Carbon Offsets

Carbon offsets are generated when someone voluntarily undertakes a project/action that reduces the amount of greenhouse gas emissions entering the atmosphere (reduction), prevents greenhouse gas emissions from entering the atmosphere (avoidance), or increases the amount of greenhouse gas emissions being taken out of the atmosphere and sequestered for a defined period of time (removal enhancement).

It is highly likely that anaerobic digesters will generate carbon offsets by capturing and destroying methane emissions from livestock manure and other organic waste streams. However, for an anaerobic digestion project to be eligible to generate and sell carbon offsets, it will have to meet the specific criteria of the carbon market in which the offset will be sold. These criteria vary from market and market. Project developers are encouraged to consider all available carbon markets before deciding how and where they want to sell their carbon offsets.

An anaerobic digestion project could potentially sell carbon offsets to the Pacific Carbon Trust, the Western Climate Initiative or in Voluntary markets.

 

Pacific Carbon Trust (PCT)

Under the Greenhouse Gas Reduction Targets Act (GGRTA), the B.C. Government has legislated carbon-neutral status for B.C.’s public sector beginning in 2010. The Pacific Carbon Trust (PCT), which was launched in the fall of 2008, is a Crown corporation created to deliver quality BC-based greenhouse gas (GHG) offsets to help ministries, school districts, universities, colleges, health authorities, Crown corporations and other government agencies meet this carbon neutral goal.

For every tonne of GHG emissions generated for the calendar year, each ministry, school district, university, etc. must deposit $25 into the PCT. The price of offsets will be negotiated on a project-by-project basis. However, despite this, there is a high level of certainty that the initial price of carbon will be between $10 and $20 for each carbon offset. For more information on protocols, guidance documents, etc. please visit the Pacific Carbon Trust website by clicking here.

 

Western Climate Initiative (WCI)

Launched in February, 2007, the Western Climate Initiative (WCI) began as collaboration among Arizona, California, New Mexico, Oregon and Washington to develop regional strategies to address climate change. On April 24th, 2007, B.C. announced that it had joined the program, turning the WCI into an international partnership. Manitoba, Ontario and Quebec have since joined while several other Canadian Provinces, American States and Mexican States are observing the initiative.

The WCI’s final design recommendations state that B.C., along with the other WCI participants, will initiate a cap-and-trade program enforced in compliance periods 2012 to 2020 where allowable levels of GHG emissions (e.g., the number of carbon allowances given to each emitter) declines overtime. Capped entities will initially be restricted to large emitters (>25,000 tonnes of CO2 equivalent) such as large electrical generators, industrial fuel burners and industrial process emitters. Coverage for smaller commercial and industrial emitters (> 10,000 tonnes of CO2 equivalent) is proposed to commence in 2015.

The WCI has decided to allow the agriculture sector to sell carbon offsets to regulated participants that are unable to meet their carbon reduction targets. However, because the guidelines for carbon offsets will take some time to develop, carbon offset projects will not be immediately realized. For more information, please visit the Western Climate Initiative website by clicking here.

 

Voluntary markets

The voluntary market refers to entities (companies, governments, NGOs, individuals) that voluntarily purchase carbon offsets to lessen their carbon footprints. The act of purchasing offsets is defined as voluntary as long as the carbon offsets are not employed to meet some regulatory purpose. Unlike the PCT and the WCI, the voluntary market is self-directed and has no commonly accepted standards regarding carbon offset criteria and protocols.

In theory, the voluntary market is assumed to self-regulate as the quality of offsets is reflected in the market price they garner. Not surprisingly, the chief controversy surrounding the voluntary market has been the credibility of the carbon offsets due to a lack of transparency, a centralized regulatory system and third-party standards. However, carbon offset consumers and the general public are becoming better educated regarding what constitutes a legitimate carbon offset.

Private businesses compose the majority of offset purchases in 2007, citing corporate responsibility and branding as the primary motivators behind their purchasing decisions. These voluntary consumers also have driven demand for more robust carbon offsets as they wish to avoid any negative repercussions to brand identity from the purchase of low quality carbon offsets.

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