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Progressive organizations are seeking powerful solutions to their most pressing environmental impacts, and carbon offsets can be an affordable and credible step towards achieving carbon neutrality.

Increasingly, companies are recognizing that reducing reliance on carbon-based fuel sources is imperative. Combustion of these finite and so called “dirty” fuels contributes to climate change and poor air qual-ity. However, energy efficiency measures don’t fully eliminate the use of carbon-based fuels in most cases. The remaining emissions that cannot be otherwise avoided can be offset through the use of renewable energy credits (RECs) and carbon offsets.

RECs can be used to mitigate the climate impact of emissions from purchased electricity while carbon

offsets reduce the impact of onsite fuel combustion, as well as air travel, logistics & transportation, waste disposal, natural gas consumption, and more.

Carbon offsets provide critical financial support to projects that remove greenhouse gases from the atmosphere. These projects vary widely in their scope and use a variety of emission reduction technolo-gies, including reforestation and fuel switching. Renewable Choice works with offset projects all over the world, many of which have attractive co-benefits including improved human health, job creation, and species preservation.

There is a rapidly growing consumer market for the voluntary purchase of carbon offsets. Sizable cor-porations including Microsoft, The Walt Disney Company, and Google are turning to carbon offsets as a sophisticated addition to their environmental impact reduction portfolio.

These purchases provide a credible solution for helping an organization to achieve carbon neutrality. Offsets are rigorously verified to ensure that they are sourced and retired effectively, and chain of custody can be guaranteed, providing companies with the transparency and validity necessary to support their environmental impact reduction claims. The most widely-respected environmental NGOs on climate change all support carbon offsets as a viable way to address operational emissions.

We hope you enjoy this white paper and invite you to learn more at www.renewablechoice.com.

EXECUTIVE SUMMARY

White Paper: Moving Progressive Organizations Toward Carbon Neutrality: The Role of Carbon Offsets

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Organizations can move their opera-tions towards im-proved environmen-tal performance or even carbon neutrality by increasing opera-tional efficiencies and making use of emissions reduc-tion and renewable energy resources.

INTRODUCTION

The role of business in shaping practices and trends in our society can’t be understated. Since the Industrial Revolution, corporations have driven advancements in technology, development, and design while simultaneously contributing to the growth of the economy, globalism, and the work-force. This growth has brought humanity to a new level of affluence and influence, but has also taken a toll on our natural resources and environment.

As we move into 2014, climate change is the most pressing consequence of this revolution’s impact on our planet. Scientists now agree with 95% certainty that human activities are the source of climate change1, and that, unabated, the release of greenhouse gases into the atmosphere will likely have catastrophic results for our planet and its inhabitants.

While governments and international organizations seem to be mired in an inability to move the needle on this issue, the emergence of corporate leadership has been remarkable. For perhaps the first time, the opportunity exists for business to play a new and progressive role in the future of our planet, that of steward and guardian. Through innovation and the quest for new technolo-gies, corporations are poised to discover solutions to our environmental problems that don’t currently exist.

In the meantime, however, organizations can move their operations towards improved environ-mental performance or even carbon neutrality by increasing operational efficiencies and making use of emissions reduction and renewable energy resources.

GETTING TO NET ZERO

Energy for business is derived from many sources in order to generate electricity and fuel. The most common—and environmentally impactful—include coal, wood, petroleum, and natural gas. Increasingly, companies are realizing that reducing consumption of these so-called “dirty,” carbon-based fuel sources is not only imperative to decrease greenhouse gas (GHG) emissions, but also has a myriad of benefits, including improved air quality and a positive bottom line impact.

A critical first step for all organizations to take is to reduce or avoid GHG emissions through energy efficiency improvements and operational changes. However, measures such as improved manufacturing & design processes and reduced air travel cannot fully eliminate the consumption of carbon-based fuels and, in some cases, may be cost prohibitive or operationally impossible for companies to adopt. As a result, most companies will find that some amount of emissions is unavoidable. It is those emissions that can be offset using renewable energy and carbon offsets.

