Mitigate your greenhouse gas emissions
 |
| Tararua Wind Farm |
Reduction of GHG emissions is the fundamental principle guiding the carboNZero programme. However, it is not possible for an organisation to achieve a net zero emissions position through reductions in its own emissions sources. Organisations may choose to mitigate or neutralise their remaining unavoidable emissions by purchasing offsets from projects elsewhere that abate or reduce GHG emissions. Mitigation is the process of neutralising an individual’s, organisation’s or event’s remaining unavoidable emissions by purchasing high quality offsets or carbon credits. Carbon credits may be created by projects that:
- Avoid greenhouse gas emissions through renewable energy generation projects
- Reduce greenhouse gas emissions through energy efficiency projects
- Sink carbon dioxide, e.g. through regeneration of native forest
The carboNZero programme sets high standards for the credibility and integrity of its programme to ensure that organisations participating in the programme can make greenhouse gas assertions or carbon claims with confidence. Because there are no statutory regulations in New Zealand that define the status of offsets or rules to determine their legal ownership, there are both financial and reputational risks to be considered when purchasing offsets. In developing our standards, we have taken into account regulations that are being developed by the Australian and UK governments. There are numerous publications where the quality of offsets or carbon credits is debated. The use of poor quality offsets is most often the basis on which accusations of “greenwash” are made. Claims of carbon neutrality based on offsets that do not meet the requirements of recognised standards may be subject to investigation by regulators of advertising standards or consumer protection laws.
- About the offset projects used by the carboNZero programme
- Wind farm projects
- Landfill gas recovery projects
- EBEX21 projects (native forest regeneration)
- About carbon credits
- Carbon credit accounts
- Clean Development Mechanism and Joint Implementation
- Projects to Reduce Emissions
- Permanent Forest Sinks Initiative
- Voluntary Carbon Standard
- Gold Standard
About the offset projects used by the carboNZero programme
The carboNZero programme currently sources the voluntary emission reduction units (VERs) as the carbon credits used to offset your remaining unavoidable emissions from a portfolio of New Zealand projects:
The larger proportion of carbon credits provided by the carboNZero programme during 2008 came from renewable energy generation.
From June 2009, carbon credits recognised by the carboNZero programme include cancelled Kyoto units from the Joint Implementation programme or Clean Development Mechanism verified against ISO 14064-2 and voluntary carbon credits verified against the Gold Standard or the Voluntary Carbon Standard. Additionality must be demonstrated.
Wind Farm projectsProjects that generate energy from renewable sources reduce greenhouse gas emissions by displacing energy generation from fossil fuels such as coal or gas. They also create new business opportunities and jobs by stimulating innovation in environmental technologies. The amount of carbon credits accumulated is calculated by assessing the amount of emissions reduction that has resulted compared to the generation of the same amount of electricity using a greenhouse gas emitting alternative.
Meridian Energy - Te Apiti wind farm Te Apiti wind farm, located in the lower North Island of New Zealand, is a 90 MW wind farm made up of 55, 1.65 MW Vestas turbines. Te Apiti wind farm was one of the first projects to be allocated Emission Reduction Units by the New Zealand Government and was the first Joint Implementation project outside Europe. Te Apiti wind farm has been accepted for registration by the Gold Standard Foundation. It was approved as a Track One Joint Implementation project hosted by New Zealand in August 2007. DNV Certification Pty Ltd verified with reasonable assurance that the Te Apiti wind farm produced 191,374 tonnes CO2e VERs for the period 1 January 2007 to 31 December 2007, calculated as required by the Gold Standard compliant project Design Document dated July 2003 (DNV ref: ZAAAU980DAWES080318-1).
Meridian Energy - White Hill wind farm White Hill, located in the South Island of New Zealand, is a 58 MW wind farm made up of 29, 2 MW Vestas turbines. White Hill wind farm has been accepted for registration by the Gold Standard Foundation. It was approved as a Projects to Reduce Emissions (PRE) project by the Ministry for the Environment in 2004. It was approved as a Track One Joint Implementation project hosted by New Zealand in August 2007. DNV Certification Pty Ltd verified with reasonable assurance that the White Hill wind farm produced 31,895 tonnes CO2e VERs for the period 1 January 2007 to 31 December 2007, calculated as required by the Gold Standard compliant project Design Document dated December 2005 (DNV ref: ZAAAU980DAWES080409-1 v2).
