Kelly Hoell Good Company Eugene, OR

1. NRG 173: Carbon Footprints for Climate Action in Complex OrganizationsSpring Term 2011Class 9 of 20April 26, 2011 Kelly Hoell Good Company Eugene, OR

2. pop quiz Calculate the CO2, CH4 and N2O emissions in units of Metric Tons of Carbon Dioxide equivalent (MT CO2e) from burning 100,000 gallons of diesel fuel. What are the characteristics of a high quality carbon offset? List as many of these characteristics as you can and explain what each one means in one or two sentences. In what way(s) is the analogy used on the website cheatneutral.com fundamentally incorrect when compared to a high quality carbon offset with additionality?

3. pop quiz: calculate emissions Calculate the CO2, CH4 and N2O emissions in units of Metric Tons of Carbon Dioxide equivalent (MT CO2e) from burning 100,000 gallons of diesel fuel in a fleet of heavy-duty trucks that get an average of 10 miles per gallon using the information below. Show all four equations (one for CO2, one for CH4, one for N2O and one for total CO2e) written out so your units cancel, as we have been doing in class.

4. pop quiz: calculate emissions

5. overview • discuss two common climate action strategies related to electricity consumption • Carbon offsets • Renewable Energy Credits (RECs) / Greentags, etc.

6. objectives • learn what carbon offsets and RECs are • understand that there is a bigger policy picture that puts these commodities in context • learn when these commodities have meaning (under what circumstances are they high quality) • understand that you may be asked if purchasing offsets is a good strategy (for your employer) at some point in the future

7. You know your carbon footprint. Now what?

8. climate action carbon management hierarchy

9. offsets and RECs: What are they? definitions A carbon offsetis a reduction in emissions of carbon dioxide or greenhouse gases made in order to compensate for an emission made elsewhere. Renewable Energy Certificates (also known as RECs, Green tags, Renewable Energy Credits, or Tradable Renewable Certificates TRCs): are tradable, non-tangible energy commodities in the United States that represent proof that 1 megawatt-hour (MWh) of electricity was generated from an eligible renewable energy resource (renewable electricity).

10. offsets and RECs: What are they? carbon offsets: what are they good for? • meeting compliance obligations (more coming) • showing leadership / commitment • opportunity to do more when avoiding, reducing, replacing emissions is not an option • participate in market transformation • invest in a cause you believe in (or is aligned with your mission) • preparing for a cost of carbon

11. cost of carbon cost of carbon • definition: the cost or price of emitting a ton of CO2 (or other CO2-equivalent emissions), as a result of regulatory mechanisms • What is the cost or price today of emitting a ton of CO2e emissions in the United States?* • What do we know about the cost of carbon in the future? • We are reasonably certain it will change. • We are highly uncertain about its trajectory. • Policy and markets will affect the trajectory. • We can take hints from others’ experiences. * Cost of carbon present in the ten northeastern states that compose RGGI.

12. cost of carbon • - driven by policy • - all but inevitable • requested by potentially • regulated entities • - examples exist already - owned - shared - owned - shared can be managed can be managed cost of carbon carbon footprint x cost of carbon = risk carbon footprint climate risk

13. cost of carbon $ per MT CO2e: past, present, future

14. offsets and RECs: What are they? carbon offsets: what are they good for? • meeting compliance obligations (more coming) • showing leadership / commitment • opportunity to do more when avoiding, reducing, replacing emissions is not an option • participate in market transformation • invest in a cause you believe in • preparing for a cost of carbon • strategy to achieve carbon neutrality

15. offsets and RECs: What are they? a strategy for getting to carbon neutral Becoming ‘carbon neutral’ is the act of balancing one’s personal or business carbon emissions with a corresponding set of emissions reductions and/or purchase of carbon offsets, thus ensuring zero net emissions.

16. offsets and RECs: What are they? carbon offset: example project • Toksook Bay Alaska Native Village Wind Turbines • funds develop and maintain wind turbine • wind power displaces dirtier diesel generators • investment in native village (co-benefits) • would not have been built without additional investment • emissions reductions are real, measurable, permanent

17. offsets and RECs: big policy picture carbon offsets: why were they created? • compliance markets (examples) • European Union Emissions Trading Scheme (EU ETS) • Regional Greenhouse Gas Initiative (RGGI) • California’s AB 32 (part of Western Climate Initiative) • voluntary markets (examples) • businesses, governments, higher education that want to reduce their carbon footprint voluntarily

18. offsets and RECs: big policy picture world carbon markets

19. CO2 Emissions in 2002, in tons per capita An issue of fairness: CDM source: World Bank online database, 2004

20. offsets and RECs: big policy picture US carbon markets

21. offsets and RECs: big policy picture voluntary offset market Source: http://www.environmentalleader.com/2010/06/01/google-to-buy-carbon-offsets-from-landfill-gas-to-energy-project/

