Carbon project
Encyclopedia
A carbon project refers to a business initiative that receives funding because of the cut the emission of greenhouse gas
Greenhouse gas
A greenhouse gas is a gas in an atmosphere that absorbs and emits radiation within the thermal infrared range. This process is the fundamental cause of the greenhouse effect. The primary greenhouse gases in the Earth's atmosphere are water vapor, carbon dioxide, methane, nitrous oxide, and ozone...

es (GHGs) that will result. To prove that the project will result in real, permanent, verifiable reductions in Greenhouse Gases, proof must be provided in the form of a project design document and activity reports validated by an approved third party in the case of Clean Development Mechanism
Clean Development Mechanism
The Clean Development Mechanism is one of the "flexibility" mechanisms defined in the Kyoto Protocol . It is defined in Article 12 of the Protocol, and is intended to meet two objectives: to assist parties not included in Annex I in achieving sustainable development and in contributing to the...

 (CDM) or Joint Implementation
Joint Implementation
Joint implementation is one of three flexibility mechanisms set forth in the Kyoto Protocol to help countries with binding greenhouse gas emissions targets meet their obligations. JI is set forth in Article 6 of the Kyoto Protocol...

 (JI) projects.

Reasons for carbon project development

Carbon projects are developed for reasons of voluntary environmental stewardship
Stewardship
Stewardship is an ethic that embodies responsible planning and management of resources. The concept of stewardship has been applied in diverse realms, including with respect to environment, economics, health, property, information, and religion, and is linked to the concept of sustainability...

, as well as legal compliance under a Greenhouse Gas Cap & Trade
Emissions trading
Emissions trading is a market-based approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants....

 program. Voluntary carbon (GHG) reducers may wish to monetize reductions in their carbon footprint
Carbon footprint
A carbon footprint has historically been defined as "the total set of greenhouse gas emissions caused by an organization, event, product or person.". However, calculating a carbon footprint which conforms to this definition is often impracticable due to the large amount of data required, which is...

 by trading the reductions in exchange for monetary compensation. The transfer of environmental stewardship rights would then allow another entity to make an environmental stewardship claim. There are several developing voluntary reduction standards that projects can use as guides for development.

Kyoto Protocol

Carbon projects have become increasingly important since the advent of emissions trading
Emissions trading
Emissions trading is a market-based approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants....

 under Phase I of the Kyoto Protocol
Kyoto Protocol
The Kyoto Protocol is a protocol to the United Nations Framework Convention on Climate Change , aimed at fighting global warming...

 in 2005. They may be used if the project has been validated by a Clean Development Mechanism
Clean Development Mechanism
The Clean Development Mechanism is one of the "flexibility" mechanisms defined in the Kyoto Protocol . It is defined in Article 12 of the Protocol, and is intended to meet two objectives: to assist parties not included in Annex I in achieving sustainable development and in contributing to the...

 (CDM) Designated Operational Entity (DOE) according the United Nations Framework Convention on Climate Change
United Nations Framework Convention on Climate Change
The United Nations Framework Convention on Climate Change is an international environmental treaty produced at the United Nations Conference on Environment and Development , informally known as the Earth Summit, held in Rio de Janeiro from June 3 to 14, 1992...

. The resulting emissions reductions may become Certified Emissions Reduction
Certified Emission Reduction
Certified Emission Reductions are a type of emissions unit issued by the Clean Development Mechanism Executive Board for emission reductions achieved by CDM projects and verified by a DOE under the rules of the Kyoto Protocol...

s (CERs) when a DOE has produced a verification report which has been submitted to the CDM Executive Board.

There may be new project methodology validated by the CDM EB
EB
EB may refer to:*East Brunswick Township, New Jersey, a city in central New Jersey*EarthBound, a role-playing game for the Super Nintendo*Eat Bulaga!, a long-running variety show in the Philippines*EB , Polish beer...

 for post phase II Kyoto trading.

United States

In the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

 standards similar to those of the Kyoto Protocol schemes are developing around California
California
California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...

's AB-32 and the Regional Greenhouse Gas Initiative
Regional Greenhouse Gas Initiative
Regional Greenhouse Gas Initiative is a regional initiative by states and provinces in the Northeastern United States and Eastern Canada regions to reduce greenhouse gas emissions...

 (RGGI). Offset projects can be of many types, but only those that have proven additionality are likely to become monetized
Monetization
Monetization is the process of converting or establishing something into legal tender. It usually refers to the coining of currency or the printing of banknotes by central banks...

 under a future U.S. Cap & Trade program.

