Offsets RECS SRECS


TLR Energy will consult and facilitate your projects and credit issuances.


Carbon Offsets represent the act of reducing or the act of avoiding green house gas emissions. Companies that are able to reduce their emissions below a business as usual baseline may be able to generate Voluntary Emission Reductions (VER's) that can then be sold.


Carbon Offsets that have a story element or have substantial co-benefits are valued at a premium, as well as VER's that are verified against the most stringent voluntary carbon standard using the most reputable verifier. The premium is based on the likely-hood of there being a use in a future U.S. compliance market for the credit and whether it stands a chance of being resold at a higher price.


There are generally two types of Offsets;


SEQUESTRATION- pulling carbon out of the atmosphere and store it in sinks


EMISSION REDUCTIONS-either reduces or destroys green house gases in ways such as Fuel Switching, Efficiency, Renewable Energy, Industrial Gas Destruction, Flaring Agricultural or Landfill Gas.


The economic advantages of Offsets include taking advantage of the varied costs of achieving emissions reductions by activity and geography. Companies can buy Offsets for compliance providing a most cost effective option to meet their imposed Cap. This creates liquidity and possible economic relief. Offsets help promote innovation for new low carbon technologies, job creation, improved air quality, wealth creation, infrastructure development, increased awareness of climate change and sensitivity to the planet,and build support for public policy and the necessities of long term planning into the public dialogue.


-There are "Primary trades" - these involve the offset project that reduces emissions in the first place. The contract establishing this trade is the Voluntary Emission Reduction Purchase Agreement (VERPA). These are generally long-term forward contracts, with quarterly or annual delivery obligations. VERPAs will likely continue to be bilaterally negotiated and customized in order to fit and highlight the terms and uniqueness of each project.


-There are also "Secondary trades" - these involve allowances or credits that have already been issued. In the EU ETS (European Union’s Emissions Trading System) these trades are documented by a Master Agreement.


It is important to note that Offsets should have the following characteristics:


  • OFFSETS should represent emission reductions that have occurred. Each offset represents the equivalent of one metric ton of carbon dioxide emissions reduction.
  • OFFSETS should be "additional." Offsets must go beyond business as usual.
  • OFFSETS must be permanent and have guarantees. In order to prevent double counting they should be retired once sold and the benefits and claims are directly assigned to the buyer.
  • OFFSETS should be verifiable; precisely measured, tracked and recorded

-VER's must be verified by a reputable third party against a reliable standard. There exist over ten Carbon Standards for the Voluntary market; The more widely used are the Voluntary carbon Standard and the California Climate Action Registry.


-There exists Electronic Registries to demonstrate that a VER has been issued and confirms if it is transferred or retired, this assists in preventing double counting and adds transparency.


Given the vagueness on which kinds of projects will be eligible under future mandatory programs, the VER's will need to be from the highest quality projects in order to minimize the risk that some types of credits will not be eligible for future Cap and Trade programs.


-VER sellers may include farmers that seek to control animal methane emissions or switch tilling practices, landfills that capture and destroy gas emissions, forestry companies or land owners that agree to protect, or replant forests, industrial facilities that have improved their efficiencies enough that they significantly reduce emissions, companies that commit to fuel switching to renewable sources of energy, or miners that flare or sequestrate their carbon dioxide.


-VER buyers include aggregators, wholesalers, and carbon funds that are buying carbon because they perceive value, and anticipate that it will increase in value, and may be used for compliance purposes under a mandatory U.S. regulation. Endusers that have adopted carbon neutral pledges or goals to reduce their emissions,or create brand image, or familiarize their management in anticipation of mandatory legislation in their sector are ahead in the game. By promoting corporate responsibility and consumer accountability for their carbon footprint, they will bypass government bureaucracy waiting for a national mandate.


THE CLEAN DEVELOPMENT MECHANISM (CDM) is a project based mechanism under the KYOTO PROTOCOL that allows industrial countries to pay for projects that reduce greenhouse gases in poorer countries, and then provide certified emission reductions. The goal is to assist developing countries in achieving sustainable futures and to assist developed countries in achieving their emission limitations under the Kyoto Protocol. The CDM is cost effective and offers flexibility to industrialized countries who are trying to meet their Kyoto targets. The aim is for companies to achieve reductions at the least possible cost, and the recipient receives investment and transfer of technology allowing production operation more efficiency. CDM's also help resolve the problem that exists for conditions of justice, in that developing countries may pay more for climate change than developed countries, recognizing the right of development usually equates to CO2 emissions.


