Chicago Climate Exchange

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Chicago Climate Exchange
Leveraging Landfills with Public Private
Partnerships June 9, 2006 Nathan Clark (312)
554-0819 www.chicagoclimateexchange.com
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What is Chicago Climate Exchange?
Chicago Climate Exchange (CCX) is the worlds
first and North Americas only voluntary, legally
binding pilot greenhouse gas reduction and
trading program for emission sources and offset
projects in North America, Brazil
and elsewhere.
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Why Carbon Emissions Trading?

• Proven, least-cost, and sustainable tool for
  managing emissions
• Environmental protection with minimum economic
  impact
• Flexibility, market efficiencies
• Multiple successes US SO2, lead phase-out
  (gasoline), NOx, ETS
• Enhances and rewards sound management practices
• Carbon price signal reward innovators, encourage
  creative solutions
• Reveals true cost paid by society

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CCX Members
Environmental Services Waste Management,
Inc. Food Processing Premium Standard
Farms Forest Products Abitibi-Consolidated Aracr
uz Celulose S.A. International Paper Klabin
S.A. MeadWestvaco Corp. Stora Enso North
America Temple-Inland Inc. Information
Technology IBM States, Municipalities State of
New Mexico City of Boulder City of Chicago City
of Oakland City of Portland
Pharmaceuticals Baxter Healthcare Private
University Tufts University Public
Universities The University of Iowa University of
Minnesota The University of Oklahoma Recreation A
spen Skiing Company Semiconductors ST
Microelectronics Steel Roanoke Electric Steel
Corp. Transportation Amtrak
Aerospace and Equipment Rolls-Royce Automotive Fo
rd Motor Company Chemicals Dow
Corning DuPont Diversified Manufacturing Bayer
Corporation Interface, Inc. Ozinga Bros Electric
Power Generation American Electric Power Central
Vermont Public Service Green Mountain
Power Manitoba Hydro TECO Energy,
Inc. Electronics Motorola, Inc.
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CCX Associate Members
Private College Presidio World College Risk
Management The Professional Risk Managers
International Association Religious
Organization Jesuit Community of Santa Clara
University Retiring/Offsets Carbonfund.org SRI
Fund Pax World Technology Millennium Cell Polar
Technology TerraPass
Architecture/Planning Mithun, Inc. Associations C
onfederation of British Industry Brokerage
Services Amerex Power Consulting Domani
LLC Global Change Associates Natural Capitalism,
Inc. Rocky Mountain Institute Energy and
Management Services Airtricity Orion Energy
Systems Ltd Sieben Energy Associates Thermal
Energy International Engineering Vanasse Hangen
Brustlin, Inc.
Financial Services Access Industries, Inc. MB
Investments, LLC Information Technology Open
Finance LLCIntercontinental Exchange Legal
Services Foley Lardner Non-Governmental
Organization American Coal Ash Association America
n Council on Renewable Energy Delta
Institute Houston Advanced Research
Center Midwest Energy Efficiency Alliance World
Resources Institute
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Participant Members
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CCX Market Architecture (2003-2010)

• Phase I Members make a legally binding
  commitment to reduce or trade 1 per
• year from 2003-2006, for a total of 4, below a
  baseline avg of 1998-2001.
• Phase II Members make a legally binding
  commitment to reduce 6 below baseline by 2010.
• Independent standardized verificationimportant
  value
• Annual true-up
• Pre-defined offset projects
• Sequestration reforestation, agricultural soils
• Landfill and agricultural methane destruction

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Initial list of CCX eligible offset projects

• Landfill methane destruction/combustion
• Agricultural methane destruction/combustion
• Agricultural sequestration- No-till and grassland
  plantings
• Forest sequestration/reforestation on previously
  degraded lands
• Certain new renewable electricity systems
• Coalmine/Coal bed methane destruction/combustion
  (in process)

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CCX Offset Rules, Processes

• If you have significant direct emissions then you
  must become a full-fledged CCX Member before
  selling any offset projects you own.
• Conservative crediting discounts, but less
  admin cost
• All Offsets have value equal to each other and to
  allowances
• CCX Offsets Committee has full discretion over
  project approval
• CCX Forestry Committee reviews specific forest
  project rule issues
• Ownership of offsets can be other than site or
  facility owner
• e.g. my equipment clean- your landfill (project
  developers, etc.)

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CCX Offset Project Verification

• CCX Rules define eligible projects, verification
  requirements
• Each project must be approved by CCX Offsets
  Committee
• All verification reports examined by NASD
• CCX-Approved project verifiers

Landfill Methane Projects Det Norske Veritas
(DNV) First Environment, Inc. G.N. Richardson
Associates
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Mechanics of Ag Offset Aggregation in CCX
CCX - issues offsets to aggregators registry
account - reviews verification reports
documentation
offsets

• Aggregators
• accept initial registrations from project owners
• coordinate third party verification
• receive offsets into CCX registry account
• executes sales on CCX trading platform on behalf
  of owners
• may charge fees

documentation
sales proceeds
Individual Projects - register sign annual
attestations allow access to CCX verifiers
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CCX Landfill Methane Project Rules

• Basic Specifications for CCX Landfill Methane
  Offset Projects
• Placed into service on or after Jan. 1, 1999
• Not required to collect methane under national
  or local laws (e.g., U.S. New Source
  Performance Standards)
• Demonstrate clear ownership of the emission
  reductions
• All projects must be approved by a CCX verifier
• Crediting rate 18.25 metric tons CO2 per metric
  ton of methane combusted
• Verification requirements
• Project start date, ownership (could be on-site
  or customer burn)
• Gas flow records, proper meter calibration
• Methane content meters or lab analysis, or
  implied methane burn based on electricity
  production

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Offsets for Emissions Displacement

• Guidelines for CCX GHG Emission Offsets from
  Renewable Energy
• Renewable (landfill gas included) systems
  activated after Jan. 1, 2005
• Must demonstrate clear ownership rights
• Energy cant be used to meet obligations
  established by state of local mandate (e.g.
  renewable portfolio standards)
• Energy generated cant be sold as green
• Credited at a rate of 0.40 metric tons of CO2 per
  megawatt hour (rate of typical gas combined cycle
  plant)

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Carbon Credits as a Financing Tool

• Hypothetical Example 1 MW Power Facility
• 1,992 metric tons methane/year ? 36,350 metric
  tons CO2/year
• Recent CCX CFI Price 4.00/metric ton CO2
• 145,400 annual revenue from CO2 sales
• 550,000 annual revenue from commercial
  electricity sales
• Selling CCX Offsets may increase annual
  operating revenue by 25
• Compared to average 1 MW CHP facility operation
  maintenance costs of 65,000/ year

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CCX Offset Projects Enrolled

• Landfill methane Waste Management (IN, TX)
• Agricultural methane Environmental Credit Corp.,
  Premium Standard Farms (MN, WA, TX, etc.)
• Agricultural soils Iowa Farm Bureau, Delta
  Institute (Midwest focused but expanding)
• 330,00 acres enrolled to date
• Reforestation Precious Woods (Costa Rica)
• Fuel switching IdleAire (CA, TX)
• Offsets equal to approximately
• 1 million metric tons CO2 generated to date