“A Renewable Energy Credit should not necessarily be used for claims of carbon neutrality”

Green-e Energy

08 – Carbon Offsets, Sequestration + Honesty

Since buildings are carbon intensive to construct and operate, any carbon neutral project requires some negative carbon numbers to balance emissions to zero. We don’t have a great term yet that includes all these negative numbers, but the list generally includes using carbon-sequestering building products, generating extra renewable energy, on-site landscape, and carbon offsets.

Carbon offsets are by far the most popular carbon-negative strategy, from vacation airplane travel to corporate carbon neutrality goals. At their best, they substitute a lower-cost carbon emissions reduction for a higher-cost, equivalent emissions reduction, reducing the cost of climate action. At their worst, they are used to disguise inaction, providing inexpensive and green-sounding carbon claims for companies that are choosing not to invest in their own emissions reductions. How do we discover the difference?

This article is not just about carbon offsets – it includes frameworks and questions for all carbon-negative activities since proving that an activity verifiably reduces carbon emissions from business-as-usual is much more challenging than it seems.

What Are We Looking For?

In the design and construction industry, we have two main options that provide negative carbon numbers that can compensate for emissions to reach a goal of carbon neutrality. Beyond these two, sequestration from on-site landscape and generating extra on-site renewable energy to displace electricity grid carbon are useful, carbon-negative strategies.

1. Use construction products that include carbon sequestration. Though few current products currently show negative Global Warming Potential (GWP, this refers to carbon emissions) in an Environmental Product Data (EPD), many are being researched and reformulated toward this end.
2. Carbon offsets purchase as a last resort. Carbon offsets can be bought for $1.50 per metric ton of CO₂e (tCO₂e) up to $150 per tCO₂e and higher. To be blunt, many offset programs fail to meet many basic criteria that align with carbon neutrality goals, which is why some are so inexpensive. The Carbon Offset Guide website is a good resource for terms and concepts; the table at the end has useful questions as well.

Nearly all parts of the economy emit carbon; it follows that a nearly limitless list of activities can be envisioned that reduce carbon emissions. Based on our research, activities (including carbon offsets) that contribute to a carbon neutral project should include these attributes:

3. Unique (not double-counted). Two or more entities claiming the same carbon reduction is problematic. Carbon registries track many of the reductions, ‘retiring’ them after they are sold to avoid double counting. But many other opportunities for double counting exist – for example, some forest owners sell carbon offsets based on their good carbon practices; should project teams also take credit for those same practices when they purchase wood from the forest? In the concrete world, Carboncure sells carbon offsets that represent the carbon sequestration in their product; should a design and construction team that uses the product also count the same reductions in their own calculations?
4. Avoid leakage. Protecting a forest from clear-cut logging, for example, is not effective if a nearby parcel is clear cut in place of the one being protected.
5. Maintain environmental integrity. Our environment should be, in general, no worse off than if the carbon negative activity did not take place. Clear cutting forests for mass timber does not maintain environmental integrity.
6. Permanent, Low-Risk or include end of life scenarios. Since many carbon negative calculations are based on future scenarios, risk and end of life scenarios should be integrated into the calculations as well as the benefits of carbon storage. Planting trees to sequester carbon, for example, includes some risk that trees are harvested early or are burned in wildfires. A range of discount rates (perhaps 0%-3%) can also be used to show uncertainty in the future (but not to make future carbon emissions seem unimportant).
7. Time-aligned. While this is not industry practice yet, we believe that carbon-negative activities should avoid or remove carbon at roughly the same time (within a decade or so) as the carbon emissions occur. Planting trees that sequester carbon over the next 100 years of growth should not be used to cover carbon emitted today.
8. Third-party verified. A trusted third party, with no perverse financial incentive, should verify the claims.
9. Transparent. All of this information should be readily available to the public alongside any claim.

Most of the carbon offset options that LMN reviewed as part of researching this article did not meet many of the above criteria.

Carbon Avoidance and Removal Types

So how are the above criteria reflected in frameworks for carbon emissions reductions? The Oxford Principles for Net-Zero Aligned Carbon Offsetting is a primary resource for principles and categorization that applied to any carbon reduction. All negative carbon emissions strategies should begin with their first principle: Prioritize reducing your own emissions before considering offsets.

