Challenges in GHG Accounting and Verification Pierre Boileau Manager, Climate Change Canadian Standards Association October 22, 2007

Climate Change: A Shift in Thinking Climate Change – Driving Public PolicyClimate Change – Driving Public Policy Need for…Need for… -Carbon Footprint Measurement -Improved Carbon Management -Tools to Measure & Report Progress To support emerging market mechanismsTo support emerging market mechanisms

The carbon market is growing… World Bank says carbon market has grown 3-fold between 2005 and 2006, to a value of $US30 billion;World Bank says carbon market has grown 3-fold between 2005 and 2006, to a value of $US30 billion; Ecosystem Marketplace and New Carbon Finance say that:Ecosystem Marketplace and New Carbon Finance say that: -the Over The Counter (OTC) market grew 200% between 2005 and 2006; -Combined with the Chicago Climate Exchange, the total voluntary market is worth more than $US90 million North America appears to be where most of the voluntary action is.North America appears to be where most of the voluntary action is.

…but there are concerns about the quality of the tonnes. The Economist, Financial Times and Business Week have published articles critical of offsetting practice:The Economist, Financial Times and Business Week have published articles critical of offsetting practice: -Econ, Aug. 2006, ‘Upset about offsets’; -FT, April 2006 ‘Beware the carbon offsetting cowboys’; -BW, March 2007 ‘Another inconvenient truth’ UK consulted on a voluntary code for carbon offsetting. Responses indicated wide range of diverging views;UK consulted on a voluntary code for carbon offsetting. Responses indicated wide range of diverging views; Guides from The Climate Group, Clean Air/Cool Planet attempt to demystify the subject matterGuides from The Climate Group, Clean Air/Cool Planet attempt to demystify the subject matter

The challenges are numerous… Lack of understanding and education among market participants;Lack of understanding and education among market participants; Many ‘anyways’ tonnes in the voluntary market;Many ‘anyways’ tonnes in the voluntary market; Development of quantification methodologies is still evolving;Development of quantification methodologies is still evolving; Some validators and verifiers relaxing the rules;Some validators and verifiers relaxing the rules; Difficulty figuring out what standards to use;Difficulty figuring out what standards to use; Lack of transparency in carbon neutral claims.Lack of transparency in carbon neutral claims.

… But CSA is helping… “GHG Accounting & Management” -Secretariat for ISO Working Group on GHG quantification & verification -GHG Inventory and Reporting Registries -GHG Measurement Tools & Training

…With key GHG tracking tools… Document & Track Carbon Footprint -CSA’s GHG CleanStart TM Registry – also based on ISO Available early Improving Carbon Footprints: Invest in New TechnologiesInvest in New Technologies Improve Internal Operations & PoliciesImprove Internal Operations & Policies Invest in &/or Produce Green PowerInvest in &/or Produce Green Power -Guidance on accessing quality offsets RegisteredRegistered Third-party verifiedThird-party verified RetiredRetired

…And tools for the carbon markets. CSA CleanProjects TM Registry -Showcases Carbon Reduction Projects -Based on ISO and -3 Standards -Simple, inexpensive, scaled to meet market demand

Others are also helping… Emerging certification standards:Emerging certification standards: -Voluntary Gold Standard -Voluntary Carbon Standard -Green-e standards -Carbon Neutral Company Accreditation and certification of personnel:Accreditation and certification of personnel: -ISO accreditation for validation and verification bodies -ISO schemes for personnel certification New standardsNew standards -ISO new work items on carbon neutrality standards and ISO on GHG validator/verifier certification

…because there is a demand from the voluntary carbon market. Weekly announcements on carbon neutrality:Weekly announcements on carbon neutrality: -Dell, HP, -Dole, Wal-mart -GE and AES Public is taking action:Public is taking action: -Terrapass, Clean Air Pass -Major airlines allow offsetting of emissions Events are going carbon neutralEvents are going carbon neutral -Live Earth -Major conferences

The future looks bright… ISO and GHG Protocol have created the basis for credible GHG quantification;ISO and GHG Protocol have created the basis for credible GHG quantification; Validators and verifiers can soon become accredited and/or certified;Validators and verifiers can soon become accredited and/or certified; Third party verification and registration are becoming the norm;Third party verification and registration are becoming the norm; Various certification standards for GHG tonnes or carbon neutral products are emergingVarious certification standards for GHG tonnes or carbon neutral products are emerging -Creating market differentiation; -Creating voluntary carbon market competition

…for those who want voluntary action. Voluntary markets can complement regulatory markets;Voluntary markets can complement regulatory markets; -Provide for participation of SME’s and individuals; -Can move economic actors to make decisions out of economic or social self interest; Voluntary markets are built on clear market signalsVoluntary markets are built on clear market signals -Balance of supply and demand; -Price fluctuates with grade of offset; Voluntary markets are built on voluntary standards and practicesVoluntary markets are built on voluntary standards and practices -Do not require intervention of regulators; -With transparency, buyers make decisions with the proper information; -Market forces will drive the need for quality tonnes

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