There are SIX major Green House Gases defined by the Kyoto Protocol


Green House Gas
Carbon Dioxide (CO2)
Methane (CH4)
Nitrous Oxide (N2O)
Hydrofluorocarbons (HFC's)
Perfluorocarbons (PFCs)
Sulfur Hexafluoride (SF6)

Global Warming Potential
1
21
310
140-11, 700
6,500-9,200
23,900


Only 1/3 of voluntary offsets credits are created in the U.S.; the remaining amount is from CDM (Clean Development Mechanism) projects that did not qualify or had been generated while waiting for approval in the registration process.


The value of global voluntary markets tripled from 06-07; 96.7 million to 330.8 million and 63 billion for compliance markets in 2007.


A COMPREHENSIVE ENERGY POLICY and final Carbon Bill should enhance safeguards for the environment while minimizing economic harm, protect and create jobs, while avoiding a trade war, promote investment in new technologies to change how we use and produce energy and encourage a wider deployment of existing technologies. A strong bill will provide reduced greenhouse gases, with set achievable targets that are economically viable; providing immediate major investments in new energy technology. This must be enacted with assurances of continued fresh analysis, in order to provide confidence that any weaknesses will be rectified.


Governments worldwide need to adopt policies of sustainability in their planning and greater efforts of efficiency in their infrastructure and energy use. Policy makers need to discourage the consumption of nonrenewable resources,and encourage a reduction in human fertility.


RENEWABLE ENERGY CERTIFICATES (RECs) are a popular method of supporting renewable energy and meeting desired goals of sustainability, environmental protection, and greenhouse gas reduction. A REC attests to the production of 1 Megawatt hour of environmentally preferable electricity from an eligible renewable energy source; such as SUN, WIND, WATER and BIO-ENERGY. Anyone can buy a REC to support clean renewable energy and reduce their environmental footprint. RECs support domestic energy sources helping to reduce the country's energy security and national security. Certification and verification standards ensures environmental integrity and guarantees the delivery of the promised benefits. RECs can be blended to suit the client with a percentage derived from WIND, BIOMASS etc. REC clients are from the business sector,colleges and universities, government, and event off-setters.


SRECs (Solar Renewable Energy Certificates or Credits)

SRECs are a form of Renewable Energy Certificates (RECs) that exist in states that have Renewable Portfolio Standards (RPS) legislation with specific requirements for solar energy. In 2011 there are 20 states (including NY, NJ, CT, IL, etc.), plus the District of Columbia, that have SRECs. 1 SREC is equal to 1000 kWh or 1MWh. SRECs can be sold which greatly increases the economic value of a solar investment and helps with financing.


Solar RPS requirements demand that energy suppliers/utilities procure a certain percentage of electricity from qualified solar renewable energy resources in their state. If the supply from solar energy producers does not meet the solar RPS requirements, energy suppliers/utilities can purchase SRECs from businesses (and homeowners) that have solar systems and produce SRECs.


In order to produce SRECs, a solar system must first be certified by state regulatory agencies, usually public service commissions or public utility commissions, and then registered with the registry authorized by the state to create and track SRECs. Once a solar system is certified with the state agency and registered with a registry such as PJM GATS or NEPOOL GIS.


SREC prices are a function of (1) a state's Solar Alternative Compliance Payment (SACP), (2) the supply and demand for SRECs within the relevant state, and (3) the term or length over which SRECs are sold. The SACP is the fee that energy suppliers must pay if they fail to secure SRECs as required by a state’s RPS regulations. A state's ACP (Alternative Compliance Payment) therefore generally sets a cap on the value of SRECs because energy suppliers and utilities may simply pay the fee if SREC prices approach the fee level. The life of SRECs is 15 years from the time of installation.


The value of an SREC is determined by supply and demand, primarily the number of solar installations qualified to produce SRECs and actually selling SRECs in that state, and the RPS solar requirements. RPS solar requirements in many states are set to increase in the coming decade, as are the number of solar energy resources. The SACP is scheduled to decline over time with the intention of eventually phasing out the solar industry's reliance on SREC sales as an incentive for installing solar.


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