Carbon Offset Criteria:

1. Methodology
   Companies must scrutinize the methods employed in carbon offset projects. Whether it’s reforestation/Afforestation, Carbon removal, or methane capture, understanding the methodology is vital in determining the actual impact of the offset. Aligning your organization’s goal and scopes with high quality carbon offsets is critical. For instance, projects utilizing carbon capture and storage (CCS) technologies directly capture emissions from industrial processes and power plants, preventing them from entering the atmosphere. On the other hand, nature-based solutions such as afforestation and reforestation leverage the natural ability of ecosystems to sequester carbon. Understanding these methods helps companies gauge the actual impact of the offset and its contribution to emission reduction.
2. Technology vs Nature-Based Solutions (NBS)
   Evaluate the balance between technological solutions and nature-based solutions. Tech-based projects may include carbon capture technologies (avoided emissions), while nature-based projects involve activities like afforestation and reforestation (sequestration / removal). A strategic mix can provide a more comprehensive approach to carbon mitigation. Striking a balance between these two approaches ensures a comprehensive and sustainable carbon offset strategy.
3. Vintage
   The vintage of carbon offsets refers to the year in which the emission reductions occurred. Companies should consider the vintage to ensure that the offsets align with their current emission levels and goals. This consideration prevents the purchase of outdated offsets that may not contribute effectively to a company’s current sustainability targets. Other target frameworks allow for some flexibility with vintage and act as a good yardstick for procurement.
4. Countries/Location/Market Boundary
   Geographical considerations play a significant role in the effectiveness of carbon offset projects. Companies should assess whether the projects are in regions where emissions reductions are critical and whether they align with global climate goals. To avoid greenwashing, considering market boundaries ensures that the offsets adhere to international standards and contribute meaningfully to the global effort to combat climate change.
5. Price Range
   While cost is a factor, it should not be the sole consideration. Assess the price range of carbon offsets to ensure it aligns with your budget, but also consider the impact and quality of the projects associated with the offsets. the price of carbon offsets varies based on project type, location, and vintage. Cheaper offsets may not always guarantee the same level of emission reduction or removal. Companies should evaluate the cost-effectiveness of offsets by considering the quality and impact of the underlying projects. Some frameworks require third-party audit for verification of the projects.
6. Registry Preference
   Choosing carbon offsets registered with recognized carbon registries is crucial for transparency and credibility. Well-established registries, such as the Verified Carbon Standard (VCS) or the Gold Standard, ensure that emission reductions are accurately measured, reported, and verified. Companies should prioritize offsets that adhere to these standards to build trust in the offset’s environmental integrity. CORCs (Carbon Removal Credits) by Puro Earth registry is another wonderful example of high-quality credits.
7. Quantity
   Accurately assessing the quantity of carbon offsets required involves a detailed understanding of a company’s current emission levels (Scope 1 ,2 and 3 measurement) and reduction goals. This may require collaboration with experts in emissions accounting and carbon offsetting to calculate the precise number of offsets needed to achieve carbon neutrality.
8. Diversity of Projects
   Building a diverse portfolio of carbon offset projects minimizes risks associated with a single project type. Including Afforestation/reforestation, Human induced regeneration (HIR) and methane capture projects, among others, ensures resilience against potential fluctuations in the efficacy or viability of any one project. This diversification enhances the overall impact of a company’s carbon offset strategy.
9. Alignment with Standards (CCP/Oxford/CORSIA)
   Ensure that the chosen carbon offset projects align with reputable standards such as the Carbon Clean Solutions (CCP), Oxford Standard, or CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation). Compliance with these standards enhances the credibility and environmental integrity of the offset.

Purchasing carbon offsets is a strategic step toward mitigating the environmental impact of business operations. By delving into the technical intricacies of each criterion, companies can make informed and strategic decisions when purchasing carbon offsets. Technical expertise and a comprehensive understanding of these considerations will empower businesses to select offsets that not only align with their sustainability goals but also contribute meaningfully to the global fight against climate change.

Northmore Gordon has experience establishing a carbon offset criteria suitable for your business, Procurement of high-quality carbon credits and third-party verification.

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To achieve best practices, align the investment with sustainability goals and remove the risk of any claims of greenwashing, companies need to consider a number of criteria when purchasing.

These criteria include the technology generating the energy, the period (vintage) when it was generated, quantity required, location of generation, alignment with global programs or best practices, and risks associated with the registry (the authority issuing the certificates) or issuing country. The latest advance in RECs now includes timestamping the generation period to match load profiles.