Carbon Removal with Storage are off site and mostly transactional from the building industry standpoint. Carbonplan provides an interactive summary with critiques.

• Direct Air Carbon Capture and Storage (DAC or DACCS) mechanically removes CO₂ from the atmosphere and stores it, often permanently. Many projects are being funded, including some large projects.
• Carbon Capture, Use, and Storage (CCS or CCUS) removes carbon equivalents from the direct exhaust stream of fossil fuel power plants and industrial facilities. The removed carbon can be stored in geologic formations or used to produce products, including construction materials such as concrete aggregate.
• Planting or protecting forests and other land use. While an important part of environmental stewardship, we can’t plant enough trees to solve the climate crisis.
• Bioenergy with Carbon Capture and Storage (BECCS) extracts plant-sequestered carbon for energy use and stores remaining carbon as biochar. It is not likely scalable.
• Biogenic materials remove and store carbon dioxide, discussed in the next section.

Carbon Avoidance includes a nearly limitless range of creative reductions. Baselines are challenging for avoidance measures and require thoughtful, critical questions from those who consider purchasing them. Common examples of carbon avoidance offsets:

• Renewable energy can displace dirty energy, taking credit for carbon reductions, see the section below on this subject.
• Providing cleaner cookstoves is a popular carbon offset project. Cleaner fuel sources can reduce air pollution (with significant health improvement) as well as total carbon emissions. Like all offsets, ensuring that all criteria are met and that people continue to use the cookstoves and are better off in all ways is critical.
• This searchable list is one of many that shows the breadth of carbon offset projects. Many do not meet the criteria listed above that we believe are essential for carbon neutrality goals.

Biogenic Carbon to the Rescue?

Pulling carbon dioxide out of ambient air is critical to most carbon neutrality scenarios (Post 05). While mechanical means to take carbon out of the air is attracting significant investment, living plants using photosynthesis already do this around the world, every day. The carbon sequestered this way is called biogenic carbon (CLF research here) also discussed in Post 07.

With proper accounting, some products can be shown to use biogenic carbon removed from the atmosphere with a high likelihood of storing it. The construction industry, expected to add new floor area equal to that of New York City every month over the next 40 years, offers a massive opportunity to lock up atmospheric carbon within these products.

Biogenic carbon is very complicated and difficult to summarize. Here is a list of things that are true, concise, and useful. Thanks to the CLF message board for input.

1. A cradle to grave analysis usually shows a product’s emissions summing to zero due to end-of-life incineration or decomposition, but some end-of-life scenarios continue to store carbon. Cradle-to-gate (A1-A3) analyses help understand carbon stored during a product’s service life. Since there is a time value of storage, we recommend using a discount rate (Post 05) that will show a benefit for the stored carbon. Also, architects tend to work on higher quality buildings that will last longer than typical LCAs estimate (60 years), so biogenic carbon storage in structure and envelope may have more storage value than is estimated.
2. Many products sequester more CO₂ than they weigh. How? They absorb CO₂, release the O₂, and store the carbon. Since carbon dioxide weighs 3.7x more than carbon, a product (like some mass timber) that is 50% carbon can sequester 1.833 kg CO₂ per 1 kg of wood within a final timber product.
3. Biogenic materials need to consider both attributional emissions within EPDs as well as consequential emissions that are carbon outside of the scope of an EPD and more difficult to track down. Biogenic carbon can be reported per ISO 21930. For mass timber structures, land management can result in total emissions similar to steel or concrete structures, for example, or with significant additional carbon sequestration. Land can also sequester additional carbon, conservation agriculture practices, for example.
4. Agricultural and wood waste can be used to create products that store carbon. These are often short-rotation crops or small diameter wood from the thinning of forests, with wastes that are generally fibers. According to Build Beyond Zero, 2.2 billion tons of straw (a waste product) sequesters carbon roughly equal to India’s annual emissions – incorporating this into building materials has a potential massive impact in drawing down global emissions.
5. Purpose grown biogenic stocks should not compete with food systems for land use. They should include carbon emissions from fertilizers, planting, tilling, and harvesting. Agricultural waste products (and from thinning of forests) should include a smaller, prorated portion of these inputs.
6. For short-rotation crops, carbon is sequestered in roughly the same year the product is produced, so the storage begins immediately. For long-rotation crops such as trees, accounting for when the carbon is sequestered is complicated: one can take credit for past, present, or future sequestration depending on the accounting method.
7. Location matters. Practices that support biogenic carbon sequestration in one area may not work as well in others. Local ecosystems should be supported.

