Bluesource Q4 Newsletter

December 8, 2020
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DECEMBER 2020

STRAIGHT FROM THE SOURCE

Oh, the climate outside is frightful,
But the goal remains viable,
With the Paris promise that we wrote
There is hope, there is hope, there is hope.

INDUSTRY INSIGHTS

The Role and Potential of Nature-Based Solutions

Nature-based solutions (NBS) are attracting significant attention from corporations purchasing offsets to neutralize their greenhouse gas emissions. True to their name, these solutions include a variety of project types like grasslands preservation, wetlands protection, soil carbon sequestration and forestry. The landscape of these projects is interesting, and some credits command buyer interest and a price premium while other types of credits are not yet readily available. In this newsletter, Bluesource breaks down the types of nature-based solutions in the market, why some have had more success at generating offsets to date and prospects for future credit generation by project type.

Grasslands Preservation
Offsets from protection grasslands—while highly coveted among buyers—typically require a premium carbon price to be financially viable, as grasslands yield only 0.5-2 metric tons of carbon stored per acre. The American Carbon Registry (ACR) and Climate Action Reserve (CAR) require the placement of a permanent conservation easement on the land in conjunction with the project, which necessitates a high carbon price signal to convince landowners to participate. The higher carbon price justifies the acceptance of a permanent easement, allowing landowners to forgo potential cropland revenue in favor of preservation and sequestration.

Wetlands Protection
Wetlands and mangrove protection or blue carbon projects are frequently requested (perhaps because our name is Bluesource!), but few registered projects exist in the current market. There is one Verified Carbon Standard methodology (VM0033) for the protection of tidal wetland and seagrasses and one for the creation of coastal wetlands (VM0024) but no projects have been developed to date, presumably because too few credits are generated to support project creation. In September 2020, a new blue carbon methodology was developed as a revision to an avoided deforestation protocol (VM0007) that allows crediting for the avoided conversion and restoration of tidal wetlands, mangroves, seagrasses and salt marshes. This new methodology may be the key to unlock financing for blue carbon offsets and develop these projects on a large scale.

Soil Carbon Sequestration
One VCS soil carbon sequestration protocol (VM0021) has existed since 2012, and the Gold Standard has had a soil carbon protocol since 2015, but only one project has been developed to date. To ameliorate this situation, three new soil sequestration protocols are in development now through the Gold Standard, VCS and CAR. These protocols will credit activities such as crop rotation, use of cover crops, low and no-till agriculture and other practices that result in additional carbon sequestered in the soil. These new protocols have the potential to generate a large number of offsets, creating a large contribution to climate change mitigation efforts. It will be interesting to see what buyers are willing to pay for these credits and, based on the demand created, how many projects can implement successfully.

Forestry
Due to the limitations in the supply of the previously discussed nature-based solutions, forestry has become the most widely-used NBS offset. Forestry offset projects are not a monolith; there is a variety of forestry offsets from different types of protocols. CAR’s Avoided Conversion and ACR’s Improved Forest Management Protocols seek to protect the trees that are standing while also crediting the carbon that is stored as these standing trees continue to grow during the life of the project. REDD (Reduced Emissions from Deforestation and Degradation) projects protect standing forests in developing countries and are most often developed under VCS or the Gold Standard protocols. Afforestation and reforestation protocols available under ACR, CAR and VCS credit projects that either grow trees where they have never grown before or regrow trees in areas that have experienced disturbances like logging or fire. Afforestation and reforestation projects have proven difficult to develop as carbon projects due to the high up-front capital costs and extended timeframe. (It can take 7-10+ years to store meaningful amounts of carbon in the trees, depending on the species planted.) Most carbon buyers need delivery of credits faster than a 7-10-year timeframe, so expensive tree plantings often need supplemental or different sources of funding altogether. The new Climate Forward program under CAR allows ex-ante (forecasted, rather than actual) crediting of these projects. It is unclear whether corporates will use the Forward Mitigation Units (not offsets) produced by the project since they could not claim an immediate offsetting of existing emissions but instead would purchase FMUs to cover future, anticipated emissions.

Afforestation and reforestation projects produce “removals credits” that correspond to the amount of carbon taken out of the atmosphere by the growth of the trees. Despite their benefits, it should be noted that afforestation and reforestation projects can lead to the development of a monoculture if only one species of tree is planted. Additionally, preference for only removals while shunning credits from projects that protect the standing carbon in forests neglects protection of the valuable biodiversity, habitat protection, soil protection, watershed protection, and nutrient cycling functions of standing forests.

To meet the ambitious climate change mitigation target of a 1.5°C warming scenario outlined in the 2018 Intergovernmental Panel on Climate Change report, the world needs to have net zero emissions by 2050. This week, the World Meteorological Organization released a statement that there is “at least a one in five chance of [global temperatures] temporarily exceeding 1.5°C by 2024.” The truth is that, to meet this net zero target by 2050, we will need all nature-based solutions: grasslands, wetlands and mangroves, soil sequestration, all types of forestry and new, yet-to-be-developed solutions.