TrustPower - Tararua Wind Farm The Tararua Windfarm is New Zealand’s largest wind farm, both in terms of number of turbines and output. It is located on 700 hectares of private sheep and beef farming land high in the Tararua Ranges in the North Island of New Zealand, near Wellington. Stage I of the Tararua Windfarm was commissioned in 1999 with 48 turbines. Stages II and III have expanded the windfarm to 134 turbines providing an installed capacity of 160 MW and an average annual output of 620 GWh. Stages II and III were approved as Projects to Reduce Emissions (PRE) projects by the Ministry for the Environment in 2004. Stage II was approved as a Track One Joint Implementation project hosted by New Zealand in February 2008. Stage III was approved in April 2008. DNV Certification Pty Ltd verified with reasonable assurance that the Tararua II wind farm produced 222,942 tonnes CO2e VERs for the period 1 January 2004 to 31 December 2006, calculated as required by the Project Agreement between the New Zealand Government and TrustPower Limited dated 15 December 2003 (DNV ref: ZAPAU980DAWES070221-1).
|
||||||
Landfill gas recovery projects
Landfill gas projects are projects that captures methane gas, which is naturally produced in the landfills and convert it to useful energy, such as electricity or heat. A landfill gas project can generate carbon credits because it is preventing greenhouse gases (in the form of methane) from dissipating into the atmosphere. Projects may also generate carbon credits by supplying electricity that would otherwise be generated by fossil fuels. Palmerston North Awapuni Landfill Gas to Electricity Project The Palmerston North City Council's credits are generated by its internationally recognised operation at the Awapuni Sustainable Development Centre which harnesses harmful methane gas to power its nearby wastewater treatment plant and offers surplus energy to the national grid. The Awapuni Landfill Gas to Electricity Project was approved by the Ministry for the Environment as a PRE project in 2003 and approved as a Track One Joint Implementation project hosted by New Zealand in July 2008. DNV Certification Pty Ltd verified with reasonable assurance that the Awapuni landfill gas to electricity project produced 12,142 tonnes CO2e VERs for the period 1 January 2006 to 31 December 2006, calculated as required by the Project Agreement between the New Zealand Government and Palmerston North City Council dated 29 March 2004 (DNV ref: ZAPAU980DAWES070327-1).
|
||||||
EBEX21 projects
Native forest regeneration reduces the amount of greenhouse gases in the atmosphere, enhances biodiversity, reduces soil erosion and improves local water quality. EBEX21 carbon credits are generated on forest regeneration sites located throughout New Zealand. Carbon credits are generated on these sites because growing trees and shrubs process atmospheric carbon dioxide (CO2), and store the carbon as wood and other biomass. Regular field site audits are conducted to calculate how fast the trees are growing and how many carbon credits are available to sell. The EBEX21 project is administered by Landcare Research on behalf of a pool of landowners. EBEX21 is superior to reforestation projects for the following reasons.
More detailed information is available at www.ebex21.co.nz EBEX21 is currently negotiating its status within either the Permanent Forest Sinks Initiative or the Emissions Trading Scheme. Once completed, EBEX21 offsets will be Kyoto units from 2008 and they will be listed on the New Zealand Emission Unit Register (NZEUR). Some enquirers also expressed concern that VERs from EBEX21 projects are double-counted. This is not the case as there was no Kyoto carbon-accounting prior to 2008. EBEX21 offsets have only been accounted for once, by the carboNZero programme.
|
About carbon credits
When purchasing carbon credits, it is important to check that the project that created the offsets was validated and that the carbon credits have been verified against a recognised international standard.
- Validation is forward looking – an independent audit is undertaken to confirm that the project has the potential to produce the number of offsets that it claims.
- Verification is backward looking – an independent audit confirms the number of carbon credits already produced by a project.
Offsets from validated projects are often forward sold and this means that the buyer is taking the risk that later verification will confirm that the carbon credits already used to offset emissions were real. A carbon neutral claim cannot be made on the basis of forward purchased carbon credits.
Carbon credits may be Kyoto units or voluntary carbon credits.
- Kyoto units are created from Government-approved projects that have been allocated assigned amount units or AAUs and from clean development mechanism (CDM) projects validated through the United Nations Framework Convention on Climate Change (UNFCCC).
