ALLCOT and indigenous communities: Allies in forestry projects

 


Written by Andrés Melandro, Sustainability Consultant.


Indigenous communities are key stakeholders in global climate change mitigation and their territories’ local sustainability. At the regional level, according to the State of the Amazon report published by WWF in 2017, territories governed indigenous communities correspond to 33% of the Amazon and only 8% of deforested lands. This fact highlights the relevance of their role in the fight against deforestation. Over the past decade, technology has empowered indigenous people to monitor their territories. For example, GPS devices are used by indigenous groups to report environmental crimes. This has made companies operating in the Amazon more accountable.

In Colombia, indigenous reservations have historically been located at the crossroads of drug trafficking routes and rebel groups fiefdoms. Having been hit by the armed conflict between guerrillas and the Colombian army, their development rates are now below the national average.

The Inga and Kamsá communities, native of Alto Putumayo and Caquetá provinces respectively (both in southern Colombia) play a key role in this new stage of their regions, in which the progressive restoration of public order can generate an intensification of deforestation. Putumayo and Caquetá are located in a transition zone between the Amazon and the Andean region, Colombia’s economic and administrative center, and they display some of the highest deforestation rates in the country. In addition, the signature of the peace agreement in 2016 has meant the arrival of settlers and large economic groups, which is reflected in land-use changes towards agriculture, whether of large estates or subsistence. The agricultural frontier and livestock frontiers exert pressure on forests. It is worth remembering that the forestry sector is the largest emitter of greenhouse gases (GHG) in Colombia, responsible for 36% of emissions, according to the National GHG Inventory. Hence this sector is key to achieve the goals of the nationally determined contribution (NDC) of the country.

ALLCOT coordinates forestry projects with the objective of preserving forests so these will continue playing their role as carbon sinks. Since the founding of ALLCOT 10 years ago, the social consultation process has been rigorous and indigenous communities have been allies of several forestry projects. The social consultation carried out by ALLCOT is always governed by the principle of prior, free and informed consent. Through the funds derived from forestry projects that ALLCOT develops, it is possible to improve the community’s wellbeing, measured by indicators linked to the UN’s Sustainable Development Goals (SDG) such as 24-hour access to energy, schooling rate or infant mortality rate. The ultimate goal is to improve the social and economic development of the local populations of the area in parallel with forest protection. This way, we contribute to both the 2030 Agenda and the Paris Agreement. This is ALLCOT’s mission and the ancestral knowledge that indigenous people have about forests is a key tool to achieve it.

Carbon offsets should have the same value as PPAs for project finance


Written by Alexis Leroy, CEO ALLCOT


Carbon offsets are just as valid and valuable as renewable power

Anyone involved in developing clean energy projects around the world will be familiar with the demands of securing project finance. Lenders typically want to see a solid revenue stream before they consider financing renewable energy or low-carbon energy projects.

Normally, a Power Purchase Agreement (PPA) fits this requirement: a long-term offtake agreement with a high-quality buyer offers confidence that the project will generate steady cash flow to service its debt.

Occasionally a PPA by itself may not be regarded as a sufficient guarantee of performance, or the off taker’s credit quality may not be sufficiently strong. In such instances additional security can be added in the form of liquid guarantees or performance bonds.

But there is another revenue stream that can play its part: carbon offsets.

Carbon offsets represent the saving in emissions of carbon dioxide and other greenhouse gases (GHGs); they’re measured against a baseline in which the project would use legacy technologies. In this way a wind farm, a solar park or a waste-to-energy plant represents savings in GHG emissions compared to coal or even gas-fired power.

The world is waiting for a new global offsets market to replace the Clean Development Mechanism (CDM) that will end when the Kyoto Protocol is superseded by the Paris Agreement in 2021. But in the meantime, there are plenty of opportunities to develop and sell carbon offsets for some existing markets. The revenues generated should help secure project finance.

South Africa and Colombia are leading the way in creating high-confidence markets for carbon offsets, by allowing them to be used in part payment of their respective national carbon taxes and thereby granting them a monetized value – at least on paper.

Besides, the International Civil Aviation Organisation is preparing the launch a global offsetting market for airlines in January 2021. Demand for offsets from airlines participating in CORSIA is projected to reach as much as 174 million tonnes of CO2 equivalent (tCO2e) tonnes in 2025 and could be nearly 8 billion tCO2e by 2040.

And beyond these formally established, government-backed markets is a wide variety of voluntary carbon offsetting programs operated by large industrial, commercial and retail companies around the world. According to Forest Trends, nearly 49 million offsets were retired by governments, companies, and individuals in 2018.

There are plenty of challenges facing the use of carbon offsets as securities for project finance. Firstly, the revenue stream from offsets would likely form only a fraction of the overall project costs, and for some, it may simply not be worth the effort to incorporate offsets into a finance agreement.

