climate action reserve ods project protocols geneva, switzerland june 14, 2010
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Climate Action Reserve ODS Project Protocols
Geneva, SwitzerlandJune 14, 2010
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Background on the Climate Action Reserve
• Non-profit organization, chartered by California state legislation in 2001
– Mission is to encourage voluntary actions to reduce emissions and to have such emissions reductions recognized
• Balances business, government, and environmental interests
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What We Do• Develop High Quality Standards
– Convene stakeholders and lead development of standardized protocols for carbon offset projects
• Manage Independent Third Party Verification
– Training and oversight of independent verification bodies
• Operate a Transparent Registry System
– Maintain registry of approved projects
– Issue and track serialized credits generated by projects
Listed & Registered Projects
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Reserve stats
CRTs registered ~5.2 million (~1 million ODS)
Account holders 325
Projects 350 (3 ODS)
ExchangesCRT futures are traded on: •Chicago Climate Futures Exchange (CCX)•Green Exchange (NYMEX)
Recent prices $5-8 per CRT
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Performance Standards
• Why a performance standard is different
– The hard work is upfront
– Assess industry practice as a whole, rather than individual project activities
• Less subjective determination to qualify
• More certainty in amount of credits
• Lower risk for developers and investors
• Faster project processing
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ODS Project Definition
• All ODS destroyed within a twelve month period by a single project developer at a single destruction facility– May come from a single or multiple sourcesIncludes only gases for which production is completely phased out
• Excludes halons
– Refrigerants• Collection and destruction of ODS refrigerant from residential, commercial
and industrial equipment, systems and appliances, or stockpiles
– Foam• Extraction and destruction of ODS blowing agent from foam; or• Destruction of intact foam sourced from building insulation
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Sources and Destruction
• Acceptable sources– US sources: Must originate from US sources for
destruction in US– Imported sources: Must originate from (one or more)
Article 5 countries for destruction in US• Why only U.S. destruction?
– Role of destruction facility is very important. We only permit destruction at U.S. facilities that are regulated for ODS destruction by U.S. EPA.
• If there were a similar mechanism for overseeing ODS incinerators globally, we would be pleased to collaborate with it.
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Additionality
• Legal requirement test
• Performance standard test: Must exceed a standard of common practice for ODS management
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Performance standard test
• Must exceed a “common practice” standard for managing ODS– US: ODS destruction is not common practice,
so all ODS destruction activities are considered additional
– Article 5 Countries: ODS destruction is not common practice, so all ODS destruction activities are considered additional
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Calculating reductions
• Emission reductions = baseline emissions – project emissions
• Baseline emissions: Sum of all emissions in the baseline scenario over 10 years
• Project emissions: Sum of all emissions in the project over 10 years
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Baseline scenarios
• US– Refrigerants: Recovered and used to charge existing
equipment– Appliance foam: shredded and landfilled– Building demolition foam: landfilled
• Article 5 countries– Virgin stockpiles of refrigerants: used to recharge
existing equipment– Refrigerants from end-of-life equipment: 100% vented– Appliance foam: shredded and landfilled– Building demolition foam: landfilled
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Project emissions
• Sum various sources such as– Transportation of gases for destruction– Losses from extraction of foam– Losses from incomplete destruction– Energy use at destruction facility– Emissions from non-ODS substitutes
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So what does all this mean?
• Destruction of one kg CFC 12– Article 5 source
• Government stockpile: ~10 tonnes CO2e• End of life: ~10.9 tonnes CO2e
– U.S. source• End of life: ~9.58 tonnes CO2e
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Project Examples
• Project Developer: EOS Climate– Partnered with firm that gathers and recycles
U.S. refrigerators– Instead of reuse, CFC-12 is destroyed– To date, issued ~250,000 CRTs
• Project Developer: Coolgas– Ships ODS to US from private Indian
stockpiles for destruction– To date, issued ~650,000 CRTs
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Who are the buyers?
• Large industrial firms that expect to be regulated under state or federal climate legislation.
• Financial firms hoping to buy now and sell to regulated entities later.– Banks, hedge funds, private equity funds
• Pure voluntary buyers
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How does financing work?
• We do not get involved in financial transaction
• Currently, most transactions are through a broker– There are a handful of active CRT brokers– Can be exchange-traded– Common for project developers to pre-sell
some CRTs and get some upfront financing—depends on risk profile
• Helps pay for verification and project costs
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The bottom line today
• We currently accept Article 5 sourced ODS projects for U.S. destruction from:– Government stockpiles;– Equipment end-of-life.
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Going forward
• For destruction elsewhere, we are very interested to work with the Ozone Secretariat and others to develop an oversight mechanism for destruction in Article 5 countries.
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Would a facility be useful?
• In the short-term, voluntary and pre-compliance buyers are generating moderate demand.
• Looking out several years, federal program will have large demand
• Over next 1-3 years, a facility could ramp projects up to scale– Administration would be very simple for
projects registered with the Reserve
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Contact Information
Joel Levin
jlevin@climateactionreserve.org
www.climateactionreserve.org
523 W. 6th Street, Ste. 428Los Angeles, CA 90014
(213) 891-1444
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