In
the August newsletter, we gave an introduction to carbon markets.
This is part two of the series. Read
part one in the August edition of the newsletter.
What is required for a project to
qualify for carbon credits?
1. Additionality:
This is the biggest requirement for a project to qualify for
carbon credits. A project must be able to show that the emissions
offset from the projects are additional, meaning the emission
reductions would have otherwise occurred without the carbon
credits. A project must meet one of the three requirements
to qualify for carbon credits:
-
Investment Analysis: The project
is not economically or financially attractive, or economically
or financially feasible without the revenue from the sale
of carbon credits
-
Barrier analysis: There
must be at least one barrier preventing implementation
of the proposed project without the carbon credit:
-
Investment Barrier: a
financially more viable alternative to the project
activity would have led to higher emissions
-
Technological barrier:
a less technologically advanced alternative to the
project activity involves lower risks due to the performance
uncertainty or low market share of the new technology
adopted for the project activity and so would have
led to higher emissions
-
Barrier due to prevailing practice:
prevailing practice or existing regulatory or policy
requirements would have led to implementation of a
technology with higher emissions
-
Other barriers: without
the project activity, for another specific reason
identified by the project participant, such as institutional
barriers or limited information, managerial resources,
organizational capacity, financial resources, or capacity
to absorb new technologies, emissions would have been
higher.
-
Common practice analysis:
it must not be common practice in its region compared
to projects that have received no carbon financing.
2. Baseline
The project baseline involves the energy use of the building
that is being replaced in the case of a retrofit, and the
energy use that would otherwise have been built in the case
of a new facility. The energy used is multiplied by an emission
coefficient to determine the emission released from the energy
used.
3. Monitoring and Verification
For retrofit measures, monitoring shall consist of:
- Documenting the specifications of the equipment replaced
- Calculating the energy saving due to the measures installed
In the case of a new facility, monitoring shall consist of:
- Metering the energy use of the building(s)
- Calculating the energy savings of the new building(s)
This article is courtesy of Kevin
Tse, who holds a master's degree in sustainability and
the environment.
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