Also, revenue streams from offset sales tend not to be regular, but “lumpy”. Offset projects must submit independent verification and reporting of the volume of emissions reduced before they can apply for the issuance of those credits, and the costs associated with that process usually mean they can only afford annual or even biennial issuance. Such periodic issuance may not be steady or regular enough to satisfy a lender.

Yet at the same time, using carbon revenue to secure financing may yield two significant benefits: the quality and the reliability of the purchaser. In the case of countries with carbon taxes that can be part-paid in offsets, the guarantor of demand is the government, and industrial emitters must abide by the law.

Similarly, in the case of CORSIA, the end-buyers will be international airlines seeking to comply with government-established, UN-approved targets.

Why is the end-use of the offset important? Because lenders are concerned not only with the scale of revenue streams from a project but also the reliability and creditworthiness of the buyers. Higher-quality off-takers will mean more security for the seller and hence for the lender.

Secondly, it’s important to understand that there is a direct link between the security of the supply of renewable electricity and the security of the supply of carbon offsets. It should be the case that any lender that relies on a PPA as security against project finance, should also be able to rely on the flow of offsets through an emissions reduction purchase agreement (ERPA).

Lenders will consider the reliability of the power project – how much power it is expected to deliver across the length of any contract – when estimating the value of the PPA. The PPA, therefore, is a measure of the potential supply of power, and it can, therefore, be a measure of the supply of carbon offsets.

In the case of many reliable renewable energy technologies – waste gas, solar and even wind power – the actual generation of power and the generation of offsets are very closely linked.

A project developer could even use future delivery of offsets as a source of seed capital for a project. This was a common practice under the UN Clean Development Mechanism. By arranging an ERPA with a buyer who is seeking offsets for some compliance or even voluntary purpose, a project developer can then use this ERPA to raise seed capital. To be sure, the volume of offsets may be subject to clipping, but the principle is sound.

So why don’t lenders take ERPAs into account? If we agree that the fight against climate change is paramount, then how can we not support carbon offsets as a valid source of capital, and indeed may be more valuable than megawatt-hours of renewable power generation?

IEA-IETA-EPRI Conference on Greenhouse Gas Emission Trade


Written by Casania Fometescu, ALLCOT Group Business Development


Earlier this month, Casiana Fometescu, international CO2 consultant and ALLCOT Group business development director on Eastern Europe attended the 19th Annual Workshop on Greenhouse Gas Emissions Trading, jointly organized by The International Energy Agency (IEA), the International Emissions Trading Association (IETA) and the Electric Power Research Institute (EPRI) in Paris.

The Conference shows the growing importance of the CO2 market worldwide. The number of attendees at the Conference doubled from last year’s, especially in terms of government representatives (e.g. United Kingdom, Switzerland, European Commission, China, New Zealand, Canada, etc.). This feeling was embodied by Mark Lewis from BNP who told the audience he feels “in the glory days of the carbon action”.

The international carbon market has become such an extended topic since national and regional governments, but also companies have developed policies to reduce emissions, and each of them has different technical details in implementation. The presentations held explained many sub-national trading schemes or carbon initiatives (Ontario, Quebec, California), national ones (New Zealand, China, Taiwan, Korea, Japan, Costa Rica, Columbia), and supra-national carbon markets (EU ETS). 

The following talking points are worth highlighting:

  1. The representative of the World Bank, Celine Ramstein, recognized the importance of pricing carbon and mentioned that there are 46 national and 30 subnational jurisdictions that have already implemented either carbon trading or carbon tax schemes. Yet, all the emissions trading schemes (ETS) in the world (including China) comprise just 20% from the worldwide greenhouse gas (GHG). Therefore, there is still plenty of room to broaden the scope of these mechanisms. 
  2. According to the World Bank report on the state of the carbon market, there is a diversity of carbon prices in different countries, ranging from €127/tCO2 in Sweden and €96/tCO2 in Switzerland, to €25/tCO2 in the EU ETS to less than €10/tCO2 in most countries covered by carbon pricing. Only 5% of the global GHG market has carbon prices between €40-80/tCO2.
  3. Worldwide carbon revenues by governments are also on the rise from USD 22 billion in 2016 to 33 billion USD in 2017, and 45 billion USD in 2018, according to the WB.
  4. Voluntary carbon trading volumes have been rising in recent years and companies are increasingly looking to set CO2 targets in line with the Paris Agreements, Sustainable Development Goals and EU targets for 2030 and 2050.
  5. The EU target of carbon neutrality for 2050 can be achieved only if governments reinforce their National Determined Contributions (NDCs), and set higher targets to achieve through carbon offsetting and investment in green technologies, renewable energy, and carbon storage measures.
  6. Germany would like to introduce a national sectoral trading scheme in addition to the mandatory EU ETS, which will comprise more activity sectors compared to the EU ETS. China has been moving forward on the implementation of the national ETS finalizing Phase I with the plan to realize Phase 2 “simulation exercises” before the end of this year.
  7. Article 6 negotiations of the Paris Agreement can represent an opportunity for private entities to contribute to global mitigation efforts through their participation in international market mechanisms, but also through voluntary cooperation in the implementation of the each country’s NDC. Yet, all pilot initiatives under Article 6 are government initiatives and not private ones.
  8. IETA’s 2019 GHG Market Sentiment Survey shows that 85% of respondents expect corporate voluntary action to increase over the next 5-10 years with businesses much more involved in reducing GHGs emissions and achieving their voluntary targets.

