Project comment response – March 24, 2008

Project comment response – March 24, 2008

All TerraPass project undergo a public comment period when they are being evaluated for inclusion in our portfolio, so that the general public can provide feedback and ask questions. Below is TerraPass’ response to the open comment period for the following projects:

Project comments

Project and project-type comments received are summarized in the following tables. Substantive comments are outlined briefly. (Many positive comments did not include elaboration.)

Project Positive Negative Details
Scenic View Dairy I 3 0 “Reducing pollution in a community and creating energy at the same time is exactly what I want to see my money funding”
Greater Lebanon Refuse Authority 2 1 Would prefer landfill gas be converted to a fuel for use in vehicles (e.g. garbage trucks)
Leaning Juniper I Wind 3 1 “I appreciate that Leaning Juniper has a role in paving the way for other similar investments in this particular location… I would like to see more effort to push the tipping point in other parts of the US which need more creative incentives.”
Foote Creek I Wind 3 0 “This is a great way to bring green power into coal-dependent communities and begin weaning them from fossil fuels.”
Rock River Wind 1 1 Would prefer not to support projects connected to major oil companies. “Don’t they have enough money without us?” (Shell Wind Energy owns this project)
General 0 1 “The funds should go to projects that are going to be built (in the future), after they are built there is really no benefit.”
Project type Sentiment Details
Agricultural methane Positive “I completely support … anaerobic digestion/methane harvesting as projects for carbon offsetting and applaud your efforts”
Agricultural methane Query Questioned whether greenhouse gas emissions from the entire project (including for example construction emissions) are required to be offset prior to generating any credits
Agricultural methane Negative “I would rather not see my TerraPass money used to prop up mega-dairies which in my opinion are still not environmentally sustainable.”
Landfill gas capture Negative (3) Would prefer money to be spent on diverting organics from landfills and educating the public about recycling and composting, or generally reducing emissions at landfills. Skeptical about projects which only flare methane without generating energy.
Landfill gas capture Cautionary Concern that landfill methane capture projects could provide incentives to increase organics in landfills to boost the methane
Utility-scale wind Positive (2) Two people made general comments in support of all wind projects
Utility-scale wind Negative “Wind farms will happen anyway because the profit margin is good.”
Utility-scale wind Cautionary Need to be certain wind Renewable Energy Credits aren’t double-counted (such as sold to TerraPass and also used for a Renewable Portfolio Standard)

TerraPass responses

Agricultural methane (“farm power”) projects

Support of large farms: One person commented that large dairies or “mega-dairies” present a variety of other environmental concerns in addition to methane production and may not be environmentally sustainable. We’d first like to note that at this time all TerraPass agricultural methane projects take place on farms with fewer than 5,000 head of cattle, many of which have been family farmed for several generations (contrast with some commercial dairies in California with 15 or 20 thousand cows). It’s also important to note that anaerobic digesters aren’t just about capturing methane; they are manure management systems that remove many potentially harmful substances from manure and allow it to be effectively reused around farms (e.g. applied to fields as fertilizer or re-used as peat or bedding) thereby reducing the potential impacts of those wastes on the environment. Finally, we recognize that large farms present many of the environmental complexities of industry. It is our belief that anaerobic digesters are an important component of managing the environmental impact of farming and while we recognize that not everyone is an advocate of large-scale farming we applaud the efforts of these operations to help mitigate the effects of their operations. It is our hope that these agricultural methane projects will help to encourage more farms to go above and beyond when managing their waste.

Full emissions accounting: One person asked about emissions which occur as a result of project activities, specifically emissions related to construction. This person wanted to know if these emissions were subtracted out of the total emissions reductions added to our portfolio. The standards we use for agricultural methane projects do not cover construction emissions. It is our observation that relative to the total emissions of a project construction emissions are so small as to become immaterial in calculations. For example, the CCX guidelines do not account for any emissions which contribute less than 5% of the baseline emissions. We calculated the emissions from cement used in the Scenic View I project and they result in 1.37 tons of CO2e per year or 0.01% of total annual emissions reductions. Even following the guideline of conservativeness required under the standards it is our belief that excluding construction emissions from calculations is justified and that this is confirmed by the fact that no standard for agricultural methane takes them into account.

Landfill gas projects

Methane and organics diversion: Three people made comments regarding the potential for conflicting incentives regarding landfill gas collection and its subsequent use to generate energy. Methane forms in landfills because the organic materials deposited do not have sufficient oxygen available to decompose into carbon dioxide. Since landfill gas-to-energy systems provide revenue to landfill authorities or energy partners, some people are concerned that landfills with such a system in place will de-emphasize waste minimization, composting, recycling, and other organics-diversion programs; or, that such programs will never be initiated at these landfills.

We very much agree that minimizing the quantity of waste sent to landfills is the preferred practice almost without exception. Landfill gas-to-energy plants and the communications and promotion that accompany them should not imply that it’s better to throw your trash into a landfill because energy will be generated from it, than to minimize waste, separate recyclables, and compost locally if possible, or at the landfill if not. This is valuable comment and we will seek to make our recommendation clear to project owners. Some of our projects, such as Greater Lebanon Refuse Authority, have an educational program component and we will work with our project partners to ensure the excitement over renewable energy doesn’t overshadow the more important minimization message.