Demolition of biogenic products during renovation and demolition may result in significant emissions. Investigate end of life scenarios and consider reuse or continued storage of the biogenic material.

Additional biogenic carbon resources:

• Videos on wood and carbon by the Carbon Leadership Forum and CLF-Seattle.
• The Upstream Tool (beta) estimates biogenic carbon scenarios for wood products, building on existing methods and research and adding an A0 module for forest carbon impacts. More on Upstream and wood will be in Post 11 (Structure).
• Biogenic carbon is an area of significant research for manufacturers as well as the Department of Energy.
• Woodworks has many resources on biogenic carbon as well.
• The US Department of Agriculture BioPreferred program certifies products with biobased content.

Energy Related Purchasing: RECs are Not Offsets

Providing renewable energy for 100% of building needs (ideally on a 24/7 basis) is an important part of reaching carbon neutrality (Post 06 and Post 13 get into more detail), but as sales of certified off-site renewable energy have grown to nearly 100 million MWh annually in the last two decades we need an industry understanding of what purchasers are and aren’t getting.

Renewable Energy Credits (RECs) are an energy-related purchase, but do not (by themselves) meet the criteria above for carbon neutrality claims as they do not need to prove additionality (and research suggests that RECs are not creating additional renewable energy). RECs represent only the ‘environmental attributes’ of renewable energy and are often sold separately from the renewable energy itself. Thus, RECs do not fund the entire cost of new renewable energy, just the green premium (or incremental cost) above the cost of traditional energy sources, giving the developer another source of income. With renewable energy cost-competitive with fossil fuel energy, there is little or no green premium. RECs are tracked in registries and considered ‘retired’ when they are purchased to avoid double-counting.

Virtual Power Purchase Agreements (VPPA) are a contract to purchase energy from a specific source for a specified length of time. These are called ‘virtual’ since the purchased electricity does not flow exclusively or directly to the user. They often meet all the requirements under ‘What are we looking for?’ for new installations and are appropriate for balancing on-site energy use with off-site energy procurement. All renewable energy purchased toward a goal of carbon neutrality should also retain the RECs associated with their purchase. This is a good primer on the challenges of off-site renewable energy purchases. Resources include: Renewable Energy Buyer’s Alliance, LevelTen, 3Degrees,  Customer First Renewables, and Schneider Electric.

Biogas and Methane Capture at landfills are common carbon offsets projects. Landfills and some industrial and farm-related uses emit methane, a potent greenhouse gas. Methane can be burned off, wasting a resource but lowering GWP,  or captured and used in place of fossil fuels; some examples.

Carbon Offsets: The Last Resort

Since climate change is a global problem, reducing or sequestering carbon anywhere can be used to ‘offset’ carbon emitted elsewhere. This allows the cheapest emissions reductions or removals to be realized first, creating a transfer of money across borders. The transfer is often via a carbon offset (aka carbon credit), which is a packaged asset that represents carbon removal or avoidance, usually in metric tons of CO₂e. Very few of these packaged assets meet the principles outlined in ‘What are we looking for?’ and should only be purchased after all other carbon emissions reduction options have been exhausted.

Carbon offsets can be part of voluntary programs, meaning that they are created and verified by the market, or within mandatory programs, meaning they additionally need to comply with other policies such as California’s Cap and Trade program. This post focuses on voluntary programs.

The UN Clean Development Mechanism creates and updates standards (pdf here) for carbon offsets in developing countries, including Certified Emissions Reductions (CER, for use within the Kyoto protocol) and Verified Emissions Reductions (voluntary market, outside the Kyoto protocol).

