Climate Care’s Projects Policy
Aim
The primary purpose of Climate Care’s projects is to make real and measurable
reductions in greenhouse gases in the atmosphere. In addition our projects are always
designed to have local social and environmental benefits.
The purpose of this document is to lay out the criteria we apply to ensure that this goal
is realised.
To date, Climate Care has not registered its projects under UNFCCC’s Clean
Development Mechanism (CDM). The main reason for this is that in the voluntary
market we have been able to fund very worthwhile projects without adding the high
transaction costs associated with the CDM process. However, we do follow relevant
parts of the CDM model when we develop and monitor projects.
Types of Project
Climate Care’s focus is on projects that reduce emissions of greenhouse gases
produced by industry and other human activity. Examples of project types that we fund
are in Appendix 1.
Location & Double Counting
Climate Care needs to ensure that its emissions reductions are not “double counted” by
countries that have emissions reductions targets under the Kyoto Protocol. Climate
Care will therefore not fund projects in countries that have binding targets under the
Kyoto Protocol (i.e. Annex 1 Countries that have ratified the Protocol) unless it can be
assured that the emissions reductions can be retired from the national account.
In addition we are currently not prepared to fund projects in countries that were
allocated targets under Annex B of the Kyoto Protocol but failed to ratify it for reasons
of political convenience (e.g. USA and Australia). We would be concerned that our
customer’s funds were being used to deliver savings that the countries themselves
should be making.
Additionality
Key to Climate Care’s projects is that they are additional: that is to say that carbon
finance is a central consideration to their going ahead and provides an incentive for
further investment in the sector or technology. For its additionality assessment Climate
Care uses the guidelines published by the UNFCCC for CDM projects.
The UNFCCC publishes two sets of additionality tests, for large and small scale
projects; they are outlined in Appendix 2.
A project is, broadly, small scale if it is:
•
A renewable energy project with a capacity of up to 15MW
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•
•
An energy efficiency project that reduce emissions on the supply or demand side by
up to 15GWh per year
An emissions reduction project (such as fuel switching or methane destruction)
whose remaining emissions are less than 15,000 tonnes of CO2e per year.
Baseline Methodology
The baseline determines what the emissions would have been in the absence of the
project activity and is therefore central to calculating what the emissions reductions
will be.
Where appropriate, we will use a baseline methodology as approved by the UNFCCC for
the CDM. Where there is not an appropriate methodology, we will use one
independently validated by an appropriate third party for the particular project. An
example of this is where we are working to save emissions from non renewable
biomass through cooking projects.
Timing of Emissions Reductions
There are two main ways of financing emissions reductions projects:
1. Pay for the emissions reductions on delivery
2. Pay for the emissions reductions achieved over a project’s life at the start of the
project.
Climate Care uses both methods, depending on the project. There is less risk of non
delivery in the former model, but many projects are short of capital. The latter model
enables the carbon finance to make a significant contribution towards the capital a
project requires needs its start – which can be a key factor for development-focused
projects.
In the case of reforestation it may take up to 100 years for all of the CO2 to be
sequestered. However for energy projects savings can typically be made in two to
seven years.
In order to reduce the delivery risk for projects with future delivery Climate Care runs
a portfolio which contains projects with varying technologies and risk profiles. The risk
of non delivery is born by Climate Care.
Third Party Validation and Verification
Compliance with recognised standards.
The Clean Development Mechanism sets rigorous standards for project validation and
verification. In addition to the CDM standards there are a number of developing
standards for voluntary emissions reductions, of which the Voluntary Gold Standard is
fully developed and the Voluntary Carbon Standard is under consultation.
At least 80% of Climate Care’s emissions reductions and all energy projects creating
emissions reductions greater than 10,000 tonnes over their life will be validated and
verified to one of these standards. Note that these standards currently preclude
reforestation activities.
Smaller Scale Projects
Smaller scale projects that make fewer than 10,000 tonnes of emissions reductions
over their life are often projects with high social, poverty alleviation or conservation
value. Burdening them with the full costs of CDM style monitoring and verification
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would nearly always preclude them happening at all. In general these projects will be
validated and verified using local consultants and our own professional expertise in
order to ensure that they are not excluded from accessing carbon finance simply
because of the high cost of administration.
Environmental and Social Impacts
In pursuing our policy of maintaining the highest environmental and social standards,
Climate Care analyses all the impacts of a project on a full range of stakeholders. We
will only fund a project which provides overall a benefit to the local community. In
instances where there is an apparent conflict between the interests of the community
and the interests of the project (eg illegal logging for charcoal being of benefit to the
local community) our reference point will be compliance with the law.
In the transition from an unsustainable to a sustainable energy economy existing
patterns of supply and consumption will be disrupted and there may be losers (eg fuel
wood and charcoal suppliers) as well as winners. Although such consequences need to
be handled with sensitivity and care, they are sometimes an inevitable part of a
transition in society.
Suppressed Demand
In looking for socially beneficial opportunities for global warming mitigation, we often
come across the following question,
“Should communities which are experiencing economic growth have to become dependent
on non-sustainable energy technologies before they can qualify for funding for sustainable
low emissions technologies?”
Climate Care’s basic assumption is that in time all these communities will be given
access to the basic energy services that we all enjoy elsewhere in the world.
Furthermore it makes no economic or environmental sense to allow this to happen in a
non-sustainable way. It is much better to intercept the path of development and divert
it to a sustainable route, rather than let it proceed in an unsustainable way.
On this basis Climate Care is prepared to support renewables and energy efficient
projects in such circumstances – using as its baseline energy data from elsewhere in
the economy of the community in question.
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Appendix 1: Project Types
We provide funds for several types of projects as below. The list is not comprehensive
and we will consider further innovative ways of reducing emissions.
Renewable Electricity generated from sources including
• Wind Power
• Hydro Power (run of the river)
• Solar power
• Sustainably grown biomass
• Agricultural residues (crop and animal waste)
Renewable Heat generated from sources including
•
•
Sustainably grown biomass
Agricultural residues (crop and animal waste)
Energy Efficiency including
• Electrical efficiency
• Heating efficiency
• Efficient cooking
Included in this category are projects that reduce the consumption of nonrenewable
biomass as their baseline.
Methane
• Projects that avoid the production of methane
• Projects that destroy methane through flaring or electricity generation
Reforestation
We are committed to one high quality reforestation project in Kibale National Park,
Uganda. In 2007 we expect this to contribute about 5% of our total emissions
reduction liabilities.
Appendix 2: Additionality Tests
Small scale projects must be able to demonstrate that the project activity would
otherwise not be implemented due to the existence of one or more of the barriers
listed below:
Investment barrier: a more financially viable alternative to the project activity would have
lead to higher emissions;
Technology 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 lead to higher
emissions;
Barrier due to prevailing practice: prevailing practice or existing regulatory or policy
requirements would have lead to the 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, organisational capacity, financial resources or capacity to absorb new
technologies, emissions would have been higher.
Large scale projects must pass the tests as laid out in the matrix below:
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