WHAT’S NEW AT BLUE

BUENA VISTA URBAN FOREST SEES FIRST CREDITS SOLD
Originally slated for conversion to a subdivision with more than 150 homes, Allegheny Land Trust’s Buena Vista project is protected under the City Forest Credit standard–preserving the urban forest and providing local social, environmental and economic benefits. We’re incredibly proud to work alongside Allegheny Land Trust to bring this project to life. Cloverly purchased the first credits from this project, and we hope to see more companies show support for this important project type.

WILL OVERLY FEATURED IN BIOGAS AMERICAS SESSION ON RIN AND LCFS OUTLOOK
Bluesource’s Will Overly joined other experts to provide an update on the RIN and LCFS market. In a Biogas Americas session, the American Biogas Council assembled industry leaders to give insight and discuss how businesses can get involved.

NESTLE WATERS LEARN OVER LUNCH
On December 14, Bluesource’s Lizzie Aldrich will join Ready Refresh and Natural Capital Partners to speak to around 300 Nestle Waters North American employees. The virtual meeting will cover several topics, with Lizzie leading the discussion about how offsets are quantified, verified and issued and why they’re additional to business-as-usual situations. We love to see organizations get their employees involved in sustainability goals. If you’re interested in an educational lunch series, reach out to Lizzie Aldrich.

DEMYSTIFYING NATURE-BASED SOLUTIONS
As mentioned above, nature-based solutions are a crucial tool in the fight against climate change and one of our most popular project types. Yet, there are a lot of questions and myths surrounding this type of carbon storage. We posted a series on LinkedIn where our experts answered the five most common questions about forest carbon projects.

BLUESOURCE.COM GETS AN UPDATE
If you haven’t yet checked out Bluesource’s new website, take a tour! We would be glad to talk you through our offset, RNG, advisory and pneumatic valve controller replacement products and services. Email Lizzie Aldrich, Vice President of Business Development, at laldrich@bluesource.com.

HUDSON TECHNOLOGIES AND BLUESOURCE PARTNER TO REDUCE GREENHOUSE GASE EMISSIONS ASSOCIATED WITH HFC REFRIGERANTS
Hudson Technologies, Inc. (NASDAQ: HDSN), the nation’s largest refrigerant services provider and largest reclaimer of refrigerants, and Bluesource, the nation’s leading carbon offset developer and retailer, announced they are teaming up to scale Greenhouse Gas emission reductions associated with HFC refrigerants.

A COVID-19 SOLUTION
COVID-19 has created a world of uncertainty in most markets, carbon offsets included. Companies are faced with unknown emissions as some industries ramp down and others ramp up. If this sounds familiar, give us a call; we’re now offering flexible solutions to create more certainty and allow you to continue your sustainability journey, worry-free.

UPCOMING Webinars

JANUARY 2021 WEBINAR WITH C2ES

Bluesource and the Center for Climate and Energy Solutions are planning a webinar for January 2021. Register for our webinar list to be the first to receive an invitation.

Past Webinars

Renewable Natural Gas: A Compliance and Voluntary Solution to Lower Greenhouse Gases

SEPTEMBER 29, 2020

Our last webinar hosted with the Green-e Division of the Center for Resource Solutions and M-RETS was an excellent introduction and in-depth discussion of both voluntary and compliance RNG markets, the new certification standard for voluntary RNG and the system to track RNG. See the recording of the webinar here.

An Updated Look at COVID-19’s Impact on Environmental Markets

SEPTEMBER 1, 2020

Bluesource, Verra and Bank of America took an in-depth look at how the COVID-19 crisis has affected the demand for offsets from both unregulated corporate buyers and regulated compliance entities. See the recording.

FEATURED PROJECT

HC_Fuel for Ingenco Engines

Successful Revalidation of Henrico Landfill Gas Combustion Project

While Bluesource has spotlighted many of its forestry projects in past newsletters, it should be noted that we develop projects from over twenty different technology types. We offer customers cost-effective offsets from projects like landfill gas that can be blended with higher-cost forestry projects to create a balanced, blended portfolio of offsets. The Henrico Landfill Gas Combustion Project involves the capture of landfill gas from a small site that is not required under federal or state mandate to capture and destroy the gas. Without the carbon project, the gas would be vented to the atmosphere. Instead, the methane is put to beneficial use in 12 gensets with a total power capacity of 4 MW. This project reached the end of its first 10-year crediting period and successfully passed its rigorous second validation. It is now eligible for another 10 years of offset crediting. Bluesource has also completed or is completing revalidation of two other landfill projects and a wastewater project. Contact Lizzie Aldrich at laldrich@bluesource.com if you have an interest in landfill gas or other lower-cost industrial gas reductions.

WHERE TO MEET US

We are closely monitoring the ever-evolving COVID-19 situation and have postponed all travel plans until it is safe. We eagerly await the time when we can meet again in person. Until then, give us a shout via Zoom, Teams or whatever platform you prefer.

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