- Voluntary carbon credits are produced outside the regulatory framework and are often created through community projects. These credits may have additional ecological and social value.
Projects that create Kyoto units must meet Kyoto rules related to baseline, additionality, redundancy, permanence and leakage. These terms are defined in our glossary. To ensure that the projects meet these rules, validation and verification is undertaken against recognised international standards such as ISO 14064-2 and those set by the Clean Development Mechanism and the Joint Implementation programme. Voluntary carbon credits can be validated and verified against the Voluntary Carbon Standard or the Gold Standard.
The New Zealand Government has allocated AAUs to Projects to Reduce Emissions (PRE) and to the Permanent Forest Sinks Initiative (PFSI). Offsets sold by these projects can be both Kyoto units and voluntary carbon credits.
In New Zealand, the ownership of carbon credits is logged by the New Zealand Emission Unit Register (NZEUR) for Kyoto units and by TZ1 Maarket (operated by the New Zealand Stock Exchange, NZX) and The Registry Company (regi) for voluntary carbon credits. TZ1 Market is also a trading platform and provides up to date prices for the different types of carbon credits. When you purchase carbon credits, the change of ownership is registered in one of these three registries.
Additionally, there are carbon brokers and traders who buy and sell carbon credits. Carbon credits can be bought and sold by auction through Trade Me.
Carbon credit accounts
The status of carbon credits is determined by the type of account in which they are held in the registry. Carbon credits used to offset your greenhouse gas emissions should not have been used before as an offset and they should not be onsold. To do so would negate the offset. This is often referred to as ‘double dipping’. To help track the status of carbon credits, each tonne of carbon dioxide equivalent emissions reduction should have a unique serial number. Carbon credits may be held in the following accounts:
- Holding (Active) – carbon credits held in an active holding account can be traded provided that they have not been retired or cancelled, i.e. previously used as an offset, and are not registered in more than one registry.
- Retirement (or Surrender) – Kyoto units may be transferred to a retirement (or surrender) account in the NZEUR when they are used as an offset for emissions. From this account, they may be further retired by the Crown to the UNFCCC at the end of the first commitment period of the Kyoto Protocol.
- Cancellation – Kyoto units and voluntary carbon credits may be transferred to a cancellation account in the NZEUR, or in a register for voluntary units, for a number of reasons:
- when Kyoto units or voluntary carbon credits are to be shifted to another registry that is not directly linked, they are cancelled in the first registry and are reissued – they may be further traded from the second registry
- when Kyoto units or voluntary carbon credits are found to be listed in active holding accounts in two registries at the same time, they need to be cancelled from one of the registries
- Kyoto units may be cancelled without being used (retired or surrendered) in order to reduce the quantity of allowed emissions units available
- under a voluntary carbon market scheme, issued credits might also be cancelled instead of being used to offset emissions
- should a forest sinks project lose some of the previously credited sequestered carbon through fire, flood or accidental harvesting, the equivalent amount of carbon credits must be cancelled
- as international air travel and international maritime freight are not included in New Zealand’s national greenhouse gas emissions inventory, if Kyoto units are being used to offset these emissions, they must be cancelled to ensure that these emissions have been properly offset.
In all cases except where credits are being shifted to another registry, cancelling effectively ‘destroys’ the carbon credits so that they can no longer be traded or used to offset emissions. This action cannot be undone.
Retiring (or surrendering) Kyoto units to the Crown’s retirement (or surrender) account effectively donates them to the Crown and helps them to meet the country’s Kyoto commitments. Cancelling Kyoto units tightens New Zealand’s emissions reduction target (i.e. lowers the initial allocation of units to New Zealand) and in turn tightens the overall Kyoto cap.
CDM and JI - Clean Development Mechanism and Joint Implementation
The Project Design Documents (PDDs) for compliance projects are approved through Clean Development Mechanism (CDM) or Joint Implementation (JI) initiatives of the Kyoto Protocol or through a national scheme established by government. National schemes may be in turn approved under one of the Kyoto Protocol mechanisms. Validators (auditors) of CDM and JI projects are Designated Operational Entities (DOEs) for CDM projects or Accredited Independent Entities (AIEs) for JI projects. Lists of accredited validators and certified projects are available on the CDM and JI web pages at www.cdm.unfccc.int/index.html and www.ji.unfccc.int/index.html respectively. CDM and JI projects may be additionally endorsed by the Gold Standard. These projects are listed on the Gold Standard registry at www.goldstandard.apx.com/. Further information about the Gold Standard is given below under voluntary offset projects.
