8/31/2016. Global carbon dioxide emissions. Electricity. Global carbon dioxide emissions. Fires: Fuel, cooking, land clearance.

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1 Carbon Offsets Cheryl Gomez, PE, MBA, LEED AP Do we know enough about carbon offsets to make an informed decision? 1 Global carbon dioxide emissions Electricity Global carbon dioxide emissions Fires: Fuel, cooking, land clearance 1

2 Why are offsets a topic of discussion? Negative emissions Stabilize emissions now Stabilize emissions in ~30 years Even if everyone stopped increasing GHG emissions right now, we might still see >2 C warming GHG offsets represent negative emissions SOURCE: IPCC 2014 Synthesis Report 4 Definitions Greenhouse Gas Offsets Renewable energy certificates (RECs) Green Power Solar RECs Optimized RECs Carbon Attributes Carbon Offsets 5 Greenhouse Gas Offsets A greenhouse gas (GHG) offset, sometimes referred to as a carbon offset, is a tradable commodity representing a unit of GHG emissions reduction or avoidance. Typically, a GHG offset represents a reduction or avoidance of one metric ton of carbon dioxide equivalent (CO2e, MTCDE). GHG offsets may be purchased by consumers and businesses to "offset" their own emissions, such as those associated with electricity consumption, product manufacturing processes, automobile use, and air travel. Source: US DOE 6 2

3 Greenhouse Gas Offsets GHG offsets can be derived from a variety of project types that reduce or avoid GHG emissions, with diverse methods for measuring these reductions. Examples of GHG reduction projects include renewable electricity generation, energy efficiency measures, methane capture at landfill sites, soil carbon sequestration, and reforestation projects. Developers of these project types can sell GHG offsets to consumers or businesses to help finance their projects. Source: US DOE 7 What is a renewable energy certificate (REC)? Renewable energy certificates (RECs), also known as renewable energy credits, green certificates, green tags, or tradable renewable certificates, represent the environmental attributes of the power produced from renewable energy projects and are sold separate from commodity electricity. Customers can buy green certificates whether or not they have access to green power through their local utility or a competitive electricity marketer and they can purchase RECs without having to switch electricity suppliers. Source: US DOE 8 Green Power a subset of renewable energy and represents those renewable energy resources and technologies that provide the highest environmental benefit. EPA defines green power as electricity produced from solar, wind, geothermal, biogas, eligible biomass, and low-impact small hydroelectric sources. Customers often buy green power for its zero emissions profile and carbon footprint reduction benefits. Source: US EPA 9 3

4 Eligible Renewable Power Solar photovoltaic (PV) Wind Geothermal Eligible hydroelectric Eligible biomass Co-firing of eligible forms of biomass with non-renewable is accepted under certain conditions Biodiesel (B100) Fuel cells using the above eligible fuels Voluntary REC Price s/certificates.shtml?page=5 Compliance REC Market s/certificates.shtml?page=5 4

5 State Solar REC Pricing (Compliance Market) s/certificates.shtml?page=5 ying_power.shtml 5

6 Optimized RECs Tier 1 Renewable sources include solar (including solar thermal), wind, qualifying biomass, methane from a landfill or wastewater treatment plant, geothermal, ocean, including energy from waves, tides, currents, and thermal differences, and a fuel cell that produces electricity from a Tier 1 renewable source generated from qualifying biomass or methane from a landfill or wastewater treatment plant. Tier 2 Renewable sources include hydroelectric power other than pump storage generation and waste-to-energy. For Tier 2 sources, the facility must have existed and been operational as of January 1, The incineration of solid waste cannot be used to meet more than 20 percent of the standard for Tier 2 renewable sources for a given year. After December 31, 2012, the incineration of solid waste shall not be eligible to generate renewable energy credits. 16 Carbon Attributes Carbon allowances or emissions credits associated with the facility Is this different from RECs? Are they real? 17 Definitions Greenhouse Gas Offsets Renewable energy certificates (RECs) Solar RECs Green Power Optimized RECs Carbon Attributes Carbon Offsets 18 6

