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carbon credits (VERs)
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Frequently Asked Questions
Q. Can the owner of a parcel of VERs split
them up? Q. Can VERs be used to help meet New Zealand's Kyoto Protocol commitment?
Q. How will the purchase of VERs help to
combat climate change? Q. Why is the M-co Registry involved?
Q. How did Energy Mad claim these VERs?
Q. How have Energy Mad validated the VERs?
Q. What is meant by environmental
additionality? Q. What is meant by financial additionality?
Q. As a householder can I claim the carbon credits from my installed Ecobulbs?
Q. How many greenhouse gases are there?
Q. How were these VERs measured?
Q. What standard did Det Norske Veritas Certification use to verify the VERs?
Q. Why have Energy Mad used a Kyoto Protocol compliant, CDM Approved Methodology to design the Ecobulb projects, yet only claimed VERs as the emission reduction units?
Q. Can you explain how the world will benefit if I purchase VERs?
Q. How does the whole carbon credit system work?
Q. Do the Energy Mad VERs account for the energy/materials used in the manufacture of the project Ecobulbs?
VER stands for verified emission
reduction and represents one tonne of carbon dioxide that was saved
from being emitted into the atmosphere.
Q. Do VERs have an expiry date?
No. The owner has the freedom to
retire some or all of their VERs at anytime in the future.
You have three choices – sell, hold and retire.
Options for selling VERs include by direct trade, auction or you can engage a broker to do this for you. Holding will expose the owner to future pricing on the voluntary market. Retiring VERs offsets the owners carbon dioxide emissions to the value of the VERs being retired. Retired VERs cannot be traded and have no monetary value.
Q. Can the owner of a parcel of VERs split them up? Yes. The smallest tradable unit is one VER.
Q. Can VERs be used to help meet New Zealand's Kyoto Protocol
commitment?
VERs have been verified to the voluntary market standard only and do not comply with the requirements of the Kyoto Protocol.
Q. How will the purchase of VERs help to combat climate change?
Limits on the emission of greenhouse
gases combined with emissions trading effectively places a monetary
value on the earth’s atmosphere. The purpose of this is to provide
an incentive to nations, organisations and individuals to reduce
their greenhouse gas emissions. The purchase of VERs drives the
implementation of projects that measurably reduce greenhouse gas
emissions.
Q. I purchased my Ecobulbs with my own hard-earned cash. Why
should Energy Mad get ownership of the VERs?
Energy Mad were able to sell Ecobulbs
to consumers for less than one third of the recommended retail price
in anticipation of the revenue that would be generated by the sale
of the resultant VERs. The additional VER revenue also contributes
towards the on-going verification and monitoring costs of the New
Zealand Household Efficient Lighting Project. The benefit to
consumers are the on-going electricity savings delivered by the
Ecobulbs.
Q. Why is the M-co Registry involved?
The M-co Registry are a trusted third
party who manage the registration, transfer, retirement and
cancellation of VERs. They ensure that all traded units are of a
sufficiently high standard and that no double accounting occurs.
Q. How did Energy Mad claim these VERs?
The monitoring and calculation of the
Energy Mad emission reductions was in accordance with the Kyoto
Protocol Clean Development Mechanism Approved Methodology AM0046,
‘Distribution of efficient light bulbs to households’. This rigorous
methodology is the global benchmark standard for measuring carbon
dioxide emission reductions resulting from energy efficient lighting
projects. This methodology involved Energy Mad monitoring a large
statistically representative pool of 250 households to measure their
lighting energy consumption. The monitoring phase required extensive
written and verbal consultation with the households in addition to
site visits to monitor over 1,200 individual light bulbs. The
results from the monitoring phase were used to calculate an average
electricity saving per installed Ecobulb. This result was then used
to calculate the emission reductions created by each installed
Ecobulb.
Q. How have Energy Mad validated the VERs?
The
Energy Mad VERs have been validated by United Nations designated
operational entity, Det Norske Veritas.
Q. What is meant by environmental additionality?
This is a concept which states that
the greenhouse gas emission reductions created by the VER project
would not have occurred, if the project had not been implemented.
This is a check to ensure that the VER project was not just a
‘business as usual’ scenario.
Q. What is meant by financial additionality?
This is a concept which states that
it would not have been financially viable for the greenhouse gas
emission reduction project to have been implemented without revenue
from the sale of the resultant VERs.
Q. As a householder can I claim the carbon credits from my
installed Ecobulbs?
