Climate Action Reserve
www.climateactionreserve.org
Overview
Additionality and Quantification Procedures
Overview
Type of Standard and Context
The Climate Action Reserve (formerly the California Climate Action Registry, see below) was launched in 2008. It is a national offsets program focused on the US carbon market.
The Climate Action Reserve (Reserve) establishes standards for quantifying and verifying GHG emissions reduction projects, provides oversight to independent third-party verification bodies, and issues and tracks carbon credits called Climate Reserve Tonnes (CRTs pronounced ‘carrots’).
As of June 2009, the Reserve has adopted four performance-based project protocols defining the eligibility criteria and reduction quantification guidelines for carbon offset projects (see Project Types below).
The California Climate Action Registry (California Registry) is the predecessor organization and legacy program of the Climate Action Reserve. It is a voluntary GHG registry established by the California State Legislature in September 2000 to encourage and promote early actions to measure, manage and reduce GHG emissions. To support this goal, the California Registry developed a general reporting protocol, general verification protocol, and a number of sector-specific reporting protocols to enable its members to voluntarily calculate and report entity-wide GHG emissions. The California Registry also produced a series of standardized, performance-based, project-specific protocols and accompanying verification protocols to quantify the emission reductions from GHG mitigation projects. For example, the first set of project protocols for quantifying and verifying forestry projects was launched in 2005 and these protocols were subsequently adopted by the California Air Resources Board in 2007, which recognized the resulting emission reductions as early voluntary actions under the California Global Warming Solutions Act of 2006 (AB-32). This act established a program of regulatory and market mechanisms to achieve real, quantifiable and cost-effective reductions in GHGs.
In 2007, CCAR worked with other regional non-governmental organizations to build and launch the Climate Registry, a voluntary GHG registry for the North American region covering states in the US, Native Sovereign Nations, Canada and Mexico. The last year for which the California Registry will accept emissions reports is 2009 and, thereafter, its members will transition to The Climate Registry.
Standard Authority and Administrative Bodies
The Climate Action Reserve is administered by employed staff with overall direction from a Board of Directors. The Board of Directors is comprised of representatives from state government, business, environmental organizations, academia and others.
The Reserve’s operations are funded by account holder fees, CRT issuance and transfer fees, grants and sponsorships.
Regional Scope
The Reserve provides services to companies and project developers in the US and Mexico. Discussions are underway for further expansion throughout North America.
Recognition of Other Standards/ Linkage with Other Trading Systems
The Reserve’s GHG emission reduction program, including its project-specific protocols and its verifier accreditation and oversight program, has been approved under the Voluntary Carbon Standard (see VCS 2007). The Reserve’s Forest, Livestock and Urban Forest Project Protocols have all been adopted by the California Air Resources Board.
Market Size and Scope
Tradable Unit and Pricing Information
Projects that achieve verified emission reductions are issued with a serialized Climate Reserve Tonne (CRT, pronounced "carrot") per metric ton of CO2e emissions reduced or permanently sequestered. Over a million CRTs have been issued and are available for trading, though many projects also sell their CRTs into the future before issuance.. In early 2008, Pacific Gas and Electric Company announced it would purchase 200,000 short tons of GHG emission reductions from the Conservation Fund’s Garcia River Forest project (PG&E, 2008). The price of USD 9.71 per short ton of CO2 for the purchase was approved by the California Public Utilities Commission (Woodall, 2008).
Participants/Buyers
Climate Action Reserve account holders represent a variety of sectors, including environment, finance and business. Individuals, nonprofit organizations, government agencies and businesses may hold an account in the Reserve. Participating account holders, including project developers, traders and brokers, and retailers are located throughout the US and internationally.
Current Project Portfolio
As of July 2009, the Reserve had 75 total GHG emissions offset projects, including 9 registered (completed verification) and 51 listed (accepted by the Reserve as eligible). Go here for an updated list of projects and their status.
Offset Project Eligibility
Project Types
As of June 2009, the Reserve has adopted four performance-based project protocols defining the eligibility criteria and reduction quantification guidelines for carbon offset projects.
- The Livestock Project Protocol provides guidance to account for emissions reductions associated with installing a manure biogas control system for livestock operations.
- The Forest Project Protocol provides guidelines for three types of forest projects: conservation or avoided conversion projects, conservation-based forest management and regeneration of native trees, and reforestation projecs with native trees on land that has not been forested for at least 10 years. The Forest Project Protocol was subsequently adopted by the California Air Resources Board, which recognized the resulting emissions reductions as early voluntary actions under the California Global Warming Solutions Act of 2006 (AB 32).
- The Landfill Project Protocol provides guidance to account for GHG emissions reductions associated with installing a gas collection and destruction system at a landfill.
- The Urban Forest Protocol provides guidance to account for GHG reductions from tree planting projects by municipalities, utilities, and universities.
Project Locations
Currently, only forestry projects located in California are eligible for participation in the Reserve, but the updated Forest Project Protocol (expected adoption in September 2009) expands the protocol nationwide. Livestock and landfill projects may be located anywhere in the US and Mexico. Urban forest projects may be located anywhere in the US. All future projects will be able to be located anywhere in the US, and discussions are ongoing about expanding all protocols to all of North America.