One example of such a project, the Valley Wood Carbon Sequestration Project, receives funding from a partnership that was developed by Verus Carbon Neutral that links 17 merchants of Atlanta's Virginia-Highland shopping and dining neighborhood retail district, through the Chicago Climate Exchange, to directly fund the thousands of acres of forest in rural Georgia. The unique partnership established Virginia-Highland as the first Carbon-Neutral Zone in the United States.

Operation

An entity whose greenhouse gas emissions are capped by a regulatory program has three choices for complying if they exceed their cap. First, they could pay an alternative compliance measure or "carbon tax", a default payment set by the regulatory body. This choice is usually the least attractive given the ability to comply by trading.

The second option is to purchase carbon credit
Carbon credit
A carbon credit is a generic term for any tradable certificate or permit representing the right to emit one tonne of carbon dioxide or the mass of another greenhouse gas with a carbon dioxide equivalent equivalent to one tonne of carbon dioxide....

s within an emissions trading
Emissions trading
Emissions trading is a market-based approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants....

 scheme. The trade provides an economic disincentive to the polluter, while providing an incentive to the less polluting organisation. As fossil fuel
Fossil fuel
Fossil fuels are fuels formed by natural processes such as anaerobic decomposition of buried dead organisms. The age of the organisms and their resulting fossil fuels is typically millions of years, and sometimes exceeds 650 million years...

 generation becomes less attractive it will be increasingly unattractive to exceed a carbon cap because the financial disincentive will grow via market forces. The price of a carbon allowance would go up because supply would decline while demand stays constant (assuming a positive growth rate for energy consumption).

The final option is to invest in a carbon project. The carbon project will result in a greenhouse gas emission reduction which can be used to offset the excess emissions generated by the polluter. The financial disincentive to pollute is in the form of the capital expenditure to develop the project or the cost of purchasing the offset from the developer of the project. In this case the financial incentive would go to the owner of the carbon project.

Project selection

The most important part of developing a carbon project is establishing and documenting the additionality of the project - that the carbon project would not have otherwise occurred. It is also essential to document the measurement and the verification methodology
Methodology
Methodology is generally a guideline for solving a problem, with specificcomponents such as phases, tasks, methods, techniques and tools . It can be defined also as follows:...

 applied, as outlined in the project development document.

Developing a carbon project is appropriate for renewable energy
Renewable energy
Renewable energy is energy which comes from natural resources such as sunlight, wind, rain, tides, and geothermal heat, which are renewable . About 16% of global final energy consumption comes from renewables, with 10% coming from traditional biomass, which is mainly used for heating, and 3.4% from...

 projects such as wind
Wind power
Wind power is the conversion of wind energy into a useful form of energy, such as using wind turbines to make electricity, windmills for mechanical power, windpumps for water pumping or drainage, or sails to propel ships....

, solar
Solar power
Solar energy, radiant light and heat from the sun, has been harnessed by humans since ancient times using a range of ever-evolving technologies. Solar radiation, along with secondary solar-powered resources such as wind and wave power, hydroelectricity and biomass, account for most of the available...

, low impact-small hydro
Hydropower
Hydropower, hydraulic power, hydrokinetic power or water power is power that is derived from the force or energy of falling water, which may be harnessed for useful purposes. Since ancient times, hydropower has been used for irrigation and the operation of various mechanical devices, such as...

, biomass
Biomass
Biomass, as a renewable energy source, is biological material from living, or recently living organisms. As an energy source, biomass can either be used directly, or converted into other energy products such as biofuel....

, and biogas
Biogas
Biogas typically refers to a gas produced by the biological breakdown of organic matter in the absence of oxygen. Organic waste such as dead plant and animal material, animal dung, and kitchen waste can be converted into a gaseous fuel called biogas...

. Projects have also been developed for a wide variety of other emissions reductions such as reforestation
Reforestation
Reforestation is the natural or intentional restocking of existing forests and woodlands that have been depleted, usually through deforestation....

, fuel switching, carbon capture and storage
Carbon capture and storage
Carbon capture and storage , alternatively referred to as carbon capture and sequestration, is a technology to prevent large quantities of from being released into the atmosphere from the use of fossil fuel in power generation and other industries. It is often regarded as a means of mitigating...

, and energy efficiency
Efficient energy use
Efficient energy use, sometimes simply called energy efficiency, is the goal of efforts to reduce the amount of energy required to provide products and services. For example, insulating a home allows a building to use less heating and cooling energy to achieve and maintain a comfortable temperature...

.

In the news

Latest CDM Project News
BBC article on Kyoto Post Phase II
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