Mechanics of Monetizing Methane Destruction Credits

AgStar National ConferenceApril 27, 2010

Peter WeisbergThe Climate Trust

pweisberg@climatetrust.org(503)238-1915

MethaneEmission

s

MethaneEmission

s

Renewable

Energy

Renewable

Energy

$ forOffsets$ for

Offsets$ for RECs$ for RECs

Methane Reduction

Annual credits ≈ 3-4 x # of Lactating Cows

Example:2,500 cows

=8,750 mt CO2e credits per year10 year project

=87,500 mt CO2e over the project life

•Co-digestion •Include N2O•Temperature•Solids separation •Digester capture•Biogas treatment

Methane Reduction:Changes drastically according to

The Mechanics:Choose a registry

Climate Action Reserve

Voluntary Carbon Standard

American Carbon Registry

Regional Greenhouse Gas Initiative

Chicago Climate Exchange

CurrentPrice

$5-6 $2-3 $2-3 $2 $0-1

HighPrice

$9-10 $6-7 $6-7 $3 $7

Types of Buyers

90% Pre-Compliance

Voluntary and Pre-Compliance

Voluntary and Pre-Compliance

Compliance

Exchange members

The Mechanics:Before commercial operation

Determine financial viability

Establish monitoring plan

List project with a registry

Upfront Cost = $30,000- $50,000

The Mechanics:After commercial operation

Monitor

Verify

Sell verified credits

Annual costs = $10,000 - $15,000

Revenue =(Credits)(Price) -

(Transaction Costs)

Digester offset revenue- 2,500 cows; digester reduces 8,750 mt CO2e every year

$= (Offsets)(Price) – (Transaction Costs)

Price = $6

Year 1 Carbon Sales Profit: $10,000

Year 2-10 Carbon Sales Profit: $40,000

NPV (10 years, 7%) = $250,000

Future Price Scenario:US Carbon Market Goes Away

Source: Trexler. “GHG Markets and CCS.” May 30, 2007

NPV ($6/mt CO2e) < $250,000

Future Price Scenario:Political Compromise Achieved

Source: Trexler. “GHG Markets and CCS.” May 30, 2007

NPV ($18/mt CO2e) = $1 million

Future Price Scenario:Atmospheric Stabilization

Source: Trexler. “GHG Markets and CCS.” May 30, 2007

NPV ($40/mt CO2e) = $2.3 million

Carbon Purchase Agreement Structures

1)Fixed Price–Developer guaranteed revenue–Carbon buyer takes on price

risk/upside

Carbon Purchase Agreement Structures

2) Spot–Developer sells credits annually

after verification–Developers takes on price

risk/upside

Carbon Purchase Agreement Structures

3) Hybrid–Carbon buyer guarantees to

purchase a portion at a fixed price–Developer is left to market

additional portion–The Climate Trust model

Thank you!

Peter Weisberg Offset Project Analyst

pweisberg@climatetrust.org(503)238-1915