Aggregation of Greenhouse Gas Emissions Offsets: Benefits, Existing Methods, and Key Challenges

This report is designed to develop and disseminate to members of the Electric Power Research Institute (EPRI), the public at large, and participants in the world's evolving carbon markets a set of lessons learned about the aggregation of individual greenhouse gas (GHG) emissions offset projects into larger, organized configurations that can yield large-scale GHG emissions offsets. Aggregation puts together geographically and/or temporally dispersed activities that reduce emissions in a similar manner to streamline the process of qualifying and quantifying emissions offsets.

This report examines approaches used by existing and evolving offset programs to facilitate offset project aggregation. It focuses on major existing offsets standards and aggregation approaches, including the United Nations' Clean Development Mechanism's Programme of Activities, the Verified Carbon Standard's grouped projects, the Climate Action Reserve's forestry protocol aggregation guidelines, the American Carbon Registry's aggregation guidelines for forestry projects, the Chicago Climate Exchange's soil conservation protocol, and the Alberta Offset System's tillage systems protocol.

In addition, the report examines business models that offset project developers have employed to replicate one project type in order to streamline the process of generating offsets without the need to rely on a specific methodology for aggregation. The report also discusses options for sectoral crediting, an approach that seeks to reward specific economic sectors in specific regions if they exceed sectoral GHG emissions targets. Finally, key lessons learned are summarized, including:

1. Reduce Risk: Aggregation can help reduce financial and other risks to offset project participants and can help aggregators finance the capital costs of offset activities. Aggregators can incentivize large-scale participation in their programs by reducing the project performance risk faced by landowners by paying them to implement specific practices that reduce GHG emissions at standard practice-based rates.- Consider Aggregation Upfront: Aggregation can fundamentally change the approaches used to qualify and quantify an offset project. Aggregation may enable "proportional additionality" assessments and modeling approaches to quantifying offsets that cannot be used for stand-alone projects. Offset programs may want to consider integrating aggregation guidelines more closely into new offset protocols at the time they are initially developed, rather than simply adding on aggregation guidelines as an addendum to new or existing protocols.- Simplify Protocols: Simplified, standardized offset accounting and verification protocols can enable aggregation. Performance standards, practice-based offset crediting rates, regional data, and simplified approaches to address permanence and leakage can reduce carbon market risks for all participants and speed up the development of large quantities of offsets.