RECs globally go by several different names:

• International RECs (IRECs)
• New Zealand (NZECs – Energy Certificates)
• Australia (LGCs – Large Generations Certificates, and in future Guarantee of Origin – GO)
• Tradable Instrument for Global Renewables (TIGR) a Registry for RECs

RECs Criteria:

1. Technology
   The technology employed in renewable energy projects significantly impacts the overall environmental benefits. Whether it’s solar, wind, hydro, or other clean energy sources, understanding the technology behind the generation process helps companies assess the long-term sustainability and effectiveness of the RECs they are purchasing. For example, Under RE100 Hydrogen is not recognized because hydrogen is not an energy resource. Rather, it is an energy carrier that is manufactured and has an underlying energy resource as an input. Hydrogen is therefore only renewable if the energy resource used in its manufacture is renewable, Hence it is critical to be aware of the technical criteria of the framework your business is committed to or adhering to GHG Protocol Corporate Standard is considered an excellent benchmark.
   
2. Vintage
   The vintage of RECs is a crucial factor, indicating the year in which the associated renewable energy was generated. Companies should consider aligning the vintage of RECs with their reporting year to ensure accurate representation of their commitment to renewable energy in specific timeframes. For instance, recent years have seen significant improvements in the efficiency of solar panels and wind turbines, leading to increased energy output. As technology advances, procuring recent vintages helps businesses make sure their procurement adheres to the latest regulatory changes and demonstrates commitment. For example, RE100 now only recognizes Starting January 1, 2024, RE100 members will need to secure renewable electricity or GOs specifically from power plants constructed or recommissioned within the last 15 years. However, there’s a provision: an exemption applies to 15% of a company’s overall electricity usage.
   
3. Quantity
   Assessing the quantity of RECs needed involves understanding a company’s energy consumption and sustainability goals. Careful calculations of your scopes will help determine the number of RECs required to offset a specific percentage of the company’s energy usage or achieve a certain level of renewable energy consumption. Tailoring to energy consumption patterns helps businesses match the right type of RECs. For example, a manufacturing facility with intensive production processes may have distinct energy needs compared to a technology company with extensive data centre operations running 24/7. In this case, the data centre may benefit from procuring new time-stamped RECs or ‘24/7 RECs’ as defined by RE100 Guidelines to match their constant usage.
   
4. Location
   The geographical location of renewable energy projects is significant in determining the impact of RECs. Supporting projects in regions with abundant renewable resources not only enhances the environmental impact but may also contribute to local economic development. Companies should consider aligning their RECs with regions that complement their sustainability objectives. Market boundaries are often defined by the framework you are adhering to or as a rule of thumb it is an advisable practice to procure RECs within the country where the emissions took place.
   
5. RE100 Alignment
   For companies committed to 100% renewable energy consumption (RE100), ensuring that purchased RECs align with this goal is paramount. RE100-aligned RECs contribute directly to a company’s renewable energy targets, demonstrating a clear commitment to transitioning away from conventional energy sources. Here RE100 Members have another option to procure green power directly from the supplier supported by retirement of EACs corresponding to it.
   
6. Registry Preference
   Selecting RECs from reputable registries adds credibility to a company’s commitment to renewable energy. Registries like the Green-e Energy Certification or the International REC Standard ensure that the purchased RECs meet stringent environmental and social standards, providing transparency and accountability in the renewable energy market. Some examples of registries are Evident(I-RECs) , TIGR , Certified energy New Zealand , Clean energy regulator , M-RETS etc.
   
7. Sovereign Risk
   Companies operating internationally should consider the sovereign risk associated with the countries where their chosen renewable energy projects are located. Assessing political stability, regulatory frameworks, and potential risks related to changes in government policies can mitigate potential challenges and uncertainties in the long-term viability of RECs. For example, Under recent changes in RE100 guidelines 8 countries have been excluded from the single-market boundary of Europe supporting the Guarantee of Origins RECs.
   
8. Major Operational Changes in the Past Year
   Companies should investigate whether there have been any significant operational changes in the renewable energy projects associated with the RECs over the past year. Changes in ownership, technology upgrades, or expansions can impact the overall effectiveness and reliability of the certificates. For example, Unbundled EACs cannot be used to decarbonize electricity from a non-renewable project. (e.g., a CHP system) under RE100 Framework when the project is owned by the company (therefore, the emissions from it are in scope 1), or when the project is on-site or when there is a direct line to the project (therefore, the electricity is not sourced from the grid).

As companies strive to integrate sustainability into their operations, the careful selection of Renewable Energy Certificates becomes imperative. This strategic approach not only enhances a company’s environmental credentials but also supports the global transition to a cleaner and more sustainable energy future. Although PPAs (Power Purchase Agreements) and VPPAs are feasible alternatives, most organizations prefer EACs due to their inherent flexibility and accessibility when navigating the intricate world of renewable energy procurement.

