Lesson 1: Introduction to GHG Projects and Project Level Accounting. Page 1 Learning Objectives

Transcription

1 Lesson 1: Introduction to GHG s and Level Accounting Page 1 Learning Objectives Upon completion of this lesson, you will be able to understand: Rationale for undertaking GHG projects Difference between types of GHG projects Key Concepts for GHG Accounting GHG project eligibility is dependent on GHG programs and key stakeholders policies, rules and requirements Steps in the GHG project cycle Page 2 Rationale for Undertaking GHG projects s are usually undertaken voluntarily, whether the credits go to the voluntary market or the compliance market. s can be used to: Demonstrate environmental excellence or corporate social responsibility Improve public relations Meet an organization s internal GHG reduction targets Create tradable Carbon Credits or GHG Offsets for the compliance market (e.g. CDM CERs) To achieve a double dividend (economic benefit and environmental benefit), sustainable development, or triple bottom line (economic, environmental and social) results Many of the projects in the news are undertaken to generate offsets (i.e., tradable carbon credits) developers quantify the GHG emission reductions associated with the projects and find a GHG program or an organization that will purchase these carbon credits Organizations typically purchase these carbon credits to: Comply with emission caps or other regulations Achieve their internal and voluntary GHG reduction targets Differentiate reputation of corporation of its products with a green image Page 3 Types of GHG s GHG projects involve activities that reduce the amount of greenhouse gases (GHG) in the atmosphere relative to a baseline case This can be accomplished by either: Reducing the amount of GHG emissions released to the atmosphere from one or more GHG sources or

2 Enhancing the amount of GHG removed from the atmosphere (e.g., carbon sequestration in forests) GHG Reductions and Enhancements Emissions Emission Reduction Emissions Removals Removals Removal Enhancement Page 4: Types of GHG s The main way in which a project reduces GHG emissions or increases GHG removals is known as its primary affect (GHG Protocol) The following slides provide examples of project activities or primary affects Examples of GHG Types (1) Onsite (direct) reductions of GHG emissions by switching to low carbon fuel energy Switching from gasoline combustion to biofuel combustion

3 activity Biofuel Gasoline Biofuel Vehicle Fleet Gasoline Vehicle Fleet transport transport GHG affect = lower direct GHG emissions from vehicles fuel switching to carbon neutral fuel Voice over the top bullet as: Onsite, or direct, reductions of GHG emissions by switching to low carbon fuel energy. For example, switching from gasoline combustion to biofuel combustion is an onsite, or direct GHG emissions reduction. Examples of GHG Types (2) Offsite (indirect) reductions of GHG emissions associated with the generation of electricity Grid-connected renewable electricity from wind activity Wind Mix of coal, NG, hydro, nuclear, etc. Wind Turbine Grid (operating, build, etc.) Electricity Electricity GHG affect = lower indirect GHG emissions from power plants reducing on fossil fuel use and combustion Voice over the top bullet as: Offsite reductions, also referred to as indirect, of GHG emissions associated with the generation of electricity] Examples of GHG Types (3) Enhanced removals of CO2 from the atmosphere by forest or agricultural biological processes Reforestation project

4 activity More trees Capture removing and GHG affect = Atmospheric CO 2 storing carbon Capture Atmospheric CO 2 Existing vegetation removing and storing carbon more direct GHG removals and storage by trees Examples of GHG Types (4) Reductions onsite of fugitive GHG emissions from leaking pipelines, landfills, industrial processes Capture on destruction of CH4 from landfills activity Waste Waste Landfill with LFG capture and flare Typical Landfill CH4 GHG affect = less direct GHG fugitive emissions from waste decomposition Examples of GHG Types (5) Reductions onsite of GHG emissions from a process or management change Fly-Ash substitution for limestone in cement production, thereby avoiding emissions of CO2 from limestone manufacture Fly-ash activity less CaCO 3 CaCO 3 Cement with SCM (e.g. fly-ash) Cement without SCM (BAU) Cement Less CO 2 Cement CO 2 GHG affect = less direct GHG emissions from production of cement

