1. Financing highly social and
environmental project through the
voluntary carbon market
Olivier Levallois

2. Household energy demand! Challenges.
• Rural Biogas tanks in Guizhou province, China
• Implemented by French NGOs
• Project activity: 8 m3 biogas tanks for individual households. Use of
waste for energy production and as fertiliser
• Baseline: use of fire wood, charcoal, coal
• 5,000 tCO2/y for 1,700 units

3. Household energy demand! Challenges.
• Microsolar Lighting in Zambia
• Implemented by SolarAid
• Project activity: small LED lights powered by photovoltaic panels for
individual HH. Train solar entrepreneurs
• Baseline: use of kerosene (common fuel for domestic lighting).
• Use of around 52-55 litres of kerosene / year.
• 2.580 kg CO2/litre of kerosene.
• 19% of their yearly spend
• 2,500 tCO2/y for 39,000 units ($20 each)

4. Household energy demand! Challenges.
• Ceramic Water Purifiers in Cambodia
• Implemented by Hydrologic
• Project activity: use of ceramic water purifiers to treat contaminated
drinking water (10 L units)
• Baseline: conventional water treatment (boiling water with NRB -
firewood)
• 20,000 tCO2e / year for 40,000 units ($20 each)
• Role of carbon: subsidy price of filters

5. Policy options to reduce GHG emissions
Objective:
reduce greenhouse gas emissions
Market-Based
Non-Market-based Mechanism(s)
Mechanism(s)
Regulated Carbon Voluntary
Market: Carbon Market:
Cap-and-trade + Offsetting mechanism
Regulation/Tax Offsetting mechanism
Voluntary Carbon Market: companies, individuals, and other entities and activities
not subject to mandatory limitations that wish to offset GHG emissions

6. Carbon credits financing channels
 How does it work?
 Bring (additional) revenues to an emission reduction project
 Cover the cost difference between an old and a new technology
 Act as an international subsidy to clean energy in developing
countries
 Obtain core funding
 Where do they grow?
 In a well taken care of tree
 Validated by auditors
 Issued by Standard bodies

7. How do you obtain carbon credits from your project?

8. Let’s use the Clean Development Mechanism…
• International agreement (KP):
• CERs accepted by signatory countries
• Included in the EU-ETS and JV-ETS
• Goal:
• Emission reduction cost-effectiveness
• Sustainable development in host countries
• Benefits:
• 1 billion tCO2e (source: UNFCCC)
• Increase knowledge on emission reduction opportunities
• Constructivism
• Limits:
• Transaction cost
• Sustainable Development
• Price volatility/decrease
This is where voluntary market
• No LULUCF activities can help

9. Compliant vs Voluntary market
• Project NOT registered/certified with UNFCCC:
• Private standards: Verified Carbon Standard, Gold Standard
Foundation, Carbon Fix, Climate Action Reserve, etc.
• Similar certification that CDM, same or similar
methodology/approaches
• Buyers of offsets are not obliged:
• Various purposes: climate change
engagement, communication strategy, pre-compliance
readiness, etc.

10. Voluntary carbon market’s main drivers
Demand Offer
Service/financial companies, Project owner/developers, intermediaries
Who
manufacturers, retailers
Reducing environmental impact, Reducing/avoiding GHG emissions,
Objective carbon footprint offsetting improving environmental impact
Standard Recognised and credible Valuable
Link with the offsetting company' Project located in developing countries.
Geography
activities Growing sources of GHG
Link with the offsetting company' Industry or household energy-related,
Technology activities transportation, land-use, forestry
Price GBP 0.5 to GBP 12 / tCO2e GBP 1 to GBP 20 / tCO2e
Voluntary Carbon Market: 93 M tCO2 exchanged in 2011

11. Large companies offsetting
Google: 1,5 M tCO2e/y
Aviva: 130,000 tCO2e/y
JLR: 700,000 tCO2e/y
Marriott: 3 M tCO2e/y

12. Voluntary market! Objectives.
• Broaden parties involved in emission reduction activities
• Voluntary initiatives
• Reduce transaction costs
• Shorter process
• Simplified methodologies
• Lighter interpretation of the UNFCCC guidance