The integration of sustainability in Tourism Sector


Written by Jessica Dominguez, Sustainability Consultant


Today might sound presumptuous and little trivial, that in the last 50 years globally have discovered practically in parallel – the growing and exponential importance – both access to information through the Internet and social networks such as the importance of protecting our planet through our daily sustainability actions for our future generations.

Twenty years ago these two themes evolved asymptotically.

Today access to information and planet protection are common themes of current humanity. We associate with a prosperous and sustainable community that can be informed by these technologies, but also if and only if a prosperous and sustainable community is one that coexists balancing the natural resources of their environment.

While following the Paris Agreement of 2015 was visibly, and precisely through these media, the need to involve all societies for the care of the planet through sustainable actions. It was in these spaces where prevailed the need for the participation of the productive sectors, since in our current environment enjoy agglomerating and influence large production and various sectors groups, through the development of a wide range of products and services that current humanity operates and means of survival.

This is where ALLCOT zooms in this reflection that can be caused to individuals and various sectors, and we will do on these items. This zoom is to take as an example the Tourism Sector and how sustainability has been integrated into their daily activities as part of their evolutionary chain.

Undoubtedly travelers and explorers of 100 years ago are very different from travelers of 50 years ago and even admire the differences they had with travelers of our present years. The first difference may lie in the number, gender and age, very few people had the opportunity and resources to move out of his home town, and even it was only man allowed them to adulthood.

A second difference could be established in the distance that could reach on their trips and the reason that led to it, such as the case of businessmen who needed to cross oceans to get textiles, food or technology in the other side of the world, in our days those and other several products/services can be acquired without traveling and taking advantage of information technology and transportation.

If we take a giant step in this evolution of the tourism sector, one of the last differences from travelers of 100 years ago, is that the current traveler is seeking sensory experiences and travel the mere fact of being able to do and know the various geographies, cultures and ecosystems on the planet. Currently, we travel alone, in pairs, with friends, with family, with children, in groups, of course these travelers are not exclusive, but they are the majority.

The current tourism for one side add  the service provider that strives to provide and ensure this experience on their customers, and for the other side add the customers / users of tourism industry looking to acquire a distinct and noble experience as well as being in contact with nature, and of course make sure you visit to nature is not impacted.

The current challenge for builders and operators of hotels, hostels or guest houses on five continents have agreed to seek to provide a balance between meeting the needs seeking users, such as ensuring that their activities do not make any impact on resources planet and the creatures that inhabit it.

In the last 20 years the main affectations detected planet were not visibly caused by the tourism sector, however the more information there is and it comes to the different groups that make up the sector, it has been identified and expanded disclosure of the powerful magnitude its impacts and the importance to do and not to do sustainable actions for the conservation of the planet.

ALLCOT challenges you to navigate the numerous social networks and even web pages for all the world of various orders (business travel or ecotourism) and different sizes (local cabins or large hotel chains) hotels. In such sources of information, you can identify sustainable actions are without naming them such as: savings and efficient water consumption, savings and energy efficiency, including the preference of hotels that use renewable energy. The use and recycling of materials consumption during the stay from soaps to feed them they offer. And building materials employing as those with the lowest possible carbon footprint that is inclusive of local origin.

Currently, there are increasingly rating agencies that evaluate sustainable actions in various sectors and major hotel groups, where being five stars is only the elementary part to attract users more demanding, but the distinction of being sustainable hotel seeks to satisfy their own needs to perform its activities with the least impact on the planet. However, the owners offer these groups are constantly inquiring experiences to innovate and ensure that their activity is sustainable.

Nowadays, if you do not disclose your activity (in your organization), your activity is not known and therefore is inert. So for the marketing of products and services of the tourism sector, both generated and exchanged information on social networks, such as the conservation of the planet are two completely convergent themes, and is the current sustainable source of tourism business sector.

Of course, this brief reflection is the top of the iceberg of sustainability that the tourism sector has integrated naturally in its evolution as a business and activity, whose approach to sustainability was the environment for the conservation of the planet. However necessary to satisfy the needs of human beings to learn and evolve activity within the tourism sector has other social sustainability approaches.