While carbon offsets are often portrayed by opponents as a greenwashed mea culpa, in actuality they form a critical step in moving a company toward carbon neutrality. As organizations mature in their efforts to reduce their environmental impact, they often begin purchasing carbon offsets in order to balance the emissions they cannot otherwise avoid.

White Paper: Moving Progressive Organizations Toward Carbon Neutrality: The Role of Carbon Offsets

... most companies will find that some amount of emissions is unavoid-able. It is those emis-sions that can be offset using renewable energy and carbon offsets.

1 http://www.ipcc.ch/report/ar5/wg1/#.UopJy-JWJTE

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UNDERSTANDING CARBON OFFSETS

A carbon offset, aka a verified emission reduction (VER) or carbon credit, ensures that a metric ton of CO

2, or its equivalent in other GHGs, is removed from the atmosphere or prevented from

entering it. This reduction in emissions is made in order to compensate for emissions occurring elsewhere.

Carbon offsets provide progressive organizations a means to directly, positively impact their GHG emissions without the need to make onsite reductions. Companies that purchase carbon offsets provide financial support to projects that remove GHGs from the environment or keep them from being initially emitted. Carbon offset projects vary widely in their scope and incorporate a variety of technologies; some examples of these projects include planting or conserving forests, capturing gas from landfills or agriculture, or switching to less harmful fuels.

While the exact mechanisms behind carbon offset projects may be highly technical, the essence of carbon offsets is easy to understand and communicate. By purchasing carbon offsets, com-panies balance their own emissions with the reduction or destruction of emissions that occur somewhere else; the company’s own “dirty” emissions—and the environmental impact of those emissions—are “offset” by a carbon capture project that creates a net zero or even positive environmental impact.

A carbon offset, aka a verified emission reduction (VER) or carbon credit, en-sures that a metric ton of CO2, or its equivalent in other GHGs, is removed from the atmosphere or prevented from entering it. This re-duction in emissions is made in order to compensate for emissions occurring elsewhere.

White Paper: Moving Progressive Organizations Toward Carbon Neutrality: The Role of Carbon Offsets

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Offsets Role in Emission ReductionTo truly understand the role carbon offsets play in reducing a company’s environmental impact, it’s necessary to understand both how emissions are classified, and how those classifications can be offset.

While it is the most recognized and most abundant GHG, carbon dioxide (CO2) is only one of

a class of gases that scientists believe play a role in the greenhouse effect2. These other gases—which include methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulphur hexaflu-oride—may actually have a longer-lasting or more damaging effect on the environment than CO

2.

GHGs are emitted across a variety of industrial situations. Take methane, for example. It is released by agriculture, natural gas acquisition (shale fracking), and landfill waste, and is estimated to be 25 times more damaging to the atmosphere than CO

2. A comprehensive strategy for

carbon neutrality must include mitigation measures for these GHGs (measured in terms of their CO

2 equivalence), as well as CO

2.

The emissions generated from business processes are defined by the World Resource Institute’s (WRI) internationally recognized GHG Protocol as either direct or indirect emissions3. Direct emissions originate from sources owned or controlled by the reporting entity, such as a headquar-ters facility. Indirect emissions result from a company’s activities, but occur at sources that the company neither owns nor ultimately controls, such as a utility or on an airline.

The GHG Protocol further divides these emissions into three types, or scopes:

Direct emissions originate from sources owned or controlled by the reporting entity, such as a headquar-ters facility. Indirect emissions result from a company’s activities, but occur at sources that the company neither owns nor ultimately controls, such as a utility or on an airline.

2 http://en.wikipedia.org/wiki/Greenhouse_gas 3 http://www.ghgprotocol.org/

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In North America, a commonly accepted practice is that Scope 2 purchased electricity emissions can be offset with renewable energy credits (RECs) as RECs are the current industry standard for offsetting grid power electricity. A REC purchase ensures the generation of a specific amount of renewable energy to offset fossil fuel-based electricity and helps create a carbon-free power system.