7 Where do offsets come from? 1.) Project chooses a methodology 2.) Project opens a registry account and lists project with a standard 3.) Project contracts a certified 3 rd party to validate project description 4.) Project measures GHGs, 3 rd party verifies project report 5.) Standard issues credits to registry account (can be held, sold, or retired) standards: certify projects to ensure that credits equal real GHG reductions methodologies: standards use approved methods to calculate the CO 2 e removed by projects registries: track offsets to prevent doublecounting SOURCE: The VCS Project Process 19 Types of offset projects Energy Projects Forestry Projects Seagrass Restoration 20 Most voluntary credits derive from forestry Forest credits: Primarily from Reducing Emissions from Deforestation and forest Degradation (REDD) The Voluntary Carbon Credit Market SOURCE: Forest Trends (2015) 21 7

8 How are offset credits allocated to projects? Real, net GHG removal: credits must = 1:1 removal of GHGs from the atmosphere Additional: the GHG removal would not have happened absent a credit market No harmful externalities: the removal project does not cause other damage Permanent: existing in perpetuity; VCS stipulates that removal must be for >30 years Independently verified: 3 rd party verifiers evaluate credit applicant project proposals SOURCE: Wunder (2005) (Adapted from c s.org/quality assurance principles) Case Study MTCD E 350, , , , , ,000 50,000 0 Total Greenhouse Gas Emissionsby Source %-0.85% -5.08%-4.25%-1.23% -4.96% UVA Goal Electricity Fuel Operations Transportation 8

9 MTCDE Greenhouse Gas Emissions Projected emissions with current rate of growth % Total emissions Current reductions UVA s emissions UVA Goal Old Projection: New Projection: MTCDE 47,000 77, Greenhouse Gas Reduction Plan Innovative Technolo gy Efficiency & Conservation 15% 24% TBD 17% 11% Fuel Switch 12% 7% 7% 6% Renewables Lighting New Transpo rtation Plant Construction 1% Optimization Ener gy Efficiency Decline Linearly 27 9

10 Sources of Carbon... faucet fossil fuel combustion deforestation about 9.1 million metric tons The Climate Bathtub Atmospheric Carbon ppm ppm ppm ppm toast ppm about 5 million metric tons Sinks of Carbon... drain absorbed by plants & soils ~30% absorbed by oceans ~25% absorbed sediments & rocks ~1% Purchasing High-Quality Carbon Offsets Helps us keep our word Reduces carbon emissions sooner rather than later Stimulates markets for the output of researcher activities Incentivizes additional carbon-reducing activities Raises the profile of carbon-reducing activities 29-67,602 Verified Carbon Standard $3.50/mt The Gold Standard $4.40/mt Climate Action Reserve $3.80/mt American Carbon Registry $2.60/mt 2014 average $3.80/mt SOURCE: Ecosystem Marketplace, 2015 Recommendation Purchase 67,602 mt of carbon offsets (~$256,900 at $3.80/mt) to completely meet and catch up our emissions commitments through and continue to purchase offsets going forward for whatever portion of our emissions goals we are unable to meet internally 30 10

11 Buying Carbon Offsets PROS Assists organizations meet GHG commitments (comparative advantage) Incentivizes high-return internal reduction projects (price on carbon emissions) Funds GHG net removal projects CONS Organizations buy their way out of reducing emissions... shirking of moral duty Offsets are of uneven quality; multiple standards and verification procedures 31 If We Had $1 Million, How Would We Spend It? What Can You Buy For $1 Million? Type Example Annual MTCDE Payback Solar** / Photovoltaic 300 kw Years (electricity increases 3% per year) Efficiency Initiatives Retro-Commissioning 10,000-30,000 <2 Years Plant Upgrades Plant Controls 7500 < 5 Years REC (DVP) $0.013/kWh 44,000 No payback Need to spend $1 million every year. Utility Scale Solar 20 MW dc 15,000-25,000 Savings? Cost? ** Assumes $3.50/Watt total installed cost. 11