5 Page 5: Key Concepts Scenario The baseline scenario [popup box] is a hypothetical reference case that best represents the conditions most likely to have occurred in the absence of a GHG project In simpler terms, the baseline scenario is what would have happened in the absence of the project. Voice over: A few key concepts will now be introduced to give you a better understanding of GHG accounting. This will allow you to better understand the next part of the course. These key concepts will be addressed in more detail in subsequent lessons. Pop up text: When determining the GHG emission reductions from a project, it is very important to select an appropriate baseline scenario. In order to calculate the GHG emissions from a project, you must determine both the GHG emissions attributable to the project and the emissions assumed in the baseline scenario. By subtracting the baseline emissions from the project emissions, the emission reductions of the project can be calculated. This course provides more detail on baseline scenario selection in later lessons. Additionality Additionality is an important criterion for environmental integrity of GHG projects It is closely linked to determining the baseline scenario It is also used to determine if the project results in GHG benefits additional to what would have occurred in the absence of the project There are a variety of additionality test including regulatory, common practices, o or financial) Depending on the programme, a project may NOT be additional if, for example, if the project: Is being undertaken to comply with regional, provincial or federal regulation(s) Is being undertaken in the context of a voluntary agreement between business & government in lieu of regulations (covenants) Is already underway or completed contractual agreements between organizations already in place to perform the activity

6 Is being undertaken to fulfill an existing contractual agreement between organizations that includes the scope of the project. This concept will be discussed in detail in later lessons. Voluntary versus Compliance GHG Markets Voluntary GHG market: A voluntary greenhouse gas emission reduction market is one which exists outside of any regulatory mandate. Participants including purchasers, and project developers are not required to participate. Compliance GHG market: In a compliance market, regulated entities have emission caps or other requirements imposed on them. These entities may meet their regulatory obligations using emission reduction credits (i.e., offsets) purchased from projects that take place through activities in uncapped sectors of the economy. Validation and Verification Validation: a systematic, independent [popup box] and documented process for the evaluation of a GHG assertion in a GHG project plan against agreed validation criteria (ISO Part 3). Validation occurs before a project is implemented (ex ante), and typically evaluates the projects eligibility. Verification: a systematic, independent [popup box] and documented process for the evaluation of a GHG assertion against agreed verification criteria (ISO Part 3). Verification occurs after a project has been implemented (ex post), may be repeated at regular intervals, and helps determine the number of credits the project will be awarded. Pop-up Text: Independence: A validator or verifier must remain independent of the activity being audited and free from bias and conflict of interest and maintain objectivity throughout the audit to ensure that the findings and conclusions will be based only on objective evidence generated during the audit.

7 Independence Intended User (2 nd party) accountability assurance GHG Assertion Developer (1 st party) Statement Validator/ Verifier (3 rd party) independence Source: ISO Part 3 Page 6: Eligibility of Types The ISO Part 2 standard for projects and the WRI/WBCSD GHG Protocol for projects are designed to enable users to plan and develop documentation for quantifying, monitoring and reporting GHG emission reductions and removal enhancements from any type of project. It is important to note that both ISO Part 2 and the GHG Protocol for s are intended to be policy neutral.

8 Some types of GHG projects may not be accepted by specific GHG programs or other interested parties, even though the emissions reduction or removal enhancements can be quantified. It is recommended that users of the ISO Part 2 and the GHG Protocol consult with GHG programs or other interested parties regarding the resolution of policy-relevant accounting decisions including: Types of eligible projects Types of eligible GHGs Additionality requirements Geographic eligibility requirements, etc... The Voluntary Carbon Standard s scope includes: All six Kyoto gas categories (i.e., CO2, CH4, N2O, HFCs, PFCs, and SF6) All technologies supported by an approved VCS program methodology, including agriculture, forestry and other land-use (AFOLU) [pop-up box] project types Any approved GHG programs categories which is part of an approved GHG program methodologies, not part of an approved GHG program, when approved under the VCS Program through the double approval process Agriculture, Forestry and Other Land Use (AFOLU) includes activities related to: Afforestation, Reforestation and Revegetation (ARR) Agricultural Land Management (ALM) Improved Forest Management (IFM) Reduced Emissions from Deforestation (RED) Double approval process Under the VCS Program, methodologies or additionality performance standards shall be assessed by two independent parties. The first assessment shall be carried out by a validator or verifier accredited for the VCS Program and appointed by the project proponent. This assessment shall cover all relevant VCS Program requirements. The VCS Secretariat, acting on behalf of the VCS Board, shall choose a different VCS Program accredited validator or verifier to carry out a second assessment. This second assessment shall cover all relevant VCS Program requirements. The Voluntary Carbon Standard s scope excludes: (s) that can reasonably be assumed to have generated GHG emissions primarily for the purpose of their subsequent reduction, removal or destruction