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Companies worldwide are implementing methods and pathways to support the net-zero movement. Alongside efforts to lower Scope 1 emissions through energy efficiency improvements, companies have the option of participating in voluntary certificate markets to claim that their energy is sourced from zero-carbon energy sources.  

The New Zealand Energy Certificate System (NZECS) is one such market. Initiated in 2019 by Certified Energy, the NZECS provides a voluntary market for the buying and selling of energy attribute certificates for New Zealand-based activity. The NZECS is aligned with international greenhouse gas (GHG) reporting schemas, such as the Greenhouse Gas Protocol. Therefore, it represents a rigorous standard for participating energy users to claim the use of renewable energy and lower their Scope 2 emissions.  

As a verified NZECS Participant, Northmore Gordon can source, procure, and redeem energy certificates for companies with New Zealand operations. This enables us to better support companies on their journey to net zero and to help them develop strategies that align with their corporate values and objectives.  

How the NZECS Works 

The NZECS marketplace is made up of verified Registrants and Participants. Registrants generate electricity from renewable energy (or approved low-carbon technology) systems and issue energy certificates to the NZECS registry. Participants register energy users that can purchase, trade, and redeem energy certificates.  

As a tradable commodity, each NZECS energy certificate (NZ-EC) includes the same core elements. The price is described in cost per MWh (in NZD), and the NZ-EC vintage shows the production year for the energy it represents. An NZ-EC also details the volume of MWh as well as the fuel source, technology details, and location of the production device.  

The NZECS is designed to promote responsible accounting of NZ-ECs. The registry has tracking measures in place to avoid double counting of certificates. In addition, NZ-ECs must be redeemed by a Participant in the same reporting year as the energy was generated. Any issued certificates that go unused by the end of the reporting cycle are automatically cancelled.  

How NZECS Participation Benefits Businesses 

For a facility that is connected to the energy grid, it is impossible to assert the source for its electricity (unless the facility owns and operates its own onsite renewable energy system, such as a rooftop PV solar system).  

For comparison, imagine a large bathtub that has many small drains and numerous taps. After water comes out of a tap, it combines with the water pouring out of the other taps to form one mixture. By the time the water exits an individual drain, it is impossible to determine from which tap that water originally came.  

The same goes for the electricity grid. Once the generated electricity enters the grid — whether it comes from solar, coal, or natural gas — it becomes indistinguishable from the other electricity in the mix. When electricity moves into a home, business, or industrial facility, the source of that electricity cannot be determined. 

Therefore, for a facility to make any claim over the source for its grid-tied energy, the facility must purchase an NZ-EC. In that way, the NZECS offers energy users the option to showcase support for clean energy.  

In addition, purchasing NZ-ECs helps companies reach their corporate sustainability goals and targets. These achievements can be highlighted in stakeholder engagement reports as well as in carbon disclosure assessments for various investor-driven reporting frameworks. Demonstrating follow-through on net-zero commitments and initiatives can help a company stand out from its peers. This competitive edge opens opportunities to strengthen economic performance and advance corporate objectives. 

Accelerating the transition away from carbon-based fuels is quickly becoming both a societal and business imperative. The severity and increased frequency of extreme weather events showcase the financial and societal toll from increasing atmospheric concentrations of greenhouse gases (GHGs) like CO2 and methane.  

The NZECS enables marketplace participants to support renewable energy generation and help spur additional development.  

Northmore Gordon Serves As An NZECS Participant  

As a registered NZECS Participant, Northmore Gordon can serve as a market intermediary for companies with New Zealand operations. This allows our team of energy experts to source, purchase, trade, and redeem NZ-ECs for our clients so that they can smoothly reach their net-zero targets.  

Issued NZECS certificates represent production devices that vary by location, fuel source, and technology type. Registrants also differ in their approach to managing profits earned from NZ-EC sales. This selection diversity opens an opportunity for energy users to establish a thoughtful and intentional certificate procurement strategy.  

Northmore Gordon strives to understand a company’s corporate identity to develop an energy certificate procurement strategy that aligns with the business’ values and objectives. This level of support can provide companies with the confidence to commit to more ambitious clean energy initiatives, like RE100.  

The business landscape is moving toward clean energy. Northmore Gordon assists companies with deep decarbonisation efforts, and our services now include helping companies take advantage of the emerging voluntary energy certificate market in New Zealand. 

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There is broad recognition, that in order to avoid the worst effects of climate change, global temperatures need to stay below 1.5°C.  In order to have a 50% chance of not exceeding 1.5°C, global emissions need to halve by 2030 and reach net zero by 2050.  

Whilst the science is clear, what isn’t clear is what it actually means to set a net-zero target. 

“The Net-Zero Standard gives companies a clear blueprint on how to bring their net-zero plans in line with the science, which is non-negotiable in this decisive decade for climate action. Because we are running out of time.” 

