Date post: | 27-Mar-2015 |
Category: |
Documents |
Upload: | joseph-bowen |
View: | 213 times |
Download: | 0 times |
Chicago Climate Exchange®, Inc.© 2010 1
CCX ODS Destruction Offsets Projects: Overview, Lessons Learned & Future Opportunities
June 14, 2010
Stephen J. DonofrioEconomistChicago Climate Exchange
Prepared for the United Nations Environment Program Seminar on the environmentally sound management of banks of ozone-depleting substances (decision XXI/2)
Chicago Climate Exchange®, Inc.© 2010
Climate Exchange Plc is an AIM listed company (CLE.L) which owns the European Climate Exchange (ECX) and the Chicago Climate Exchange (CCX)
Chicago Climate Exchange (CCX) is North America's only and the world's first global marketplace for integrating voluntary legally binding emissions reductions with emissions trading and offsets for all six greenhouse gases.
Chicago Climate Futures Exchange® (CCFE), a wholly owned subsidiary of CCX, is a CFTC designated contract market that offers derivative products for emission allowances and other environmentally based markets
European Climate Exchange (ECX) is the most liquid, pan-European platform for trading carbon emissions under the EU ETS, offering futures and options contracts. ECX commands over 80% market share of the exchange traded volume for EU ETS carbon credits
The Montréal Climate Exchange is a joint venture between the Montréal Exchange (MX) and the Chicago Climate Exchange® (CCX). MCeX operates the first regulated environmental derivatives market in Canada.
Tianjin Climate Exchange (TCX) is a joint venture between CNPC, CCX and City of Tianjin. TCX is first integrated exchange for trading environmental financial products in China.
Envex is a joint venture between CCX and Macquarie bank of Australia. Envex develops exchange-traded and OTC climate and environmental products for the emerging Australian markets.
Climate Exchange PLC FamilyGlobally Operating Six Exchanges in Five Countries across Four Continents
Chicago Climate Exchange®, Inc.© 2010
CCX Market Architecture (2003-2010) Chicago Climate Exchange (CCX ®) is the world’s first and North America’s only active
voluntary, legally binding integrated trading system to reduce emissions of all six greenhouse gases, with offset projects in North America and worldwide
CCX has 400+ members worldwide with a registered emission baseline of 600 MMT CO2e
CCX has 330+ registered GHG emission reduction projects totaling 83 MMT CO2e
Chicago Climate Exchange®, Inc.© 2010
CCX Comprehensive Market Structure
Web Electronic Trading Platform
Electronic Market Registries
Emitting Members: Standard baseline, multi-year allowance stream = to reduction targets
Offset Aggregators/Providers: GHG project protocols
Liquidity Providers
Associate Members
Emitting Members: Standard baseline, multi-year allowance stream = to reduction targets
Offset Aggregators/Providers: GHG project protocols
Liquidity Providers
Associate Members
Comprehensive Rules System
Chicago Climate Exchange®, Inc.© 20105
CCX Offset Project TypesVerified Offset projects sequester or eliminate GHGs to earn Carbon Financial
Instruments (CFI) sold on CCX electronic platform to CCX membership
Current pre-defined Offset Categories
Agricultural Methane Collection & Combustion
Agricultural Best Management Practices - Continuous Conservation Tillage and Conversion to Grassland Soil Carbon Sequestration
Agricultural Best Management Practices - Sustainably Managed Rangeland Soil Carbon Sequestration
Avoided Emissions from Organic Waste Disposal
Coal Mine Methane Collection and Combustion
Forestry Carbon Sequestration
Landfill Methane Collection and Combustion
Ozone Depleting Substances Destruction
Renewable Energy Systems
Small Scale Renewable Biogas
Ozone Depleting Substances Destruction
14 ODS Destruction Projects Registered787,300 Mt CO2e issued
Chicago Climate Exchange®, Inc.© 2010
ODS have significant Global Warming Potentials (GWP) ranging between 500 and 10,000+ Mt CO2e when emitted from ODS banks Represents a liability, destruction creates an asset
While Montreal Protocol phased out production and consumption, not much regulatory or economic incentive for recovery and destruction Little recovery and destruction occurring
Magnitude of GHG problem from ODS is significant GHG emissions 2007 US Bank of eligible ODS 330 MMT CO2e 2007 accessible quantity of ODS contained in equipment is over 1400 MMT
CO2e US EPA est. that 13% of eligible ODS will be emitted by 2010 if not recovered
and destroyed IPCC/TEAP est. 6 Gt CO2e will be released to the atmosphere from the most