At the same time, landfills are the largest source of methane in the US, and one of the U.S.’ top 5 sources of greenhouse gas emissions overall. Also, landfills produce methane for 20 years or more after the source material is deposited. So while TerraPass does not favor methane capture and energy generation at the expense of organics recycling, we do favor capturing methane wherever it can be captured, including landfills.

Actions we’ll take:

  1. We’ll work with the Greater Lebanon Refuse Authority to request any educational programs include materials on waste minimization and composting.
  2. When we consider new landfill gas to energy projects, we will look for evidence that the landfill encourages organics diversion and composting, and is not seeking to increase organic flow into the landfill for the purpose of generating energy. (For example, see the Greater Lebanon Refuse Authority’s composting web page.)

Destroying methane using flares: Two people commented that using flares to destroy methane is a wasteful practice, because its heat value could be put to beneficial use (such as electricity generation). This sentiment makes common sense, however, there are many situations where using a combustion flare is the only practical means to destroy the methane, and in these cases flaring is definitely better than doing nothing. Here are some examples of these situations:

  1. Every landfill gas-to-energy project and every dairy digester project includes a flare as a backup to the generator sets. When generators go down for maintenance, planned or not, the methane continues to flow. Also, a landfill or a digester will rarely produce precisely enough methane to maximize engine output with nothing left over. Routing excess methane to a flare for destruction is the best thing to do in such cases.
  2. Closed (or soon to be closed) landfills generally are not attractive electricity generation investments because the quantity of methane available decreases every year. If the up-front investment in generators doesn’t provide an investment return — even with renewable energy credits and the sale of electricity — then getting the up-front funding needed to install a system and power interconnect may not be possible. Carbon offset funds do help here, but won’t always make the investment sufficiently attractive to capital providers. If funding for generators can’t be justified, then flares, which cost considerably less, are the fall-back option.
  3. Sometimes flares are used as an interim strategy. For example, municipal authorities sometimes seek to route landfill gas to local industrial facilities with boilers or other heat or steam requirements. These discussions can be protracted, and flaring methane in the meantime is a sensible action.

In all, we agree with the comments that power generation (or other beneficial uses such as direct injection into a gas pipeline) is preferable to flaring. However, we also understand that flaring is sometimes needed alongside power projects, and sometimes is the only viable option for methane destruction. All of the projects under review included energy generation; as we move forward, though, we will continue to consider gas flaring projects on their merits.

Alternative uses of methane (such as vehicle fuels): One person suggested that converting landfill methane to a vehicle fuel would be preferable to using it to generate electricity. Technology to facilitate this type of use — converting landfill gas to Compressed Natural Gas or Liquefied Natural Gas — is available, but not widely used. From a quick scan of relevant literature on this topic, as well as a conversation with an LNG vendor, we’ve learned that the economics of this option can be quite positive if the landfill authority also owns vehicles such as garbage trucks, and if the authority needs to replace at least some of its trucks in the near-term so they can purchase trucks with alternative-fueled engines as a run-rate cost rather than as a specialized investment. The Los Angeles County Sanitation District is one organization which has implemented such a program.

We are very supportive of such efforts and will keep an active eye out for similar projects. However, we do not think it’s appropriate to limit our landfill gas project support to those using the gas as vehicle fuel.

Utility-scale wind projects

Additionality of wind projects: One person commented that TerraPass funding must be very small relative to the overall funding of large wind farms, and questioned whether that funding makes any difference to the project’s existence. Indeed, our contributions to wind projects are smaller, as a proportion of overall funding requirements, than our contributions to other project types. However, we believe the case is abundantly clear that such funding does make a difference to these projects because the economic market around the environmental attributes of wind farms is mature (it’s been around for about 10 years), and wind developers depend on that funding to build the case for project investment at the outset, and then to realize that return once the project is built. By participating in this market, we keep the wheel spinning — we demonstrate that to developers that voluntary markets for wind power are real and longstanding, and they can depend on the revenue (so they should go build more wind)! Notwithstanding the above, for 2008 vintages and beyond we are seeking ways to have a qualified third party ensure that each of our wind projects has appropriately applied an additionality assessment consistent with the Kyoto carbon markets.

Location of wind projects: One person commented that we should preferentially favor wind projects in coal-heavy parts of the country so that they make as much of an impact as possible, both environmentally and philosophically. We agree with this comment. First, we believe that the voluntary market may help the wind market transition from a flat pricing environment (i.e. fixed price per megawatt-hour) to an environment that reflects the location-specific benefits of wind produced in more carbon-intensive areas. While we do like to engage with projects all over the nation, we generally prefer wind projects in coal-heavy areas because in these areas the wind power displaces dirtier power than it does in areas served primarily by hydro or natural gas power. Second, we have seen several examples of rural American communities re-energized with wind power. We believe that deploying clean technology with local benefits can help break the political logjam that is stalling much needed climate change legislation.