Project Size
At present, there are no limitations on project size in any sector, though very small projects are often not financially feasible.
Start Date
For all project types (forestry, livestock, landfill and urban forest projects) the current start date for project eligibility is January 1, 2001 for projects in the US, and August 15, 2008 for landfill and livestock projects in Mexico. But as each project protocol undergoes review and update, the Reserve expects to adopt policies requiring that projects be listed (officially accepted) on the Reserve within six months of the start of operations. The Reserve released an updated version of its Landfill Project Reporting Protocol, version 2.0, in November, 2008, including the new policy, but also provided a one-year grace period before implementation of the new policy. Upon the conclusion of the grace period on November 17, 2009, landfill projects must be listed with the Reserve within six months of the start of operations. The Mexican protocols also include this one-year grace period (beginning July 1, 2009) before projects must be listed within six months of their start date.
Crediting Period
Distinct crediting periods apply for each project type:
- Livestock management projects must use the day their biogas control system started operating as the start date of their 10-year crediting period.
- For landfill projects, the crediting period is also 10 years, beginning the day their gas control system began operation. This crediting period will end early if the landfill’s emissions become subject to regulation.
- Forest projects have a 100-year crediting period and must be verified no less frequently than every six years, and must submit annual monitoring reports.
- Urban forest projects have a 100-year crediting period and must be verified no less frequently than every six years.
Co-benefit Objectives and Requirements
It is Reserve policy that GHG projects must not create negative environmental externalities and that projects should result in environmental co-benefits whenever possible. The forest protocols specifically require projects to achieve environmental co-benefits.
Additionality and Quantification Procedures
Additionality Requirements
Additionality requirements are standardized but specified by project type. Projects must not only demonstrate that the reductions go beyond what is required by law (regulatory surplus), but also that they go above and beyond common practice ("business as usual"). Additional project-specific requirements are outlined below.
- For forest management projects, additionality is defined as practices that exceed the baseline characterization, including any applicable laws and regulations. In the case of reforestation projects, additionality is further demonstrated by showing that the project area has not been forested for at least 10 years. For conservation projects, it is demonstrated by showing that the project area would have been converted to a non-forest use without the protection provided under the project.
- Livestock methane abatement projects and landfill gas collection and combustion projects need to pass two tests to demonstrate additionality: a performance standard test and a regulatory surplus test. For both livestock and landfill projects, the performance standard test is done using a technology-based threshold based on anticipated changes in technology in the sector (e.g. anaerobic digesters for livestock projects, and gas collection and combustion systems for landfill projects).
- For landfill projects, an additional practice-based threshold is used in the performance standard test – if the landfill was already collecting and combusting landfill gas with a non-qualifying technology, it cannot sell this as offsets. Only emissions reductions from a new, qualifying system added at an existing landfill operation can produce offsets.
- For urban forest GHG reduction projects, the urban forest project must meet the performance standard test and the regulatory test. For utilities, the tree plantings are considered additional if they are not a power line replacement. Because it is not common practice for utilities to have residential tree planting programs, all trees planted under these types of programs are considered additional and therefore are designated as eligible project trees. The performance threshold for municipalities and educational campuses are measured in terms of net tree gain, the annual number of trees planted by an entity minus the annual number of trees removed by an entity. Municipalities and educational campuses must maintain a stable population of existing trees and demonstrate net tree gain greater than zero. Trees that are planted to comply with federal, state or regulatory requirements may not be considered project trees.
Quantification Protocols
Standardized baseline quantification and monitoring guidance is included in the project-specific protocols. These requirements are outlined below by project type.
Forestry project baseline scenarios are based on a characterization of the forest management practices that would have occurred in a project’s absence.
- Forest management projects are evaluated using a baseline that reflects the management scenario resulting from the harvesting and regeneration of trees to the maximum extent permitted by mandatory forest management laws.
- Reforestation projects apply a baseline that presumes that without laws or regulations requiring reforestation, the project area would remain without forest cover over the project time period.
- Forest conservation projects define the baseline using either local land-use conversion trends identified at the county and state levels, or site-specific immediate threats of conversion.
Forestry project developers must monitor and report emissions from projects annually and submit a report which includes: an estimate of total carbon stocks in the project area, including anticipated or unanticipated changes in the stocks due to disturbances; information on the date, nature and extent of the disturbances, whether anticipated or not; a written assurance from the project developer that the project activities are being carried out; and information describing, quantifying and analyzing any on-site activity-shifting leakage. (A leakage may occur when a project activity changes the availability or quantity of a product or service, resulting in a change in the GHG emissions independent of the project’s intended GHG impacts. The Reserve differentiates between two types of leakage – activity shifting and market leakage. Activity-shifting leakage is a displacement of activities from within the project’s physical boundaries to locations outside of it. Market leakage occurs when the project activity affects an established market for goods, causing substitution or replacement elsewhere resulting in GHG emissions.)
Project developers are also required to demonstrate that the project is maintaining a consistent amount of additional carbon stocks over time.