Johan Rockstrom, Director of the Potsdam Institute for Climate Impact Research (PIK) and Professor in Earth System Science at the University of Potsdam

The IPCC defines net-zero emissions as being when “anthropogenic emissions of greenhouse gases to the atmosphere are balanced by anthropogenic removals over a specified period”, however, this is net-zero emissions as defined from a global level, and there is a lack of consistency about what it means on an individual organisation level.  

It is seen that net-zero emissions targets being adopted by businesses don’t align on the timeframe for reaching net-zero, the inclusion of other greenhouse emissions than CO2e, and the extent of the emissions boundary. A critical piece of science-based target setting is halving emissions by 2030. 

But wait, why is it important to immediately and rapidly reduce emissions now or within next 10 years?  

We are given a carbon budget to limit temperature warming and the longer we wait to act, the wider the temperature range. The IPCC AR6 Report determined that we have a total carbon budget of 500 Gtonnes of CO2 to give the world a 50% chance of keeping temperatures below 1.5 degrees C – we need urgent action now to reduce emissions and must reach net-zero carbon emissions no later than 2050. 

On 28 October, the Science-Based Targets Initiative (SBTi) launched the world’s first-ever corporate framework for net-zero target setting. This standard provides guidance, criteria, and recommendations companies need to set science-based net-zero targets consistent with limiting global temperature rise to 1.5°C. 

Here are the four key elements of the Net Zero Standard Framework: 

• To set near-term science-based targets: 5-10 year emission reduction targets in line with 1.5°C pathways 
• To set long-term science-based targets: Target to reduce emissions to a residual level in line with 1.5°C scenarios by no later than 2050 
• Beyond value chain mitigation: In the transition to net-zero, companies should take action to mitigate emissions beyond their value chains. For example, purchasing high-quality, jurisdictional REDD+ credits or investing in direct air capture (DAC) and geologic storage 
• Neutralization of residual emissions: GHGs released into the atmosphere when the company has achieved their long-term SBT must be counterbalanced through the permanent removal and storage of carbon from the atmosphere 

This is exciting news as it’s the first time the SBTi has clarified the acceptable level of genuine decarbonisation and carbon offsets permitted within a science-based net-zero target. The SBTi is also committing to working closely to set standards for monitoring, reporting and verification, with more expected policies around what and how to report. 

The difficulty for many companies is the strategic process behind emissions reduction, both in planning and implementation. At Northmore Gordon, we will get you started on the right foot and can provide ongoing support to make sure that you reach your target goals. We’re all in this together, you can feel confident that support is available to assist you on your Net-Zero journey. 

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It is clear that there will be a competitive advantage for those who are prepared for the transition to the low carbon economy.

Not sure where to start? We can facilitate a complimentary carbon health check for your management team to understand where your business needs some extra focus. Give us a call and we can arrange a time for this to be done either virtually or in person. Otherwise, try our online carbon health check!

The setting of targets is just one element of a complete carbon strategy as can be seen in the infographic below. 

If you aren’t sure where to start on your carbon strategy journey, or you have begun in a piecemeal fashion, we can run a complimentary carbon strategy benchmarking session with your management team to highlight areas where there are gaps, and develop a measured plan to filling them.

Contact our carbon team today carbon@northmoregordon.com

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Net Zero is a commitment to decrease or offset greenhouse gas emissions to zero by a certain year. Most governments around the world have set targets to be net-zero by 2050, if not at a federal level, then at a local or state level.

What does this look like?

For a government net-zero means zero direct greenhouse gas emissions for the territory. Some of the policy measures introduced to help achieve these targets are already adding to business costs through increased environmental charges in electricity bills, and this has impacts across your whole supply chain. Carbon border tariffs are starting in the EU in 2023 and the UK is proposing they be introduced globally.

What can you do?

If your business wants to minimise the increasing impacts that carbon costs will have then you should look at implementing a carbon strategy to manage your risk. 

If you haven’t already started, then some simple steps include:

• Calculate your full scope 1, 2 and 3 carbon footprint
• Set a carbon reduction and renewable energy target
• Introduce a shadow price of carbon into all investment decisions.

Why should I act?

There is a significant competitive advantage to be gained in preparing your organisation for the transition to the low carbon economy.

• Future-proofing against increasing carbon price risk
• Driving innovation across the value chain
• Saving money through efficiency gains
• Improving investor confidence.

How do I start?

Schedule a complimentary carbon strategy review session with us today. We can start you off on the right pathway for a net-zero future. 

For more information about getting a complimentary review or to speak with us about your net-zero future, contact us at Northmore Gordon or get in touch via email carbon@northmoregordon.com

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