Energy Mad have implemented Clean Development Mechanism Approved Methodology 0046 (CDM AM0046) to create our carbon credits. CDM AM0046 is in the public domain. The basics steps in the methodology are: 1. To replace large numbers of household incandescent lamps with heavily discounted compact fluorescent lamps (CFLs). 2. Monitor the lighting power usage in a statistically representative sample of households. 3. Apply the steps laid out in the methodology to extrapolate the resultant lighting power savings in the sample households to all households who purchased CFLs during the voucher project. 4. Calculate the resultant emission reductions by applying the steps laid out in the methodology. 5. Seek verification of the claimed emission reductions from a suitably qualified and independent certification group. In our case, Norwegian company Det Norske Veritas Certification, completed the verification task by applying the Voluntary Carbon Standard 2007. 6. Sell verified emission reductions (VERs) to cover costs created by the sale heavily discounted CFLs, the monitoring tasks and the verification process.
There is nothing to stop another group undertaking a similar project. The obvious point here is that scale is required for the project to be viable. The significant costs incurred to monitor, calculate and verify the emission reductions are fixed and must be covered by the revenue from the resultant sale of the carbon credits.
An individual household may want to claim the carbon credits that they realised by replacing incandescent lamps with CFLs. The issue is that steps 2-5 above would still need to be completed to create carbon credits of appropriate accuracy and quality. This would not be financially viable. The upside for the household is in the electricity savings. You can’t deny that for a $10 investment, the cumulative savings of approximately $650 over the ten year lifetime of the five Ecobulbs is a great deal!
Q. How many greenhouse gases are there?
There are six significant greenhouse gases:
Q. How were these VERs measured?
The electricity savings were measured by attaching utilisation data loggers to over 600 incandescent bulbs in New Zealand homes and multiplying the the recorded data by the power rating of each bulb to yield total consumption. The same was done with over 600 Ecobulbs. The difference between the sum of the combined incandescent bulb consumption and the combined Ecobulb consumption yielded the measured electricity savings per bulb per year.
This number was multiplied by the total number of Ecobulbs sold and the national grid electricity emission factor. Other factors were included to account for sampling uncertainties, Ecobulb installation rate and fallout. This process resulted in a conservative calculation of the greenhouse gas emissions reduction generated by the installed project Ecobulbs.
Q. What standard did Det Norske Veritas Certification use to verify the VERs?
Det Norske Veritas Certification applied the Voluntary Carbon Standard 2007. This standard is available on the International Emissions Trading Association website ( www.ieta.org ).
Q. Why have Energy Mad used a Kyoto Protocol compliant, CDM Approved Methodology to design the Ecobulb projects, yet only claimed VERs as the emission reduction units?
The CDM Approved Methodology was used because it is currently seen as "world best practice" for household CFL projects of this type. Energy Mad is unable to claim CDM compliant abatement units (CERs) because New Zealand is ineligible to host CDM projects.
Q. Can you explain how the world will benefit if I buy VERs?
VERs are a type of carbon credit. Carbon credits are a way to promote greater consumer/industry uptake of efficient and low carbon technologies. These technologies may be renewable electricity generation (hydro, wind, geothermal, solar), landfill gas capture, fuel efficient cars, or energy efficient light bulbs.
The nationwide Shell Ecobulb project sold over 800,000 Ecobulbs at $2.00 each. If the Ecobulbs had been sold at their recommended retail price, we may have only sold 200,000. Perhaps less. So there are now an additional 600,000 (approx) Ecobulbs plugged in and saving electricity, and the burning of coal and gas to generate that electricity.
Energy Mad is now selling the carbon credits generated by the Ecobulbs sold for $2.00 each in an attempt to cover the project costs. In summary, carbon credits are a funding mechanism to allow efficient and low carbon technologies to be offered to consumers/industry at a heavily discounted price, thereby increasing uptake of the efficient and low carbon technologies.
Q. How does the whole carbon credit system work?
The following website includes some excellent information that will help to answer that question.
Q. Do the Energy Mad VERs account for the energy/materials used to manufacture the project Ecobulbs?
Yes. The resources required to manufacture one Ecobulb is greater than the resources required to manufacture one incandescent bulb. However this is swamped by the fact that one Ecobulb lasts 9-10 times longer than an incandescent bulb. The 9 incandescent bulbs that won't be manufactured more than offset the manufacturing footprint of the single Ecobulb.
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