9 (s) that have created another form of environmental credit (i.e., Renewable Energy Credits-RECs [popup box]) unless they provide a letter from the program operator that the credit has not been used and has been cancelled from the relevant program Page 7: The GHG Cycle The GHG project cycle generally consists of two phases: 1. Planning 2. Implementation The project cycle diagram presented on the following slide is generic. Depending on the GHG program there may be more or less steps in the process. Planning Implementation Assess Concept / Feasibility / Program Eligibility Consult Stakeholders before and after establishing the GHG Plan Validate GHG Plan Initiate Activities period Undertake Activities Final Issuance of credits Terminate time Obtain approval of the project by the program Plan the GHG Register Periodical Verification, Periodical Certification and Periodical Issuance of certified GHG units Present Final GHG Report Verify Final GHG Emissions Reductions and Removal Enhancements Certify Final GHG Emissions Reductions and Removal Enhancements Describe project, Determine Scenario, and Establish Procedures to Monitor, Quantify and Report GHG Emissions, Removals, Storage, Emission Reductions and Removal Enhancements and Validate the GHG Plan Requirements included in ISO Implement Procedures to Monitor, Quantify and Report GHG Emissions, Removals, Storage, Emission Reductions and Removal Enhancements and Verify GHG Emission Reductions, Removal Enhancements and Reports The term GHG Plan (ISO) is used in this course to represent the document that contains the project proponent s planned activities and procedures for implementation during the project period. Other commonly used terms are: CDM Design Document (PDD) VCS Description (PD)

10 Page 8: Planning: During the planning stage, project developers usually assess project feasibility, conduct financial analyses, determine program eligibility, consult stakeholders, develop and obtain validation of the GHG project plan, and register the project. Roles and Responsibilities - Developers developer develops and implements the project. Examples of developers can be: Businesses Non-profit organizations Municipalities Individual investors Roles and Responsibilities - GHG Programs The GHG program determines requirements, rules and policies of the program and eventually recognizes the eligibility of emission reduction or removal projects. Examples of programs with eligibility approval processes are: CDM executive board Voluntary Carbon Standard Chicago Climate Exchange GE AES Greenhouse Gas Service Roles and Responsibilities - Intended Users Intended user - individual or organization to whom the project developer reports information. May Include: GHG reporting or commitment program Public, shareholders or other stakeholders Purchasers of any generated credits Other interested parties 3rd party validators and verifiers Host country governments Page 9: Generally a project is validated by an independent party and is registered before it starts. Typical evidence that must be provided by project developer for validation purposes includes: Description of the project;

11 Demonstration of conformance to requirements of the relevant GHG program Determination of the baseline; Quantification, monitoring, data quality & reporting procedures; Estimated emission reductions and removal enhancements; Implementation of the GHG project follows: Start of construction (shovel in the ground) Change operating or management practice (flipping switch) The project developer implements the procedures in the GHG project plan during project operation and submits a GHG reports that undergoes verification. Page 10: Summary GHG projects can be developed for a variety of reasons; voluntary actions, generation of carbon credits, compliance to regulations. GHG projects include activities that result in reduced emissions of GHG to the atmosphere, or increased removals of GHG from the atmosphere Eligibility of projects depends on relevant stakeholders and GHG program policies, rules and requirements The GHG project cycle usually involves a planning, validation, implementation and verification phases, but many steps (including quantification, monitoring, reporting) may differ depending on the GHG program and standards. Page 11: Further Reading ISO Part 2, Introduction, Clause 4 ( WBCSD/WRI GHG Protocol for Accounting, chapter 2 ( VCS2007 (