Accounting 101 – making sure carbon credits deliver what they promise

There are several words and phrases that are used in specific ways in relation to climate mitigation and adaption. The most recent definition for framing offset programs for the electric sector (US EPA Climate Leaders Program, 2018, now discontinued, https://www.epa.gov/climateleadership/climate-leadership-awards-frequent-questions) is as follows:

  • Real: The quantified GHG reductions must represent actual emission reductions that have already occurred.
  • Additional: The GHG reductions must be surplus to regulation and beyond what would have happened in the absence of the practice or in a business-as-usual scenario based on a performance standard methodology.
  • Permanent: The GHG reductions must be permanent or have guarantees to ensure that any losses are replaced in the future.
  • Verifiable: The GHG reductions must result from practices whose performance can be readily and accurately quantified, monitored and verified.

another very important term is Leakage.

  • Leakage: Leakage refers to an emissions reduction strategy implemented in one location that creates an increase or decrease of emissions in another location.

These words and phrases are important as they help ensure the overall accounting of GHG with respect to the collective goal of mitigating emissions within and across sectors (within and across states). As there are many stakeholders involved, a strong commitment to these criteria will help inform boundaries of implementation (farm level, state level, federal level) as well as legal accountability (across farm practices, sectors, c-trading regimes, policy, accounting systems).

 

Below, we illustrate these terms with respect to the manure storage cover+flare practice:

 

  1. Real: The quantified GHG emission reduction must represent actual emission reductions.
    • For example, methane captured and destroyed with a manure storage cover and flare is real, because a meter can measure the amount of methane destroyed by a flare.
    • It will not measure the methane that it does not flare, but it will measure the volume of methane that is actually captured and destroyed at the flare.
    • Complication, if a farm amends their manure by adding materials (such as whey from yogurt production), this is intentional methane production and must be evaluated to determine if a credit should be granted to a farm that intentionally increases its methane production. This may be considered ‘gaming’, or it may be providing other ecosystem services (such as producing more biogas that could be combusted in a generator to produce electricity).
  2. Permanent: The GHG emission reductions must be permanent and must be backed by guarantees in the event that they are reversed (e.g., re-emitted into the atmosphere).
    • For example, the carbon in CH4 that is flared to CO2 is permanent. Once CH4 has been oxidized to CO2, it is 34 (or 84 on a 20-year time scale, AR5) times less potent a GHG than CH
    • Please see section on “Permanence and Managing Risk” as applicable to the responsibilities of policy makers.
  3. Verifiable: The GHG emission reductions must result from practices whose performance can be readily and accurately quantified, monitored, and verified.
    • For example, manure covers with flare are equipped with digitally reporting meters for measuring the amount of methane produced and the temperature of the flare indicating its combustion effectiveness. The gas flow which passes a cold flare will not count as mitigation.
    • Please see section on rigor of GHG verification (below) in the context of other state goals (currently existing or in development).
  4. Additional: The practice-based GHG emission reductions must be beyond what would have happened anyway or in a business-as-usual scenario (not driven because of another regulatory requirement, an improvement in production efficiency, or other requirements).
    • For example, farms have been installing manure storage units to protect water quality as per CAFO regulations. While there are other benefits to covering a manure storage (reducing odors, reducing manure hauling, reducing SPDES violations from extreme weather events etc.), there is currently no regulation to flare. Thus, adding a flare, meter etc. is an additional project.
    • Please see our page on Additionality for a more in depth consideration
  5. Leakage: Leakage refers to an emissions reduction strategy implemented in one location that creates an increase or decrease of emissions in another location. If this other location is outside the boundary of the region being analyzed, such as NYS, it can greatly affect the interpretation of the efficacy of a GHG mitigation practice (on a global scale).
    • For example, a lumber company in NYS may place 1,000 acres of forest under permanent conservation easement preventing any harvest in order to sequester carbon. However, to meet the market demand for lumber, another company may deforest 1,000 acres outside NYS. In this example, detrimental leakage occurs due to market forces, but can occur by many mechanisms including policies. The result is that GHG emissions from a local farm, sector, or State are in effect transferred to another location outside the boundary of the policy initiative.
    • Analyzing across all locations, leakage can cause either increased total GHG gas emissions (detrimental leakage) or decreased total GHG emissions (beneficial leakage).