, such that there is little room for interpretation or variance.  This often results in the need to modify an existing methodology or create a new one to support a proposed project’s activities if those activities do not precisely fit the parameters of an existing methodology.


Methodology Development

To ensure the integrity of carbon offsets, credible methodologies employ best practices based on the ISO 14064 standard, providing guidelines for quantifying, monitoring, reporting, and verifying GHG emissions and reductions.  These standards require that each project conducted under a methodology is calculated in a way that is relevant, complete, consistent, accurate, and transparent, and meets the aforementioned key crediting criteria (real, quantifiable, verifiable, and additional).  Therefore, the development of a new methodology requires a significant amount of input from the scientific community and various stakeholders, including industry groups, NGOs, and the legal and environmental justice communities.  The process can be lengthy and will typically include an individual proponent or group that authors the draft methodology, the formation of a stakeholder working group that provides technical and legal review, and a public comment period.  In our experience, it is quite common for a methodology development effort to take at least 12 months and cost hundreds of thousands of dollars in fees to complete. 


Lessons Learned

The ClimeCo team has been involved in developing several project methodologies, either as an author/co-author or by serving on a working group.  Our experience ranges from methodologies focused on industrial gases, such as the destruction of ozone-depleting substances (ODS) and the abatement of nitrous oxide (N2O) from Nitric Acid and Adipic Acid production, to avoided methane emissions from organic waste composting and agricultural methane destruction.  We are also working with clients on the development of some new methodologies that hold significant promise.  Through all of this, we have learned that the process is best served by a collaborative and transparent effort between the project proponent and the registry that balances scientific integrity, conservativeness, and financial viability to ensure a robust, practical, and defensible methodology.


The Bottom Line

As companies continue to ratchet down on their GHG commitments, the voluntary carbon market is poised for significant growth.  Buyers in this market have become increasingly savvy; they are demanding more from the offset projects they support, including a sharper focus on those that align with their businesses and produce various co-benefits.  This opens opportunities for creative thinking and project innovation in areas that existing offset methodologies may not serve.  To maximize the potential for success, a project owner/proponent should align themselves with an experienced consultant like ClimeCo to guide them through this process.


About the Author

Dave Priddy is ClimeCo’s Vice President of Business Development.  He has more than 30 years of experience in the environmental management field and is responsible for the firm’s strategic market initiatives and the evaluation of new project opportunities.  David holds a B.S. in Engineering from the University of Louisiana, Lafayette.

 

Offset Pricing Monthly Market Digest – March 2021

Offset Pricing Monthly Market Digest – January 2021

Offset Pricing Monthly Market Digest – January 2021


Offset Supply Information:

All CCOs issued to date: 215.27 million
Compliance credits awaiting issuance: 15.61 million

CA and General Market Commentary:

    • The CCO-0 quote above now reflects the August settlement date rather than the previously reported December 2021 settlement. We have made this shift because we expect increased interest in CCO-0s in Q1-Q3 as the compliance deadline for CP3 (2018-2020) on November 1st, 2021 nears.
    • We have increased our estimate for the 2022 California auction estimated floor price due to increased inflation expectations for the period November 2020 through October 2021.
    • The next auction will be held on February 17th, with results released on February 24th. This auction will offer 54.77 million allowances, down from the 57.56 million allowances that were offered on average in the 2020 auctions.  Pricing in the futures market currently predicts that the February auction will sell out, but will clear at or near the floor price of $17.71.


ClimeCo
is a respected project developer, advisor, and trader of environmental commodity market products. Specialized expertise in sustainability, regional criteria pollutant trading programs, California cap‐and‐trade, voluntary markets, and project development and financing of internal CO2 abatement systems complement ClimeCo’s diverse commodity portfolio. Within the Climate Action Reserve, ClimeCo is the largest developer of U.S. GHG‐offset projects and producer of U.S. voluntary carbon offsets, managing projects that reduce more than four million tonnes of CO2e per year. For information, contact 484‐415‐0501 or nmarshall@climeco.com.