Offset projects approved by the CDM must be validated as additional, permanent, leakage-free, measurable and verifiable. The CDM provides detailed methodologies for measuring and verifying emissions reductions for different types of projects and for testing additionality, permanence and leakage.
Once emissions reductions are verified, CDM projects are awarded Certified Emission Reductions (CERs) by the CDM Executive Board. All CDM CERs issued are listed on the CDM web pages at http://cdm.unfccc.int/Issuance/cers_iss.html. The CERs are held in the CDM registry in a holding account and then transferred via the International Transaction Log to the appropriate national registry.
Once emissions reductions are verified, JI projects are issued with Emission Reduction Units (ERUs) by the Designated National Authority (DNA). The JI ERUs issued are transferred to the project owner’s account in a national registry that in turn is linked to the International Transaction Log.
PRE - Projects to Reduce Emissions
The New Zealand Government launched the Projects to Reduce Emissions (PRE) programme in 2003 to support initiatives that will reduce greenhouse gas emissions. PRE is administered by the Ministry for the Environment (MfE). There are a number of different kinds of projects under the PRE scheme. Some produce renewable energy by using natural resources such as water, wind, or steam from geothermal activity. Others turn waste into energy.
PRE projects are eligible to become Joint Implementation (JI) initiatives. This means that PRE project owners can sell the emission units they ‘earn’ through the JI mechanism. Lists of projects approved in 2003 and 2004 and the emissions units awarded (but not yet issued) to each project are published on the MfE webpages at www.mfe.govt.nz/issues/climate/policies-initiatives/projects/index.html. PRE projects must meet eligibility and selection criteria set by MfE including a Project Design Document (PDD). MfE commissions independent verification reports on the annual emissions reduction reports submitted by the projects. MfE approves, issues and transfers the ERUs into the PRE project owner’s account in the New Zealand Emissions Unit Register (NZEUR).
PRE projects are also able to sell voluntary offsets, Verified Emissions Reductions (VERs) for emissions reductions achieved prior to 2008 but these must be separately verified. The verification reports commissioned by MfE do not provide assurance over any VERs created by these projects. MfE does not certify PRE VERs.
Renewable electricity generation and possibly electricity efficiency projects, are expected to play an important part in the PRE programme. Such projects achieve reductions in CO2 emissions indirectly, by offsetting emissions from fossil fuel used in the power generation sector. Consequently, estimating the emission reductions for these projects is largely a matter of evaluating their marginal impact on the generation sector, as mediated by the electricity market.
PFSI - Permanent Forests Sinks Initaitive
The Permanent Forests Sinks Initiative (PFSI) is a national scheme administered by the Ministry for Agriculture and Forestry (MAF). Lists of approved projects and the emissions units awarded to each project are not yet available. More information about the PFSI can be obtained at www.maf.govt.nz/forestry/pfsi/#About. MAF will approve, issue and transfer Removal Units (RMUs) or Allocated Allowance Units (AAUs) to the project owner’s account in the NZEUR. RMUs are reversible in that the project owner must replace the emissions units if the carbon stored decreases below the level of units issued. This might occur due to natural events such as fire or flood that destroys a forest or through human-induced events such as harvesting.
VERs achieved prior to 2008 by PFSI projects must be separately verified. Approval by MAF of a PFSI project does not provide assurance over any VERs created by these projects. MAF does not certify forestry-based VERs from projects that expect to be approved as PFSI projects post 2008.
Gold Standard
The Gold Standard was established in 2003 as a non-profit foundation under Swiss law by a consortium of non-governmental organisations led by WWF. The Gold Standard provides a certified label that can be applied to CDM, JI and voluntary projects. Only energy efficiency and renewable energy projects are eligible under the Gold Standard. These projects must meet additionality and sustainability criteria set by the Gold Standard. For this reason, these projects are considered to offer additional co-benefits to investors. The requirements and methodologies of the Gold Standard are freely available at www.cdmgoldstandard.org/.
