Project aggregates and cooperatives help reduce cost and increase efficiency

December 18, 2019

The cost of project development and verification can be a significant financial barrier for a carbon offset project, particularly smaller projects. To drive even more positive climate impact through offset projects, the Reserve’s voluntary offset program welcomes certain project types to enter into an aggregate or cooperative.

Aggregation involves the bundling of either multiple projects into one group or multiple activities into a single project for the purposes of project development and verification. A “project aggregate” is a group of individual projects in the registry. An “aggregated project” is a single project in the registry, but there may be multiple underlying entities, such as different fields and farmers, and that may appear as individual projects in the registry. A cooperative is essentially the same as an aggregate, but the Reserve employed a different term to denote that there is no quantitative or statistical intermingling, simply shared management and verification (which could occur in grassland and nitrogen management). The flexible options for aggregation allow for the market to determine how to organize projects. The rules for aggregates and cooperatives vary by project type, as determined by the project activity and best process for aggregation in that context.

The main benefits of aggregation are cost savings, increased efficiency, and convenience for participants. Under the Reserve’s voluntary offset program, the following protocols contain policies allowing for some form of aggregation: U.S. Forest, Mexico Forest, U.S Grassland, Canada Grassland, Nitrogen Management, Rice Cultivation, Urban Forest Management, and Livestock project protocols.

Benefits:

Allowing projects to register as part of a group, or allowing multiple instances of eligible project activities to be bundled together, aims to facilitate greater participation and may help with:

  • Reduced costs for verification and management. Verification of project aggregates or cooperatives is considered across the broader population, which reduces the verification costs to individual participants participating in an aggregate or cooperative.
     
    For example, for forest projects in an aggregate, by meeting carbon inventory confidence standards across an aggregate, rather than within each project, aggregation reduces the sampling intensity required within each project to meet statistical confidence requirements. Projects benefit from reduced inventory costs (fewer sample plots) and/or smaller deductions for uncertainty with greater enrollment, determined on a programmatic basis. Forest projects in an aggregate also benefit from reduced frequency of required desktop and site visit verifications for individual projects due to the verification sampling process. The reduced costs associated with aggregation provide an accessible pathway for smaller forest projects to participate in the carbon market.
     
  • Streamlined monitoring, reporting, and verification requirements, thus increasing the efficiency and ease of participation.
     
  • Enabling economies of scale and supporting the marketing of offset credits at volume.
     

Ensuring integrity:

Reserve protocols contain several mechanisms to uphold the rigorous accounting standards at the aggregate level and ensure the integrity of projects participating in an aggregate or cooperative. This is primarily accomplished through pooling and sampling for verification activities. Aggregation may also help increase the accuracy of GHG reduction estimates at a program level by encouraging greater participation, which reduces structural uncertainty within greenhouse gas modeling programs. The features are protocol-specific, based on applicability to each project type.

  • Project aggregates or cooperatives may enjoy improved statistical viability through greater participation.
     
    For example, with more forest projects in an aggregate, fewer sample plots are needed per project to achieve the same level of overall confidence in carbon stock estimates. Equivalent statistical confidence to non-aggregate projects can be achieved at the aggregate level through the target sampling error. The higher the number of individual projects in an aggregate, the higher the target sampling error (TSE) applied to each project’s carbon inventory; however, the higher sampling errors on an individual project basis are offset by the overall confidence achieved by the aggregate.
     
  • The aggregate/cooperative structure does not change the quantification methodology in the protocol. Quantification of emission reductions is carried out separately for each individual project, and additionality and baselines are still determined on an individual project basis. Each project must individually submit all required project documents. Reporting may be combined for efficiency, but it must be possible to trace the evidence for the emission reductions from each individual project.
     
  • Onsite verification for projects in an aggregate or cooperative occurs under the same guidelines or at a sampling rate that achieves statistically equivalence to non-aggregated projects.

    For example, for grassland cooperatives, as with all grassland projects, the risk is low enough that the site visit during verification has been made optional. However, an additional buffer pool contribution must be made to account for the increased risk. This allows cooperative developers to determine for themselves how many projects within a cooperative should get a site visit for a given verification period.
     

  • Annual monitoring reports are required for each project between onsite verifications and verifiers annually audit a sample of monitoring reports.
     
  • If the verifier cannot reach a positive verification opinion for one or more projects within a cooperative or aggregate, the cooperative or aggregate must take additional steps to be in compliance with the protocol.
     
  • CRTs are serialized and issued to individual projects, rather than the aggregate or cooperative. If a problem is later uncovered, the credits specifically issued to the problem project can be tracked and will be subject to sanction.
     
  • All other protocol requirements must be met by each project, including permanence requirements.
     

Case studies:

Grassland: Southern Plains Land Trust

The Southern Plains Land Trust is preserving and restoring two Colorado ranches that protect 8,000 metric tons of soil carbon per year. The projects in the cooperative earn offset credits for greenhouse gas emissions reductions from the avoided loss of soil carbon due to the avoided conversion of grassland to cropland. The Raven’s Nest Nature Preserve project comprises 265 acres of grasslands in Bent County, Colorado. The native prairie has never been broken for crop cultivation and a number of rare and threatened flora and fauna exist on this property. This project is entirely too small to be feasible on its own without the cooperative structure. The Heartland Ranch Phase 1 and Phase 2 projects comprise 1895 acres and 2698 acres, respectively, of grassland. Each project entered into a conservation easement to protect the grassland from conversion to cropland and underwent a verification process involving desk review of the Monitoring Plan, GrassTool, and documentation, as well as a site visit to verify the project equipment, location eligibility, GHG management systems, data collection and handling, procedures in place, and risk assessment. In this situation, where the projects in the cooperative are in the same geographic region and managed by the same Project Owner, the cooperative structure offers efficiencies and allows them to largely function as a single project for subsequent verifications.

Mexico Forest: Silviculture Association for the Pachuca and Tulancingo Forest Region

This is an aggregate made up of 20 individual projects, including both ejidal (communal) and private landowners. The forest owners have historically worked together on the management of their forests. Each project only has one Activity Area; the project developer developed the inventory for each Activity Area following the guidance in the MFP Quantification Guidance. Since the aggregate includes a total of 20 Activity Areas, rather than having a TSE of +/- 5% at a confidence of 90%, each Activity Area had to reach a TSE of +/- 20% at a confidence of 90% in order to not receive a confidence deduction. This reduced the number of plots significantly. A typical Activity Area must install 300-400 plots, however, each Activity Area in this case only has around 60 plots. Each project is now undergoing its initial onsite verification; although, only 10 projects will have to undergo an onsite verification in 6 years (then only 10 will undergo the onsite verification in 12 years). For the next desktop review verification, if they choose to undergo the desktop review verification annually, only 5 projects (square root of 20 rounded up) will have to undergo the desktop verification, and those projects are to be selected randomly each year.

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