easily accessible and destroyable ODS banks in refrigeration and air conditioning (2011-2015); total Kyoto reductions is 4.3 Gt CO2e 2008-2012
Venting is regulated, BUT, enforcement is difficult
Key Details of ODS Destruction Protocol: Rationale and Premise
Chicago Climate Exchange®, Inc.© 2010
Protocol Rationale and Premise:U.S. ODS Lost Opportunity – MMt CO2e
Today
Quick action is needed since opportunity is all but lost within 10 years
Chicago Climate Exchange®, Inc.© 2010
ODS Protocol History: Peer Review and Committee Approval Process
Concept Proposed by
DuPont(Dec. 19, 2006)
Discussions, Consultation,
Research - CCX, DuPont and
U.S.EPA
Research and technical work performed by
U.S.EPA and ICF
Discussions, Consultation -
CCX, DuPont and U.S.EPA
CCX Offsets Committee
Review(May 15, 2007)
Further Research - CCX, DuPont,
U.S.EPA
CCX Offsets Committee Approval
(June 19, 2007)
Draft protocol development by CCX, DuPont (Mack McFarland) and U.S. EPA (Jeff Cohen) began on December 19, 2006
Originally submitted to CCX Committee on Offsets on May 15, 2007 Approved by the CCX Committee on Offsets on June 19, 2007 Six months process of research, proposal, consideration, revisions and
approval
Ongoing Committee Review and Protocol Development – last update 8/20/2009
Chicago Climate Exchange®, Inc.© 2010
CCX Offsets Committee Membership
Committee Member Member Organization
Scott Subler (Chair) Environmental Credit Corp
Bill Hamlin Manitoba Hydro
Annabeth Reitter NewPage Corporation
Amy Van Kolken Banister Waste Management
Bob Fledderman Mead Westvaco
Larry Merritt Ford Motors
Dave Miller Iowa Farm Bureau
Lisa Shpritz Bank of America
David Skole Michigan State University
Tod Delaney First Environment
Scott Weaver American Electric Power
Ben Conte EcoSecurities
Chicago Climate Exchange®, Inc.© 2010
Peer Reviewers and Commenter's
CoolgasDelta Institute EcoSecuritiesReclamation Technologies (RemTec) Environmental Credit Corp.Hudson Technologies Iowa Farm Bureau
American Electric PowerBank of AmericaDow CorningDuPontFord Motors Mead WestvacoMichigan State UniversityWaste Management
CCX Offset Aggregators / Providers CCX Members
CCX-approved Verification Bodies OtherCalifornia Air Resources BoardNewPage CorporationPolar Refrigerant PureChem U.S. Environmental
Protection Agency (EPA)
Air Compliance TestingFirst Environment, Inc.ICF International
Discussions, Consultation, Research and
Technical Work
Chicago Climate Exchange®, Inc.© 2010
CCX ODS Destruction Offset Project Cycle: Converting Liabilities into Assets
OWNER Aggregator confirms project eligibility, prepares
destruction plan & proposes project implementation plan
for CCX Validation
Third-party conducts verification
Weight and samples taken. Owner transports ODS to
destruction facility.
CCX issues to Aggregator credits for verified
destruction in form of Carbon Financial Instruments (CFI)
VERIFIER
AGGREGATOR
CCX
DESTRUCTION FACILITY Weight and samples taken. Facility destroys ODS
according to CCX protocol
Chicago Climate Exchange®, Inc.© 2010
CCX ODS Destruction Protocol
CCX ODS Destruction protocol credits verified destruction of eligible ODS at a destruction facility that meets the eligibility requirements
ISO 14064-2 Format
Project Definition
General Eligibility Requirements
Project Boundary
Monitoring and Sampling Requirements
Quantification Methodology
Verification Guidance
Aggregator confirms project eligibility, prepares
destruction plan & proposes project implementation plan
for CCX Validation
Third-party conducts verification
Weight and samples taken. Owner transports ODS to
destruction facility.
CCX issues to Aggregator credits for verified
destruction in form of Carbon Financial Instruments (CFI)
Weight and samples taken. Facility destroys ODS
according to CCX protocol.
Chicago Climate Exchange®, Inc.© 2010
CCX has established the following set of general eligibility requirements that are applicable to all ODS destruction offset projects.
CCX Membership: Registered CCX member
Ownership Status: Attestations, contracts
Project Start Date: January 1, 2007
Project Location: Destruction U.S.-only, imported ODS permitted
ODS Materials: (1) Refrigerants and ODS that is entrained in foam; (2) Must be phased out under MP and CAAA Title VI
Performance Benchmark: Two criteria: (1) Regulatory; (2) Common Practice
CCX ODS Destruction Protocol: General Eligibility Requirements
Aggregator confirms project eligibility, prepares
destruction plan & proposes project implementation plan
for CCX Validation
Third-party conducts verification
Weight and samples taken. Owner transports ODS to
destruction facility.