Wind project owned by an oil company subsidiary: This comment refers to Rock River, the wind farm initially developed by an independent energy developer, Sea West, Inc, and then sold to a subsidiary of Shell Oil. These comments are well-intentioned, and in an ideal world, we would seek to encourage only clean energy developers. However, given the scope of both the emissions reductions required and the scope of projects developed and owned by energy companies, limiting TerraPass to projects to only pure-play clean energy developers could place a somewhat arbitrary and unhelpful screen on future projects. In short, we believe that the carrot of carbon revenues should extend to all project developers.

TerraPass business practices

Support for projects under construction and already operating: One person noted that most of our projects appear to be already operating at the time TerraPass provides support, and asserted that therefore the projects by definition would have happened with or without our support. Another commenter noted that we appear to be a late entrant in some projects. These comments are correct in that many of our projects are already underway at the time we engage with them; however, we disagree with the conclusion about the project’s success without our funding.

An analogy may be helpful to understand the timing of our interaction with these projects. If you decide to build an apartment building, it’s a reasonable assumption that you plan for people to come along and rent the apartments. You’re counting on that to pay back your investment. Even so, you are not likely to hang up a “for rent” sign until the building is at least under construction, or maybe even once it’s completed. That’s similar to our relationship with certain projects. We make very sure that the project developer anticipated and required carbon funding to make the investment go before we agree to purchase any carbon credits (indeed we have rejected some very good projects where the proponent implemented it because they thought it was the right thing to do and didn’t expect any carbon credit funding); and we provide actual money only when the project’s emission reductions have been verified by a third-party. This means, by definition, that the reductions will have already happened when we pay for them. That’s the best way to make sure that the offsets our customers pay for are real.

Thanks to our customers, we’ve gained name recognition and access to more funding than we had in our earliest incarnation, and as such we now have the ability to seek out projects with unrealized potential. We’re approaching people well in advance and saying, in effect, “Would you like to build an apartment building here? Maybe we can help.” Our projects won’t always work that way, but success breeds success and as the carbon markets as a sector and our own contributions as a company grow in prominence, we hope to engage early more often than not.

Permitting practices, impact analysis, and cost-benefits analysis: A commenter asked about permitting practices, environmental impacts analysis and the potential for expansion at our projects. All TerraPass projects from 2008 forward will have qualitative data about associated environmental co-benefits and project expansion possibilities in the third-party-validated project design documents. Permitting for all projects must follow applicable regulations. If there are environmental permits filed, we examine those as a part of project due diligence. In some cases these permits and site analyses are quite complex, such an extensive federal Environmental Impact Statement at a wind farm. In other cases they are quite straightforward, such as a small digester project. In all cases our review of the project history or plans is guided by the principle that a carbon-offset project should do no harm. However, the comment is well-taken in that we could improve our documentation of the negative environmental impacts of our projects. Additionally we will seek to incorporate into them into our comments on the carbon standards we follow and carbon market industry groups we belong to.

Objection to corporate carbon trading: One commenter stated that carbon trading and carbon credits were complex, bureaucratic tools that allowed polluters to continue to pollute. TerraPass supports projects which are undertaken explicitly (if not exclusively) for the purpose of reducing greenhouse gas emissions. Carbon credits are an important funding mechanism for these projects. And, once we buy the carbon credits associated with consumer purchases, we retire them so they are no longer traded.

Creativity in our selection of projects: A few people commented that the types of projects we work with are not very creative, and suggested many other kinds of projects. We very much appreciate these kinds of suggestions! Our project types will always be limited by the standards we use — there must be an approved means of calculating, monitoring, and verifying the quantity carbon emission reduction created by the project. We are now working with the Voluntary Carbon Standard, which uses the United Nations’ calculation methods. There are many UN-approved methods available, so we have more flexibility now than in the past.

Also, it takes a fair amount of domain-specific expertise to work effectively with project developers. As we grow, we look forward to developing this expertise and expanding the types of projects we engage in.

Comment period participation

During the 30-day comment period, we promoted the project reports several times on our blog. Although it is difficult to estimate the exact readership of our blog, the articles are broadcast via an opt-in email newsletter that goes out to about 40,000 people. The posts in question were referenced by other bloggers, indicating that the comment period received attention within the carbon offset community.

TerraPass received 15 comments directly. We took note of two additional sets of comments provided on the Carbon Neutral Digest blog, which we included in our summary.

We are thankful to all the people who took the time to give us their comments. Some people wrote extensive comments with many questions and suggestions, and we hope that between this summarized response format and the individual emails we’ve sent, everyone receives responses that reflect the same level of care as the comments themselves.

Summary

  • 17 people’s comments were received; many made comments on several projects and/or issues.
  • 8 people are TerraPass customers.
  • An additional 4 people subscribe to the TerraPass weekly email newsletter.
  • 2 people (comments on the Carbon Neutral Digest site) are not identified by name.
  • 6 people made comments specific to the individual projects open for comment.
  • 6 people made comments which apply to the represented “project types” — landfill gas, agricultural methane, and utility-scale wind farms — and would apply equally to any project in those categories.
  • 4 people wrote about specific projects which they are involved with, and asked for TerraPass support of these projects.
  • 5 people had general comments or questions about TerraPass business practices.