When applied to CDM and JI projects, the Gold Standard label is additional voluntary endorsement sought by the project. It is not a requirement of CDM and JI that projects are Gold Standard certified. Gold Standard certification cannot be used to substitute for the validation by a DOE or AIE required by the CDM and JI although DOEs and AIEs assess projects for the Gold Standard at the same time as undertaking validation for CDM or JI. The Gold Standard cannot issue CDM or JI credits.
Gold Standard VER PDD criteria are used to validate voluntary offset projects and these may take place only in countries that do not have a reduction target under the Kyoto Protocol. The Gold Standard Executive Board issues voluntary credits, GS VERs, on verification of the emissions reductions. Validation of the voluntary projects and verification of the emissions reductions are undertaken by DOEs or AIEs accredited by the CDM or JI. The Gold Standard maintains a public registry for all Gold Standard certified projects (including the CDM and JI projects) and for GS VERs at http://goldstandard.apx.com/.
Voluntary Carbon Standard
The Voluntary Carbon Standard (VCS) was established in 2005 by The Climate Group, the International Emissions Trading Association (IETA) and the World Economic Forum as a global standard and programme for the approval of voluntary offsets. The World Business Council for Sustainable Development (WBCSD) joined the initiative as a founding partner in 2007. Version 1 of the VCS standard was released in October 2006. Version 2 was released for consultation in October 2006 but did not replace Version 1. VCS 2007.1 was released in November 2007 as the current version of the VCS standard. The standard and programme guidelines are freely available at www.v-c-s.org/index.html.
The important difference between VCS version 1 and the VCS 2001.1 is that the emissions reductions or removals generated by the project must not be used in an emissions trading programme or for the purpose of compliance with binding limits that are in place in that jurisdiction or sector unless emissions allowances equivalent to the emissions reductions or removals claimed by the project are cancelled from the programme or national cap. Simply put, this means that if the project is claiming emissions reductions that are also counted in the national inventory or other scheme, the same number of AAUs must be cancelled from the NZEUR in order to be recognised by the VCS.
The VCS does not provide any specific project methodologies. The VCS recognises projects compliant with ISO 14064-2 for quantifying emissions reductions or projects that have been approved by the CDM, JI or the California Climate Action Registry (CCAR). The VCS recognises a wider range of project activities than the Gold Standard, including land-use and land-use change and forestry (LULUCF) activities. Entities able to perform validation or verification for the VCS must be accredited under a GHG programme recognised by the VCS (CDM, JI or CCAR) or accredited under ISO 14065 by an accreditation body that is a member of the International Accreditation Forum. To be verified, VCUs must meet the following principles: real, measureable, permanent, additional, independently verified, unique, transparent and conservative.
The VCS expects to launch its central project database and registry in 2009. The VCS intends to issue unique serial numbers to each Voluntary Carbon Unit (VCU). The registry will display the status of VCUs as issued, held or retired. No registry can currently issue VCUs.
Useful links
- www.ebex21.co.nz – a New Zealand native forest sinks project – Landcare Research
- www.cdmgoldstandard.org – a registry and standard for validation of renewable energy and energy efficiency projects under the Clean Development Mechanism - Gold Standard
- www.iso.org – specification with guidance at the project level for quantification, monitoring and reporting of greenhouse gas removals and reductions – International Standards Organization
- www.nzeur.govt.nz – the national register for ownership and status of Kyoto units – New Zealand Emission Unit Register, Ministry of Economic Development
- www.maf.govt.nz/forestry/pfsi - the New Zealand scheme and carbon accounting system for forest sinks projects - Permanent Forests Sinks Initiative, Ministry of Agriculture and Forestry
- www.mfe.govt.nz/issues/climate/policies-initiatives/projects/index.html - the New Zealand scheme for renewable energy projects Projects to Reduce Emissions, Ministry for the Environment
- www.trademe.co.nz – an online auction site for buying and selling new and second-hand goods including carbon credits - Trade Me
- www.tz1market.com – an online registry and trading platform for carbon credits; and information source on carbon markets and the price of different types of carbon credits - TZ1, New Zealand Exchange Limited (NZX)
- www.v-c-s.org – a registry and standard for validation of voluntary projects that create carbon credits - Voluntary Carbon Standard