Carbon reduction strategies typically used on construction projects (including heat pumps and biogenic materials to reduce carbon emissions) are not typically packaged and sold as carbon offsets, but there is a growing effort to incentivize these strategies by doing so. Aureus Earth, for example, has packaged mass timber carbon as high-quality offsets. Our industry is still trying to determine how this may affect double-counting within carbon claims.

The process of creating a carbon offset is complicated and involves many parties. A buyer of carbon offsets primarily will need to interact with the vendor but will look at documents prepared by the verifier and other up-stream parties to assess the validity. The rigor of a carbon offset is set by one of several ‘Carbon Offset Programs’ that develop standards that set criteria, review projects against the criteria, and operate registries to ensure each credit is sold only once. A few of these registries are listed below:

• Verra/Verified Carbon Standard
• Climate Action Reserve
• Gold Standard
• American Carbon Registry

The transparency of the Carbon Offset Programs above can be verified by the Center for Resource Solutions that operates the Green-e® program. USGBC (LEED), the International Living Future Institute (ILFI), and other certification bodies require  carbon (Green-e Climate) and renewable energy (Green-e Energy) products to meet this standard. Green-e provides an additional review and require certain disclaimers to be on a product but ultimately is only certifying the transparency of the offset, not the validity of the offset itself. One of the biggest differences between LEED and ILFI requirements is that LEED accepts REC-only purchases to satisfy EA: Renewable Energy as well as the energy portion of the LEED Zero Carbon and Zero Energy Programs. In addition to retiring the RECs, ILFI programs require the renewable energy source to be new and solely attributable to the project via a (minimum) 15-year agreement.

Conclusions and Recommendations

Any carbon neutrality goal involves negative carbon numbers – through carbon-negative products, renewable energy, landscape, or carbon offsets. This last one deserves additional scrutiny in carbon neutral goals to avoid masking inaction and dubious claims. Economics plays a role: because what is being sold is difficult to verify, the market is incentivized to overstate reductions and not report failures. And the resulting too-good-to-be-true offsets are far cheaper to buy than reducing a company’s own emissions. The quality of offsets, and other negative carbon numbers, is especially important as more products and companies claim carbon neutrality through their use.

Recommendations

• Reduce directly controlled emissions first, especially Scope 1 and 2 (Post 02). Use Virtual Power Purchase Agreements, (not RECs alone) or similarly structured purchase for energy-related carbon reduction.
• Procure low-carbon and carbon-sequestering building materials.
• After all carbon reduction measures are in place, use carbon offsets for remaining Scope 3 emissions, asking questions from the criteria in the ‘What are we looking for?’ section.
• Where possible, align carbon sequestration timeframe with the time of carbon emissions.

Remaining questions

• What higher standards exist to ensure that carbon offset purchases meet all essential criteria to avoid greenwashing and fully support claims of carbon neutrality?
• How can carbon offset markets provide better transparency on the quality products they are offering towards robust carbon neutrality claims?
• How soon will biogenic, carbon-sequestering material make it to market at scale and with verified EPD documentation?

Please email any questions or comments to Kjell Anderson, kanderson@lmnarchitects.com

Thanks to our external collaborators and peer reviewers
Meghan Lewis, CLF; Pat Brewer, Green-e; Chris Hellstern, Miller Hull; Victoria Burrows, WorldGBC; Pamela Conrad, Climate Positive Design; Jen Snook, CEBA; Tiffany Mayville, CEBA; Alex Ianchenko, Miller Hull; David Mead, PAE; Evan Ponto, OAC; Andrew Sahl, OAC; Chris Magwood, RMI

LMN Architects Team
Huma Timurbanga, Justin Schwartzhoff, Jenn Chen, Chris Savage, Andrew Gustin, Kjell Anderson

Posted: 11/15/2022

The text, images and graphics published here should be credited to LMN Architects unless stated otherwise. Permission to distribute, remix, adapt, and build upon the material in any medium or format for noncommercial purposes is granted as long as attribution is given to LMN Architects.

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