ROUND TABLE ON THE CARBON MARKET

 

 

The Ministry of Ecological Transition and Solidarity and the General Delegation of Québec in Paris will hold a seminar called:

QUÉBEC – FRANCE: ROUND TABLE ON THE CARBON MARKET

It will take place on September 30 in Paris, France. It will feature the persistence and participation of Elisabeth Borne, Minister of the Ecological Transition and Solidarity of the French Republic and Benoit Charrette, Minister of Environment and Struggle against Quebec Climate Change.

This event will be a great opportunity to discuss carbon pricing and the fair and equitable transition to a less carbon economy.

Some of the objectives of the seminar are:

  • Present key tools and trends in carbon pricing.
  • Illustrate how carbon prices can contribute to achieving the objectives of the Paris Agreement and support a fair and equitable transition.
  • Highlight the importance of international collaboration for success in the fight against climate change, through carbon pricing.

Delegates of ALLCOT will be present to know in depth the details of this interesting and very nutritious session, giving the company a local and international vision of the Carbon market, which will allow us, to develop new tools and improvements in our services.

You can find more information about the seminar, including its programming by clicking on this link (In French language)

Carbon offsets for a sustainable and decarbonized future


Written by Sergi Cuadrat, Chief Technical Officer (ALLCOT)


In 2015, leaders from the member states of the United Nations agreed on objectives to shift all economies and societies toward sustainable and decarbonised development through the adoption of the Agenda 2030 on the Sustainable Development Goals (New York, September 2015) and the Paris Agreement to limit climate warming to well below 2ᵒC (Paris, December 2015). There is enormous potential for co-benefits to arise from the mutually supportive implementation processes of the 17 Sustainable Development Goals (SDGs) elaborated in the voluntary 2030 Agenda and the Nationally Determined Contributions (NDCs) underpinning the legally binding Paris Agreement under its Article 6.

Both frameworks, although negotiated under different multilateral processes, promote the participation of all countries and are highly interlinked: the Paris Agreement emphasizes the need for considerations of sustainability in low-carbon transitions; at the same time avoiding dangerous climate change is one of the 17 Sustainable Development Goals (SDGs) defined in the 2030 Agenda on Sustainable Development. Thus, failure in one process could undermine the success of the other. The implementation of Nationally Determined Contributions (NDCs) –countries’ emissions reduction commitments– requires huge investments, which are more likely to be financed if embedded in and benefiting national development plans. While, vice versa, prospects for sustainable development depend on a limitation of global warming. This interdependency can be seen as an opportunity to move away from the discourse of two different agendas that are often perceived to be in competition, and instead pursue their implementation in a way to maximize mutual benefits.

Several carbon offset standards such as the Gold Standard and the Verified Carbon Standard are adapting their frameworks and requirements to better define a carbon mitigation project’s impacts beyond carbon reductions, and in some cases, this may lead to the creation of other tradeable instruments in addition to carbon credits. ALLCOT assesses project alignment with the SDGs to conduct a thorough analysis of the data currently being monitored and verified at the project level, to determine whether there are additional metrics that can be tracked for SDG reporting purposes.

ALLCOT is seeing an evolution in the way our clients think about carbon finance and the additional impacts their carbon investments can have. Businesses are able to articulate the benefits of their carbon project investments beyond the verified emission reduction. We believe that businesses can use carbon finance to deliver additional value through alignment with the SDGs, enabling the carbon market to extend beyond emission reductions, and play a vital role in driving a low carbon sustainable development throughout the world.

Achievement of Paris climate goals unlikely due to time lags in the land system

Global targets to limit climate change are unlikely to be met due to delays in changing the way people use land, according to new research.

Nearly 100 countries pledged to make their use of land less damaging to the climate, mainly by limiting deforestation rates and boosting forest restocking, when they signed the Paris Agreement in 2015.

Many countries planned to prevent deforestation or establish new forests over large areas to absorb carbon dioxide from the air, and to reduce greenhouse gas emissions from agriculture, changes which would remove up to 25% of the greenhouse gases released by human activity every year.

However, the new research shows that such changes in land use usually take decades to happen, far too slowly to help slow climate change to the agreed level.

Dr Calum Brown of KIT, lead author of the study, said: “Our research suggests that many of the plans for mitigation in the land system were unrealistic in the first place and now threaten to make the Paris target itself unachievable.”

Brazil increased deforestation by 29% between 2015 and 2016 despite reductions in the decade before the Paris Agreement was signed, the study says, essentially making the country’s emission promises impossible to meet.

Palm oil cultivation in Indonesia and Peru has also scuppered deforestation efforts and led to increased emissions rates, it says.

“Richer countries have not been leading the way, either in reducing their own emissions or in reducing the pressure on developing nations. And we need to find rapid but realistic ways of changing human land use if we are to meet our climate change targets”, authors say.

You can download the study here