Exploring Carbon Markets
Since the launch of the Climate Leadership Commitments and their accompanying Sustainability Planning & Climate Action Guide last October, Second Nature has been exploring new ways to support and implement the Commitments on signatory campuses. One topic we’ve been thinking about is how a price on or a market for carbon emissions can accelerate the path to a low-carbon society – or in the case of our signatories, help them achieve carbon neutrality at a faster rate.
Carbon markets have evolved significantly in the 10 years since the original launch of the American College & University Presidents’ Climate Commitment (ACUPCC) and the ways in which our signatories interact with them has also greatly expanded. While there has been no national climate policy developed which would set a price for carbon (such as a carbon tax) or establish a carbon market (such as a cap & trade system), there have been some state level or regional efforts in those areas such as the Regional Greenhouse Gas Initiative (RGGI) or the California Global Warming Solutions Act of 2006 (AB 32).
Due to the limited scope of these policies, most signatories still interact with the voluntary carbon markets. Voluntary markets are created so that organizations seeking to reduce their carbon footprint have a way to invest in mitigation activities outside of their own operations. At the time when Second Nature released its first guidance on offsetting, these markets were just emerging and there was somewhat of a “wild west” feel to them – buyers were not always sure what they were getting or that the claimed reductions could be guaranteed. That initial guidance was therefore heavily focused on evaluating the various voluntary programs and the quality of the offsets for sale on them. In the time since, markets have matured and stabilized and now a few programs (such as the Verified Carbon Standard (VCS) or the Gold Standard, among others) have emerged as reliable sources of quality offsets.
However, the ways in which many of our signatories interact with these markets has expanded beyond the simple purchase of carbon offsets. Some campuses have now been researching new ways to develop offset projects themselves on their campus or in their community. Last year at the AASHE conference, I co-hosted a networking session where campuses who were working on these types of projects could meet and discuss some of the challenges they were facing. One of the outcomes of that session was the formation of a new Second Nature Technical Advisory Group to continue the discussion of these issues.
Over the last year, this group has focused on rewriting, expanding, and revising Second Nature’s guidance on working with carbon offsets to support implementation of the Climate Commitments. The group recently released a draft version of the new guidance for comment by signatory institutions. We’re asking signatories as well as selected partners and experts in the offset field to review the draft and send us their comments (via the online form linked in the draft) by September 15, 2016. The draft will be revised based on the feedback we receive, and presented at the AASHE conference in October. We’re again hosting several panel discussions and a networking session for signatories to hear about and respond to the new guidance.
The new guidance includes strategies for using offsets in your Climate Action Plans, tips for evaluating good offset projects, and guidance on purchasing, producing, and selling offsets. One of the exciting new areas outlined in the draft allows more flexibility around producing “peer-reviewed” offsets for a portion of scope 3 emissions. The Commitments allow for scope 3 emissions up to a limit of 30% of the total campus emissions to be offset by “peer-reviewed” or “innovative” offset projects. These types of project would not require the usual 3rd-party verification, but would put the onus for verifying and monitoring the project on the Climate Leadership Network. This would allow for a campus to develop a protocol for a new type of offset project or to replicate an existing offset protocol at a small scale appropriate to their campus or community.
An important goal of the Climate Leadership Commitments has always been to utilize the educational and research capacities of signatories to advance the science and practice of addressing climate change. We hope that this increased flexibility in addressing scope 3 emissions will stimulate new ideas and research into carbon offsetting. The offset space represents a unique opportunity for signatories to demonstrate leadership in developing new and innovative offset protocols. In fact a group of signatories did just that. Working with General Motors and the Climate Neutral Business Network, a group of signatories and other higher education institutions developed a new methodology for producing offsets from campus-based energy efficiency which was accredited by VCS. The campuses were then able to produce verified carbon offsets for the market.
Last year Second Nature partnered with some of these signatories to continue and expand the program to become the Carbon Credit & Purchasing Program (C2P2). Three of these signatories recently completed a new sale of offsets. These funds generated from the sale will help finance and further their carbon neutrality work on campus, through various methods such as capitalizing green revolving funds (GRFs), or financing new sustainability and efficiency projects. Part of our C2P2 work in the coming year will be recruiting new schools to join the program, and researching the possibility of generating offsets from other types of projects besides energy efficiency.
Second Nature will continue to explore carbon offsetting, pricing, and markets in the coming year, and expand on our existing initiatives. Later this Fall we hope to write more about setting an internal carbon price (or carbon “tax) on campus to help facilitate the implementation of Climate Action Plans.