Services: Carbon Credit Advisory
General Carbon Credit Development Services
International concern about climate change has prompted a large number of initiatives to reduce the global output of greenhouse gases (GHG).
While GHG emission reductions in the United States are currently voluntary there are a number of market-based mechanisms that seek to encourage projects that reduce GHG emissions from an established baseline. Financing of these projects is done by creating revenue streams through the sale or trading of registered emissions reductions or “emissions offsets” or “carbon credits”. The mechanism by which such registration is done is as follows:
- A number of voluntary organizations (“GHG registries”) have been created that have developed well-defined programs and protocols under which sponsors of GHG emissions-reducing projects may have those GHG reductions registered. These registered reductions are also known as “emissions offsets” or “carbon credits”. The protocols differ from registry to registry, although they are similar.
- Each protocol specifies the types of GHG emissions-reducing projects that qualify and the methodology for measuring such reductions. These include projects that reduce GHG such as landfill gas, sewage gas, agricultural methane, forestry, coal mine methane and rangeland soil carbon management. All emission reduction projects must demonstrate that they are real, measurable, additional, verifiable and permanent.
- The protocols set forth the requirements with which sponsors must comply in order for GHG emissions to be registered. These rules include expert third party verification of reductions, the use of certain types of flow meters, gas monitoring, measurement equipment, calibration and recalibration of that equipment with specific data management requirements.
- These registered GHG emissions reductions then become emissions offsets or carbon credits that may be sold in a variety of ways, including sales on exchanges specifically set up for such sales and trading. An example of such an exchange is the Chicago Climate Exchange. Sales may also be made through brokers or directly to interested buyers.
- Buyers include individuals and businesses that may wish to “offset” or compensate for GHG emissions that they produce and that are more costly or difficult to eliminate.
Carbon Credit Development Philosophy
Unlike other market participants, Environmental Capital adds value by selecting the best protocol or registry to develop, and by focused marketing efforts, using all available resources, to obtain the best pricing for our client's assets. As an advisor rather than a broker, Environmental Capital's interests are aligned with those of its clients. We do not favor specific protocols or registries, but strive to place our clients' projects in the best market by carefully selecting the optimal protocol(s) or registry(ies).
Carbon credit pricing can be highly variable, due to buyer preferences among protocols, project nature, block size, contract duration and vintage. Environmental Capital recommends a customized approach whereby each client can evaluate all protocols/registries before seeking market interest. This method can maximize the amount of carbon credits generated and enables the carbon credit advisor to market the credits to the widest possible investor audience. By approaching the market in a fully-informed, focused and organized manner:
- buyer risks and uncertainties are minimized, allowing stronger bids
- our clients can obtain the best price for their assets