CCX issues to Aggregator credits for verified
destruction in form of Carbon Financial Instruments (CFI)
Weight and samples taken. Facility destroys ODS
according to CCX protocol
Chicago Climate Exchange®, Inc.© 2010
Projects must not be considered common practice or required by law or other legally binding framework to be considered for offset issuance:
Regulatory Criteria: No regulation that requires destruction of ODS No regulation that requires dismantling
refrigerators/freezers and removal and incineration of ODS entrained in the foam
CCX Project Owner Attestation
Common Practice Criteria: No voluntary destruction of ODS No voluntary dismantling refrigerators/freezers
and removal and incineration of ODS entrained in the foam
Assumes voluntary ODS destruction is not common practice; all projects that destroy ODS comply with this requirement
CCX ODS Destruction Protocol: General Eligibility Requirements
Aggregator confirms project eligibility, prepares
destruction plan & proposes project implementation plan
for CCX Validation
Third-party conducts verification
Weight and samples taken. Owner transports ODS to
destruction facility.
CCX issues to Aggregator credits for verified
destruction in form of Carbon Financial Instruments (CFI)
Weight and samples taken. Facility destroys ODS
according to CCX protocol
Chicago Climate Exchange®, Inc.© 2010
CCX identified that for both gaseous or liquid ODS and ODS entrained in foam, the baseline scenario is the fugitive emissions of ODS gas:
Gaseous or Liquid ODS: In the absence of regulation or requirements
mandating destruction fugitive emissions
ODS Entrained in Foam: Shredding baseline scenario protocol
assumes a conservative release of 24% of ODS Not significant enough research to support any
greater amount of ODS release during shredding or release in the landfill
CCX ODS Destruction Protocol: Baseline Scenario
Aggregator confirms project eligibility, prepares
destruction plan & proposes project implementation plan
for CCX Validation
Third-party conducts verification
Weight and samples taken. Owner transports ODS to
destruction facility.
CCX issues to Aggregator credits for verified
destruction in form of Carbon Financial Instruments (CFI)
Weight and samples taken. Facility destroys ODS
according to CCX protocol
Chicago Climate Exchange®, Inc.© 2010
Aggregator confirms project eligibility, prepares
destruction plan & proposes project implementation plan
for CCX Validation
Third-party conducts verification
Weight and samples taken. Owner transports ODS to
destruction facility.
CCX issues to Aggregator credits for verified
destruction in form of Carbon Financial Instruments (CFI)
Weight and samples taken. Facility destroys ODS
according to CCX protocol
Boundary of a project includes the ODS destruction, monitoring and recording equipment, and relevant project-based emission sources.
ODS Destruction Process: (1) CO2 as byproduct of destruction; and, (2) CO2 emitted from fossil fuel usage in process
Other Project-based Emissions: CO2 emitted from transportation of ODS to destruction facility
Monitoring and Recording Equipment: ODS emissions from periods that the destruction equipment not functioning to protocol requirements.
CCX ODS Destruction Protocol: Project Boundary
Chicago Climate Exchange®, Inc.© 2010
Key Details of the Protocol: Monitoring and Sampling
Must develop a monitoring plan with procedures to obtain, record, compile and analyze data for quantifying and reporting GHG ERs
Determining Total Quantity of ODS Gaseous or Liquid
Weight: Reconcile pre- and post- destruction ODS container weights using calibrated scales / flow meters as per manufacturer specs
Composition: Pure ODS (at least 95%) and mixed ODS composition is determined using protocol specified sampling procedures and gas chromatography analysis of sample at certified lab (twice tested, 99% confidence).
Foams Weight/Composition: Project Proponents must propose a
sampling procedure with project documentation to CCX. Composition: Track serial #’s, manufacturer data, sample
Aggregator confirms project eligibility, prepares
destruction plan & proposes project implementation plan
for CCX Validation
Third-party conducts verification
Weight and samples taken. Owner transports ODS to
destruction facility.
Weight and samples taken. Facility destroys ODS
according to CCX protocol
CCX issues to Aggregator credits for verified
destruction in form of Carbon Financial Instruments (CFI)
Chicago Climate Exchange®, Inc.© 2010
Aggregator confirms project eligibility, prepares
destruction plan & proposes project implementation plan
for CCX Validation
Third-party conducts verification
Weight and samples taken. Owner transports ODS to
destruction facility.
