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Trading Offset Credits and RECs 55
Table 15. Sample contract sources for bilateral transactions.
Instrument Contract Source(s)
Carbon Emissions Trading Master Agreement for the EU Scheme, International Emissions
Offset Trading Association Note this template is designed for compliance instruments
Credits and would need to be modified for carbon offset credits specific to the transaction
at hand.
http://www.ieta.org/assets/TradingDocs/uk-1597905-v1-ieta_etma_v3_0_-
_master_agreement_and_sched.pdf
RECs ACORE, Environmental Markets Association and the American Bar Association
Master Renewable Energy Certificate Purchase and Sale Agreement
http://www.retscreen.net/fichier.php/1611/ABA_EMA_ACORE_Master_RECs_
Agreement.pdf
6.2.4 Bilateral Transactions
Finally, if the owner of the environmental instrument directly approaches potential buyers to
facilitate a transaction, no middleman or additional support is needed. This essentially elimi-
nates transaction fees. This also, however, places the burden on the seller to find a buyer and an
appropriate contract vehicle. Environmental instrument transaction contracts are increasing in
standardization and template contracts are available to help lay the groundwork for establishing
terms and conditions associated with a bilateral transaction.
Examples of bilateral transactions at an airport project may include selling the offset credits
from a project to travelers seeking to offset the emissions associated with their flight or selling
RECs from a renewable energy project to commercial tenants seeking to claim that their store is
powered from renewable energy. Template contracts that can be used as a base vehicle to facili-
tate bilateral transactions are publicly available as summarized in Table 15.
6.3 Offtake Demand Drivers
Key Takeaways for Airports
· Airports should consider why a potential buyer is in the market for RECs or off-
set credits.
· Often, buyers who are required to purchase RECs or offset credits will be willing to
pay more for the instruments than those purchasing for purely voluntary reasons.
Potential buyers of offsets credit, RECs and other environmental instruments sourced from
projects at or sponsored by airports may be motivated by a number of different drivers, some to
meet compliance demand requirements and others to satisfy voluntary initiatives. When mon-
etizing through a wholesaler, retailer, or exchange, the drive of the buyer is somewhat less
important. However, it is good to understand general demand drivers for environmental instru-
ments of projects to ensure that the project best addresses the needs of the market. If an airport
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56 The Carbon Market: A Primer for Airports
Table 16. Summary of demand side entities by project type.
Project Type Instrument Compliance Demand Voluntary Demand
Carbon Offset Carbon RGGI and California Businesses, institutions, and
Project Offset Credit pre-compliance individuals seeking to reduce their
market players carbon footprint (i.e., "green"
companies, schools, or airline
passengers)
Renewable Solar REC, Utilities and energy Businesses, institutions, and
Solar aka "SREC" providers in states individuals seeking to claim solar
with solar tier renewable energy consumption
requirements in RPS
Renewable REC Utilities and energy Businesses, institutions, and
Wind, providers in states individuals seeking to claim
Biomass, with an RPS renewable energy consumption
Other
Energy White Tag Utilities and energy Businesses, institutions, and
Efficiency providers in states individuals seeking to claim lower
with efficiency energy usage and/or reduction of
requirements in RPS emissions and externalities
associated with traditional energy
production
operator is looking to bilaterally source an off taker for environmental instruments of a project,
then what drives buyer interest is very important and needs to be considered in the selection
process. Because there are no specific requirements for voluntary instrument purchases, the
characteristics of instruments sought are completely up to the buyer based on what they want to
claim. For example, a buyer may want to source instruments locally, so seeking off takers nearby
may be a good option.
Table 16 summarizes likely demand side entities, both compliance and voluntary, for differ-
ent project types.
With the exception of regional compliance programs, the United States carbon market demand
is voluntary at this time. Many businesses and institutions are very interested in reducing
their carbon footprint and purchasing verified offset credits is one way to do this. Voluntary
market demand is largely driven by the story that the buyer wants to convey through their off-
set credit purchase. Some buyers may be interested in offset credits from a certain project cate-
gory or from specific geographic location. In some instances, a buyer may be willing to pay a
premium for a certain type of offset credit. For example, a tenant in an airport may like to claim
that the operations of their business are carbon neutral through the purchase of offset credits
from a project on airport property or another location. Regardless of the offset project type and
buyer, it is important to ensure the credibility of the offset credit by having it verified in confor-
mance with the requirements of a reputable standard.
A significant demand for voluntary market RECs exists at this time, in addition to compliance
market demand. The primary standard for voluntary REC market certification is the Green-e
standard. Many utilities source voluntary market RECs to retire on behalf of individual cus-
tomers opting into their green energy programs. Like carbon offset credits, many corporations
and institutions find value in claiming green energy consumption for some or all of their energy
use that further stimulates voluntary REC demand. Likewise, some buyers may want to claim a
particular renewable energy technology or location and may be willing to pay a premium to pur-
chase specific subsets of RECs to tell this story.
Finally, voluntary demand for white tags exists, largely by entities that want to claim a reduc-
tion in GHG footprint. Several different standards exist for validating white tags, but it is impor-
tant to ensure that these efficiency reductions are verified before selling to the market.
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Trading Offset Credits and RECs 57
Airport Offset Example: Carbon Kiosks at San Francisco International Airport
In 2009, San Francisco International Airport was the first airport in the United States
to introduce a passenger offset program, called Climate Passport, which allows pas-
sengers to calculate and reduce the carbon footprint of their air travel by support-
ing carbon offset projects based in California. Three Climate Passport kiosks are
available at the airport after the security checkpoint on both sides of the Interna-
tional Terminal and in Terminal 3. Travelers can also access the Climate Passport
through SFO's website at: http://www.sfo.3degreesinc.com. Using the kiosks or the
website, travelers can calculate the carbon footprint of their flights to determine
the amount of carbon offset credits or Verified Emission Reductions needed to
address the GHG impact. 3Degrees is a local San Francisco carbon and renewable
energy marketing firm that manages the Climate Passport kiosks. 3Degrees sources
carbon offset credits from The Conservation Fund's Garcia River Forest Project
and the San Francisco Carbon Fund to reduce GHGs emitted into the atmosphere
by an amount equivalent to that passenger's trip. The carbon offset credits for Cli-
mate Passport are sourced from projects that result in real, quantifiable, and per-
manent GHG emission reductions and are third-party verified against the Climate
Action Reserve--a rigorous, objective, and transparent standard for offset credits
from forestry projects. Climate Passport also allocates $1.50 per tonne of all offset
credit sales to the San Francisco Carbon Fund, a city-run fund that invests in GHG
reduction projects within San Francisco. The primary airport expense of the Climate
Passport system is development of the three kiosks, which cost $190,000 in total.