22. offsets and RECs: big policy picture RECs: why were they created? • compliance markets (examples) • Renewable Portfolio Standards (RPS) • voluntary markets (examples) • businesses, governments, higher education that want to source electricity from renewable sources

23. offsets and RECs: big policy picture DSIRE: www.dsireusa.org October 2008 Renewable PortfolioStandards MN: 25% by 2025 (Xcel: 30% by 2020) ME: 30% by 2000 10% by 2017 - new RE VT: (1) RE meets any increase in retail sales by 2012; (2) 20% by 2017 *WA: 15% by 2020 • NH: 23.8% in 2025 WI: requirement varies by utility; 10% by 2015 goal ND: 10% by 2015 MA: 22.1% by 2020 + New RE: 15% by 2020 1% annual increase MT: 15% by 2015 OR: 25% by 2025(large utilities) 5% - 10% by 2025 (smaller utilities) *MI: 10% & 1,100 MW x 2015 RI: 16% by 2020 SD: 10% by 2015 CT: 23% by 2020 • *NV: 20% by 2015 • OH: 25%** by 2025 *UT: 20% by 2025 IA: 105 MW • NY: 29% by 2015 IL: 25% by 2025 • NJ: 22.5% by 2021 • CO: 20% by 2020(IOUs) *10% by 2020 (co-ops & large munis) CA: 33% by 2020 • PA: 18%** by 2020 MO: 15% by 2021 • MD: 20% by 2022 • NC: 12.5% by 2021(IOUs) 10% by 2018 (co-ops & munis) OK: 15% by 2015 • AZ: 15% by 2025 • *DE: 20% by 2019 • DC: 20% by 2020 • NM: 20% by 2020(IOUs) • 10% by 2020 (co-ops) *VA: 15% by 2025 *WV: 25% by 2025 TX: 5,880 MW by 2015 PR: 20% by 2035 HI: 40% by 2030 State RPS State Goal • Minimum solar or customer-sited RE requirement * Increased credit for solar or customer-sited RE • **Includes separate tier of non-renewable “alternative” energy resources Solar water heating eligible

24. offsets and RECs: big policy picture Voluntary REC markets • Intel (88%) • Kohl’s Department Stores (100%) • Whole Foods Markets (100%) • Commonwealth of Pennsylvania (50%) • City of Houston, TX (34%) • Starbucks (52%) • Johnson & Johnson (39%) • Staples (52%) • City of Dallas, TX (40%) • HSBC North America (112%)

25. offsets and RECs: What are they? When you can’t avoid, reduce or replace…

26. climate action But aren’t offsets just a big joke?

27. offsets and RECs: high-quality characteristics characteristics of high quality carbon offsets • Additional • Transparent • Real • Measurable • Permanent • Valid and Verifiable • Include Co-benefits • Enforceable • Registered • Not double-counted • Retired

28. offsets and RECs: high-quality characteristics key criteria for offset quality Real: The quantified GHG reductions must represent actual emission reductions that have already occurred. Additional: The project-based GHG reductions must be beyond what would have happened anyway or in a business-as-usual scenario. Permanent: The GHG reductions must be permanent and can be backed by guarantees if they are reversed (e.g. re-emitted into the atmosphere). Verifiable: The GHG reductions must result from projects whose performance can be readily and accurately quantified, monitored and verified. 

29. offsets and RECs: high-quality characteristics additionality in detail (CDM tests) The Investment Test asks whether the proposed project activity is economically or financially less attractive than at least one other alternative without the revenue from the sale of carbon. Barriers Test determines whether the proposed project activity faces barriers that: (a) Prevent the implementation of this type of proposed project activity; and (b) Do not prevent the implementation of at least one of the alternatives. Common Practice Test: Does the project go beyond common business practice? Regulatory Test: Does the project go beyond the legal requirement?

30. pop quiz In what way(s) is the analogy used on the website cheatneutral.com fundamentally incorrect when compared to a high quality carbon offset with additionality?

31. pop quiz: is ‘Alex’ additional?

32. offsets and RECs: high-quality characteristics 5 projects: which are eligible to sell offsets? • restoration and reforestation of a riparian area • installation of a wind turbine on native lands • massive long-haul trucking retrofit by multinational corporation • utility-scale wind farm development in Columbia Gorge area • high-efficiency stove installations in Central America

33. offsets and RECs: high-quality characteristics carbon offsets: overview • offsets: know what they are (and aren’t) • understand criteria for quality, especially “additionality” • find an appropriate place for them (if there is one) in your climate action strategy • see how they fit into emerging markets • relate them to a potential future “cap” as a sign of the coming “cost of carbon”

34. See you Thursday! Feel free to contact me: Kelly Hoell kelly.hoell@goodcompany.com (541) 341-GOOD (4663), ext. 217