However, current methodologies such as the GHG Protocol do not encourage the purchase of RECs to address Scope 1 or Scope 3 emissions; instead, carbon offsets are used. These carbon credits address direct emissions (such as onsite fuel combustion) and those indirect emissions not associated with the consumption of purchased electricity, while simultaneously fueling the demand for increased voluntary mitigation efforts and carbon reduction. [This guidance is always undergoing review and revision by the WRI to account for new emission sources and offset methodologies].

Carbon offsets are recognized internationally as a cost-effective way to reduce global emissions. From mandatory cap-and-trade programs like the Kyoto Protocol and California’s progressive carbon permitting program to the growing voluntary purchasers market, carbon offsets are embraced by governments, independent third-party organizations, and NGOs worldwide. The most respected NGOs in the U.S. on climate change—groups like the World Wildlife Federation, WRI, the Environmental Defense Fund, and the Environmental Protection Agency—all support carbon offsets as a viable and credible way to address all organizational emissions.

THE VALUE CARBON OFFSETS PROVIDE

The essential function of carbon offset projects is to reduce greenhouse gases. They do this in one of two ways. The first is emission reduction. These projects prevent emissions by making emission systems more effective, or by destroying the emissions before they enter the atmo-sphere. The second is carbon sequestration, in which emissions that have already entered the atmosphere are removed from it.

However, carbon offsets provide a host of benefits to organizations and the communities in which they operate beyond simply reducing, or neutralizing, a carbon footprint.

As a tradable commodity, offsets can provide economic incentives for reducing GHG emissions by putting a monetary value on the environmental cost of pollution. Emissions then become an internal cost of business that can be accounted for on a balance sheet alongside other operational expenses.

Offsets can also be used as a policy tool to help stabilize global carbon markets due to unequal prices of carbon; registering, and hence permitting, carbon helps to equalize the price across these markets, which benefits all purchasers.

Another important attribute of carbon offsets is additionality4. Additionality asks the question “would this carbon offset project have occurred anyway or did it only come about because it was able to sell carbon offsets?” Every credible 3rd party verification body requires that all qualifying carbon projects display project-level additionality. Buyers can be sure that without the funding provided through the sale of carbon offsets, none of these projects would be successful.

White Paper: Moving Progressive Organizations Toward Carbon Neutrality: The Role of Carbon Offsets

In 2012, Microsoft pledged to become carbon neutral. To fund its goal, the company charges an internal fee to business groups based on their car-bon output. These fees are then used to purchase carbon offsets and RECs, supporting projects around the world, including forest preservation, re-forestation, energy efficient cooking methods, wind power develop-ment, and more.

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Carbon offset projects also provide substantial value in the form of “co-benefits” to the local com-munities in which they operate. These projects eliminate pollutants, improve air quality, increase commerce, create jobs, conserve natural resources and wild places, preserve endangered species, protect biodiversity, and enhance the quality of life for impacted communities.

CHOOSING CARBON OFFSETS TO MEET ORGANIZATIONAL GOALS

While companies may select carbon offsets in order to comply with cap-and-trade schemes in place within their region, there is a rapidly growing market for voluntary offset purchasers. These purchases are made by organizations ranging in size from the Fortune 500 (including such notable names as The Walt Disney Company, Microsoft, and Google) to small businesses, all of whom share a similar goal of reducing environmental impact. When combined with energy efficiency programs and low carbon fuels, carbon offsets provide one of the most cost effective, credible solutions for organizations to achieve carbon neutrality.

Companies that are ready to add carbon offsets to their environmental impact reduction strategy typically do so for one or more of the following reasons:

Co-Benefit OpportunitiesCarbon offsets can provide purchasers with specificity that many sophisticated organizations feel are important to their overall environmental efforts. Details such as project location, technology, multiple certifications, and other co-benefits provide carbon offsets with a story that goes beyond emissions reductions.

For many companies, matching a particularly brand-coherent narrative to their GHG reduction efforts creates a more effective strategy that often results in a larger commitment. Being able to share how an offset purchase has helped to protect a specific region of forest, or how a project benefitted a community where it is based, creates a stronger sense of engagement and value for stakeholders.

