weisberg wi ag star conference
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TRANSCRIPT
Mechanics of Monetizing Methane Destruction Credits
AgStar National ConferenceApril 27, 2010
Peter WeisbergThe Climate Trust
[email protected](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