Livestock management project baseline scenarios are calculated based on the “continuation of current practices”, that is, the technology currently in use for a given geographical area, animal type and farm size. Baseline emissions of methane and CO2 gases are calculated separately and summed to arrive at the total annual baseline emissions. Projects are only eligible if the baseline scenario is an uncontrolled methanogenic process (such as an anaerobic lagoon).
Landfill project baseline scenarios include all uncontrolled methane emissions, excluding the portion of methane that would be oxidized by soil bacteria if the landfill does not utilize a synthetic cover material. Current regulatory requirements for capture of methane emissions can be incorporated into the baseline scenario, as appropriate. Methane emissions from landfill gas capture and control systems must be monitored with equipment that directly meters the continuous rate of landfill gas flow, the fraction of methane in landfill gas, and the temperature and pressure of gas prior to delivery to the combustion device or injection into the natural gas transmission and distribution system. At project sites with an existing non-qualifying methane capture system, specific pre-project installation and post-project installation monitoring of the flow rate and methane concentration of the original system is required to calculate the deduction for methane that was previously being destroyed.
Urban forest project baseline scenarios are calculated based on a performance standard demonstration of “better than business as usual.” GHG reduction credit calculations are based on the amount of annual project carbon sequestration in project trees minus the annual GHG emissions from motor vehicles and equipment related to tree planting, care and monitoring. Each year, the project developer estimates the amount of carbon stored in eligible project trees (carbon stocks) and then uses the data to calculate an annual incremental carbon stock change (carbon sequestration). The annual change in carbon stocks is the basis for estimating project carbon sequestration. The Urban Forest Project Protocol recognizes three approved approaches to quantifying the annual carbon stocks in eligible project trees, each of which is based on direct measurements of trees and approved urban tree carbon models (allometric equations).
Project Approval Process
Validation and Registration
There is no required validation process for developers seeking to use the Reserve’s protocols. Project Developers must first open an account on the Reserve. The initial registration forms, known as listing documents, along with a fee are submitted online. The proposed project is evaluated by the Reserve and may be approved, denied or returned for revisions. If approved, the project is listed on the Climate Action Reserve and is eligible to be verified.
Monitoring, Verification and Certification
After the project activities are implemented, the project developer must hire an accredited verification body to verify that the emission reductions or removals have been achieved. Verification bodies are ANSI-accredited independent entities approved by the Reserve. The forestry, livestock, landfill and urban forest verification protocols provide verifiers with guidance on assessing the GHG stocks and emissions associated with projects in these sectors.
Once verification is complete, the verifiers upload their final report and opinion on the project’s reductions. This project verification is then approved by the Reserve, at which point the project status is changed to “registered” and the project developer’s account will be credited with the appropriate number of CRTs. Credits for all project types are issued on an ex-post basis after verification has been completed and accepted by the Reserve. On payment of the issuance fee, the CRTs may be traded or retired.
Registries and Fees
Project developers, brokers, traders, retailers or members of the public may open an account with the Climate Action Reserve at any time. The annual account maintenance fee is USD 500 (this fee is waived for verification bodies).
Project developers may register a project by opening an account and paying a USD 500 project submittal fee. The Climate Action Reserve charges an issuance fee of USD 0.15 per metric ton of CO2e and a transfer fee of USD 0.03 per metric ton of CO2e paid by the seller.
Selected Issues
The Climate Action Reserve has applied the lessons learned from its entity inventory protocols to GHG emission reduction project protocols to help ensure quality and integrity. These lessons include the value of transparency, accuracy, consistency, and conservatism in GHG accounting. In doing so, the Reserve has adopted standardized and performance-based protocols as the model for its project registry.
With the launch of its offsets registry, the Climate Action Reserve is respected as a national project registry that sets standards, accredits verifiers, and registers and tracks projects using advanced web-based software to serialize and transfer the issued emission reduction credits. It is anticipated that GHG emission reductions created under the Reserve program may ultimately serve as regulatory offsets under any future California cap and trade program, and that linkages to regional efforts such as the Western Climate Initiative (see section on WCI) are likely. There is also the possibility of this program being linked with a future US cap-and-trade program on a federal level.
References
CCAR (n.d.). California Climate Action Registry. Retrieved January 12, 2008 from the California Climate Action Registry.
CCAR (n.d.). Protocols Overview. Retrieved January 12, 2008 from California Climate Action Registry.
Climate Action Reserve Project Database
Climate Action Reserve website
PG&E (2008). New Release: Pacific Gas and Electric Company’s Climatesmart Program Makes Largest Purchase of Greenhouse Gas Emission Reductions in California. San Francisco: Pacific Gas and Electric Company.
Woodall, B. (2008). PG&E carbon offsets fund California forest. Los Angeles: Thompson Reuters. Retrieved July 9, 2008, from Thomson Reuters.
State of California (2007, May 8). Press Release: Gov. Schwarzenegger Applauds Climate Action Reserve for Joining First Multi-State Greenhouse Gas Tracking.
WRI (2006). GHG Scheme Data Sheet: Climate Action Reserve Forest Project Protocol. Washington, DC: World Resources Instiute.