The Pursuit of Carbon NeutralityWhile many organizations have become familiar with the idea of emission reductions through increased operational efficiencies and the purchase of RECs, these initiatives alone do not encom-pass the full scope of emissions, as described above. Emissions occur through a variety of other business-related activities. For example, The New York Times5 reported earlier this year that air travel is among our biggest carbon ‘sins.’ Companies are becoming more aware that some of their greatest environmental impacts may not be addressed in their existing strategy.

Achieving true carbon neutrality can be a complicated process. For companies that are seeking to become carbon neutral, clearly defined organizational boundaries, full accounting of all emis-sions via a verified GHG inventory, and the purchase of carbon offsets are critical components to achieving this important environmental goal.

4 http://ghginstitute.org/wp-content/uploads/content/GHGMI/AdditionalityPaper_Part-1%28ver3%29FINAL.pdf5 http://www.nytimes.com/2013/01/27/sunday-review/the-biggest-carbon-sin-air-travel.html?_r=0

One of the carbon offset projects sup-ported by Renewable Choice is the Indian Cookstove Replace-ment project. More than 400,000 wom-en and children in India die each year from exposure to solid fuel cookstove smoke. These stoves also produce 20% of the worlds’ black car-bon emissions. By replacing the stoves with higher efficiency models and fuels, households become cleaner and safer, jobs are created, and emissions are reduced.

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Transparency & ValidityAnother reason progressive organizations choose carbon offsets is for their transparency and validity. Offsets are considered to be a leading, credible choice in reducing overall emissions and increasing additionality by many major global NGOs, particularly in instances where onsite reduc-tions have reached their maximum capacity.

The claim of reduced emissions through the use of carbon offsets is only as valid as the quality of the offsets themselves. To this end, a variety of organizations have developed demanding credibility standards for offsets that verify the emission reductions are occurring as claimed. These standards also track the trading and retirement of offsets, ensuring they are counted by the project devel-oper and end user only once, giving organizations assurance that the environmental benefits they have purchased and claimed are theirs and theirs alone.

Companies can be assured of the value and validity of their offset purchase through third-party certification under a variety of rigorous compliance standards, including the Clean Development Mechanism (CDM), the American Carbon Registry Standard, the Climate Action Reserve, and the Verified Carbon Standard.

Many of these carbon offset certification bodies manage publicly searchable databases which identify retirement of offsets on behalf of specific organizations. Companies are often attracted to this transparency and the ability to refer to all of the details of their commitment in a single, verified, and public domain.

GlobalismCarbon offset projects have the ability to support clean power initiatives around the world. Offsets are produced and used globally, under a variety of different certification standards. Companies that operate internationally may look to support emission reduction programs in regions specific to where they are operating. By purchasing globally-sourced carbon offsets, these companies can expand their emission reduction initiatives beyond North American generated RECs.

The co-benefits of carbon offset programs in other countries can be tremendous. In some of these regions, the addition of a carbon offset project provides the local economy with an infusion of resources while simultaneously creating jobs and improving both the community and ecosystem.

CONCLUSION

Increasingly, sophisticated organizations are beginning to take a look at the full scope of their emissions. As these companies evolve to see energy usage as only one part of a larger picture of environmental impact, many begin to develop a strategy for offset segmentation and turn to carbon offsets as a means of addressing GHG emissions beyond utility generated electricity. What they are finding is that the process of carbon reduction through offsetting is an affordable, credible, and powerful means of achieving their sustainability goals.

At Renewable Choice, we can provide you with the guidance necessary to effectively measure, manage, and offset your emissions. Contact us today to speak with one of our sustainable busi-ness professionals about carbon offsets today.

The Darkwoods For-est Carbon Project is a 136,000 acre property purchased by the Nature Conservancy of Canada, the biggest conservation project in Canadian history. The project simul-taneously protects biodiversity and threatened spe-cies while avoiding emissions due to logging. Darkwoods is the largest Verified Carbon Standard (VCS)-validated for-est carbon project in North America.

White Paper: Moving Progressive Organizations Toward Carbon Neutrality: The Role of Carbon Offsets