13. Voluntary market! Objectives.
• Account for Sustainable Development criteria
• MDG Matrix:
• Air quality
• Water quality and quantity
• Soil condition
• Biodiversity
• Quality of employment
• Livelihood of the poor
• Access to affordable energy
• Etc…
• During validation and verification

14. Voluntary market! Pros.
• Price level: according to the social and environmental value of
the project:
• Household level energy demand (6 – 10 GBP)
• Forestry projects (4 – 8 GBP)
• Small scale renewable energy (2 – 4 GBP)
• Large scale renewable (1 – 3 GBP)
• Industrial gases (< 1 GBP)
• Lower price volatility

15. Household energy demand! Challenges.
• Working with households in LDCs
• Technologies eligible: rural biogas, cook-stoves, water filters, solar
heater
• Larger number of participants (households, NGO, financing
party, etc.)
• Introduction of the suppressed demand concept

16. Household energy demand! Challenges.
• Offer balance demand equlibrium
14
12
10
8 Offer
Demand
6
Expon. (Offer)
4 Linear (Demand)
2
0
2007 2008 2009 2010 2011 2012
Demand:
 Marketing budget cut: Slowing of increase
Offer:
 Massive issuance from HH energy demand
 Forestry project first issuances

17. Household energy demand! Challenges.
• Higher cost of emission reduction
• Less commercial incentive (not for profit)
• Heavier management structure
• More complex monitoring
• Surveys
• Quantitative tests
• Equipment
• Valuation of NRB
• Spot transactions

18. Controversies and credibility building
 What is a credible emission reduction?
 ICROA: Code of good practice
 Financing meaningful projects

19. What makes a credible & valuable offset credit ?

20.  Industry association grouping 11 companies
 Offering Carbon management and offsetting
 Setting a code of good practice
 Carbon Management:
 Use international standards (e.g. WRI/WBCSD GHG Protocols
and ISO 14064)
 Prioritise emission reduction strategies
 Offsetting:
 ACR, UNFCCC, CarbonFix, Gold Standard, VCS, CAR
 Working with standards
 Building market credibility

21. Promote meaningful projects
 Avoid industrial gases
 Avoid large hydro power plants
 Provide client with a story

22. Global Burden of Disease Study 2010 (THE LANCET)
 Largest ever systematic
effort to describe the global
distribution and causes of
a wide array of major
diseases, injuries, and
health risk factors
 Household air pollution
from cooking with solid
fuels kills 4 million people
annually

23. Wood fuel
Supply/Demand balance

24. Low smoke project in El Fasher, North Darfur, Sudan
Partnership with Practical Action

25. Over 5 years, Carbon Clear has been providing
- Funds for micro-facility
- Project management costs (Rugby, Khartoum, El Fasher):
- Staff
- Logistics
- Training
- Workshop
- Equipment
- Indemnity from Women Development Associations
- Technical capacity building on Monitoring and Evaluation
- Monitoring equipment

26. 2008-2012: Objectives
 Distribute up to 10,000 LPG stoves in El Fasher (North Darfur)
 Reduction in indoor air pollution in households
 Reduction of overall household energy expenditures for low-
income families
 Reduction of pressure on dwindling forest resources in the
Darfur (NRB ~ 80-95%)
 Strengthening of the managerial capacity of the community-
based Women’s Development Association

27. 2008-2012: Achievement/ Challenges
- 3,500 LPG stoves distributed in El Fasher
- Part of it is outside El Fasher
- (Price of stove + canister) x 3
- Price of LPG increased by 30%
- Emission reduction (5-6 tCO2e / stove / year)
- Long delays
- Validation lasted 3 years (no DOE available, then visit delayed many
times, then auditor not available, high turnover with DOE, etc.)
- End of the 1st agreement period

28. Switching to a better energy