CCX issues to Aggregator credits for verified
destruction in form of Carbon Financial Instruments (CFI)
Weight and samples taken. Facility destroys ODS
according to CCX protocol
Key Details of the Protocol: Quantification of Avoided GHG Emissions
Avoided GHG Emissions = Total quantity ODS destroyed net project based emissions, leakage.
Total Quantity of ODS Destroyed (Mt CO2e)= (Quantity of ODS Waste * Concentration of ODS * ODS GWP * Min EPA DE) / Mt Conversion Factor ODS
Project Emissions = sum of CO2e from ODS destroyed and fossil fuel use CO2 from ODS Destroyed
= ((Quantity of ODS Waste * Concentration of ODS * Min EPA DE) / Mt Conversion Factor ODS) * ODS specific emission factor
CO2 from Fossil Fuels (Stationary and Transportation)= Quantity of fuels * Fuel-Specific Emission factor
Note: Transportation MAY be calculated by using the product of distance traveled and transportation type emission factor
Leakage: Protocol assumes no leakage
Chicago Climate Exchange®, Inc.© 2010
Aggregator confirms project eligibility, prepares
destruction plan & proposes project implementation plan
for CCX Validation
Third-party conducts verification
Weight and samples taken. Owner transports ODS to
destruction facility.
CCX issues to Aggregator credits for verified
destruction in form of Carbon Financial Instruments (CFI)
Weight and samples taken. Facility destroys ODS
according to CCX protocol
Verification guidance provided in CCX Protocol and general verification guidance document
All projects must be verified by a independent third party verification agency approved for ODS verification by CCX
All verification reports undergo a quality assurance review by Financial Regulatory Authority (FINRA) before being registered in CCX Electronic registry
CCX issues the amount of verified emission reductions into the CCX Offset Aggregator/Provider’s registry holdings account.
Key Details of the Protocol: Verification
Chicago Climate Exchange®, Inc.© 2010
CCX ODS Destruction Project Scenarios
Hospital collects to destroy ODS, on-site replacement Easy to track and identify substitute
Aggregator purchases stockpile of unusable refrigerant ODS Easy to track, no substitution
Municipality led refrigerant collection program, ODS destruction secondary ODS destruction can serve as initial incentive, e.g. rebates
ODS imported from Article 5 country (India), high cost Need strong market value to incent destruction
Chicago Climate Exchange®, Inc.© 2010
CCX ODS Program Achievements
Pioneer of protocol development - CCX developed the first standardized ODS Destruction Offset Project Protocol draft for voluntary carbon market, adopted July 2007
14 ODS Destruction Projects Registered - 787,300 tons issued R-11, R12, R-13, R-113, R-114, R-115, Halon 1211, Halon 1301, etc
12 participants 1 producer, 7 carbon offset project aggregators, 4 refrigerant reclaimers
CCX Validated the first ever refrigerator foam ODS destruction project
CCX-approved Verification agencies First Environment ICF International
Chicago Climate Exchange®, Inc.© 2010
CCX ODS Destruction Offset Projects:Lessons Learned
Despite a clear opportunity to destroy ODS, there are barriers.
CDM HFC has created negative sentiment for destruction offsets
In Article 5 countries, there is too much ODS that recycling is not viable – must encourage destruction of ODS
Critical to build/link institutional framework to market; Communication with project participants given verification requirements
Projects need to know why they are required to provide particular data items, given the cost of data acquisition
Technology exists, but is expensive
Chicago Climate Exchange®, Inc.© 2010
Project registration is market price dependent
Utilize best practice standards when possible (EPA, ISO, etc)
Cost to destroy ODS varies by country, technology, capacity and type
Market factors are important, potential to oversupply
Voluntary ODS destruction is not a windfall market; does not supply upfront funding
High level of price volatility of voluntary carbon markets
ODS project registrations indicate high market interest
CCX ODS Destruction Offset Projects:Lessons Learned
Chicago Climate Exchange®, Inc.© 2010
Ongoing Market Development:Future Opportunities
Further Developments to Existing Protocol Requirements Expanding eligible project location to include countries other than the U.S. New technologies (e.g. mobile destruction facilities) – U.S. EPA dependent Importation requirements – U.S. EPA dependent
Phase down of production and consumption of ozone-friendly, super GHGs Montreal Protocol EPA CAAA revision U.S. Climate and Energy Cap-and-Trade Legislation
Project funding opportunities – Institutional, national, regional Developing country pilot programs
24
Chicago Climate Exchange®, Inc.© 2010
End
Contact information:
Stephen Donofrio, Economist Chicago Climate Exchange, Inc.312 554 7012, direct312 554 3350, main312 554 3373, [email protected]